BL Opinion on Union Budget 2026: Financial sector reforms: Going beyond incrementalism

Building on the reforms introduced by the government in recent months, it is time to move beyond incrementalism to harmonise financial sector regulatory governance.

A coherent and consistent regulatory template, supported by sound legal backing and aligned institutions, would enable the ‘reform express’ to gather speed and stay on course towards a mature financial system.

Financial sector reforms: Going beyond incrementalism

Legislative-regulatory reforms must be harmonious across sectors. The forthcoming Budget should articulate this objective

2026 Union Budget Expectations: Central govt capex may cross ₹12 lakh crore in upcoming budget for FY27, up 10% YoY: SBI report

Capital expenditure by the central government is expected to cross ₹12 lakh crore in (Financial Year) FY27, registering a year-on-year growth of around 10%, according to a report by the State Bank of India (SBI). 

The SBI report highlighted a steady rise in government-led capital spending over the years, highlighting the continued focus on infrastructure creation and economic growth.

Central govt capex may cross ₹12 lakh crore in upcoming budget for FY27, up 10% YoY: SBI report

SBI report predicts central government’s capex to exceed ₹12 lakh crore in FY27, reflecting a 10% year-on-year growth.

BL Opinion on Union Budget 2026: Some broad goals for the Budget

• The Budget must build on fiscal sustainability.
• Tt should contribute to reduction in income and wealth inequalities.
• It ought to aim at the above two in a manner that keeps the economy on a sustainable high growth path.

The Budget should not try to over-achieve, nor under-achieve and if it succeeds in striking the right balance in the middle ground, the results will be extraordinary.

Some broad goals for the Budget

Targeting growth, fiscal consolidation and inequities at the same time would depend on the mix and balance of policies

BL Opinion on Union Budget 2026: Govt forced to walk a fiscal tightrope

India today stands at a crossroads. The Finance Minister has declared that reducing the debt-to-GDP ratio will be a central policy priority. 

The intent is sound. According to the IMF, India’s general government debt — the combined borrowing of the Centre and States — is estimated at around 80-82% of GDP, which is elevated by emerging-market standards. 

Yet the path to lowering that ratio is far from straightforward.

Govt forced to walk a fiscal tightrope

Budget should protect capex, ease pressure on middle-class finances, broaden tax base without compressing consumption

Budget Expectations live updates: Fertilizer, agri-tech sectors seek budget supporting resilient, self-reliant ecosystem

Key expectations include:

• Promoting ‘residue-free, nutrient-rich’ farming as an integrated national agriculture
• Health policy to align crop nutrition with human nutrition
• Recognising non-subsidised soluble, organic, micronutrient and stimulant (SOMS) fertilizers as strategic materials on par with critical minerals due to their importance in food systems and industrial value chains alongside subsidy reduction.

Fertilizer, agtech sectors seek budget supporting resilient, self-reliant ecosystem

Leaders in agriculture call for a budget that fosters resilient, self-reliant farming and promotes nutrient-rich, residue-free practices.

Union Budget 2026 live updates: Auto industry seeks higher charging infra outlay, PLI tweaks to boost domestic EV manufacturing

Ahead of the Union Budget 2026–27, the automobile industry is seeking higher allocation for public charging infrastructure and policy tweaks to boost domestic electric vehicle manufacturing.

Union Budget: Auto industry seeks higher charging infra outlay, PLI tweaks to boost domestic EV manufacturing

Auto industry urges higher charging infrastructure funding and PLI adjustments in Union Budget 2026-27 to enhance EV manufacturing.

Explained in 60 seconds: Why the Union Budget is presented on February 1 every year

2026 Union Budget Expectations: IVPA asks govt to increase budgetary allocation to National Mission on Oilseeds

In a pre-Budget memorandum to the government, Sudhakar Desai, IVPA President, said the upward revision is essential to address structural constraints in domestic oilseed production and to meet the objective of achieving edible oil self-sufficiency of approximately 45% by 2030-32.

IVPA asks govt to increase budgetary allocation to National Mission on Oilseeds

IVPA urges the government to boost oilseed mission funding to enhance domestic production and achieve edible oil self-sufficiency by 2030-32.

Budget Expectations live updates: Call for greater visibility on patient assistance programmes, after last Budget’s exemption

A long-standing ask from drugmakers, it was expected to expand such programmes to more patients on the drugs, or for more drugs to be supported by such PAPs. Almost a year on, and a day away from Budget 2026, there is little visibility if that has happened on the ground.

Call for greater visibility on patient assistance programmes, after last Budget’s exemption

Budget 2025 had waived BCD on 13 new PAPs if medicines were given free

2026 Union Budget Expectations: Elevator industry seeks infra spending, sops for digitalisation in Budget

The industry stakeholders are seeking sustained infrastructure spending, targeted incentives for digitalisation and stronger measures to boost local manufacturing to support safe, smart and scalable urban growth.

The sector underpins construction and real estate, together contributing nearly 16% to GDP and plays a critical role in housing, metro projects and urban infrastructure.

Elevator industry seeks infra spending, sops for digitalisation in Budget

Elevator industry urges budget support for infrastructure, digitalisation, and local manufacturing to drive urban growth and safety.

Union Budget 2026 live updates: India holds the line while others slip in fiscal prudence

Implications of India’s responsible fiscal governance are far-reaching, in the sense that Indian bonds have found place in multiple global bond market indices and a sovereign credit rating upgrade to BBB from BBB-/ BBB (low) by agencies such as S&P and Morningstar. 

With India’s debt market deepening, any meaningful decline in sovereign yields should play favourably in the hands of businesses, as their cost of capital will be directly or indirectly linked to the sovereign yield. 

At a time when the cost of capital in major economies such as the US, the UK, Japan, and Germany has increased significantly relative to pre-Covid levels, this development may be regarded as a macroeconomic achievement for India.

India holds the line while others slip in fiscal prudence

India’s fiscal prudence contrasts with global profligacy, positioning it favorably amid rising debt levels in major economies.

FY27 Budget seen at ₹54.1 lakh crore, signals calibrated fiscal consolidation

Union Finance Minister Nirmala Sitharaman is expected to present a Rs 54.1 lakh crore Union Budget for FY2026-27, reflecting a 7.9 per cent year-on-year increase, according to Sunidhi Securities & Finance. Total expenditure is projected to moderate to 13.8 per cent of GDP, signalling calibrated fiscal consolidation rather than tightening. The fiscal deficit for FY27 is estimated at 4.16 per cent of GDP, continuing the consolidation trend. While India enters FY27 with strong real GDP growth of 7.4 per cent and improved urban demand post-GST reforms, subdued nominal GDP growth and weak revenue buoyancy remain key challenges.

Budget 2026 expectations: Health allocations must rise to 2.5% of GDP, say experts

Civil society group Jan Swasthya Abhiyan (JSA) has urged the Centre to significantly raise health allocations in the Union Budget 2026, noting that India’s public health spending remains at 1.15% of GDP—far below the 2.5% target set in the National Health Policy 2017. JSA recommends doubling allocations to the National Health Mission, strengthening health and wellness centres, supporting frontline staff, and revamping public pharmaceutical and vaccine production. Experts warn that stagnant budgets and a focus on insurance-led, privatised models undermine universal healthcare. The group calls for urgent course correction to ensure equitable access, protect vulnerable communities, and honour past policy commitments.

Union Budget 2026: Capital spending set to exceed ₹12 lakh crore

India’s upcoming Union Budget is expected to balance growth support with fiscal discipline amid rising global risks, including punitive US tariffs and geopolitical tensions. Finance Minister Nirmala Sitharaman is likely to push infrastructure spending as private investment remains subdued, while simplifying customs duties and easing compliance for small businesses. Capital expenditure may cross ₹12 trillion in FY27, led by roads, ports and energy, with higher defence outlays also likely. Analysts expect the government to stick to fiscal consolidation, targeting a deficit near 4.2% of GDP and a declining debt path, while relying on RBI dividends and modest asset sales to fund higher spending.

Budget expectations: Auto industry seeks higher charging infra outlay, PLI tweaks to boost domestic EV manufacturing

Ahead of the Union Budget 2026–27, the automobile industry is seeking higher allocation for public charging infrastructure and policy tweaks to boost domestic electric vehicle manufacturing.

Industry players say a faster rollout of charging stations and sustained government spending are crucial to address range anxiety, especially for inter-city travel, and to maintain momentum in India’s EV transition.

On the manufacturing front, industry executives and policy experts have called for Budget-linked changes to the Production Linked Incentive scheme, aimed at enabling more automakers and component manufacturers to qualify for incentives.

Union Budget 2026: What India’s fertiliser trade needs to remain globally competitive

India’s fertiliser trade policy needs recalibration to balance food security, farmer affordability and long-term resilience amid volatile global markets. As a major importer and producer, India must use Budget 2026 to modernise its approach. 

Key priorities include reforming fertiliser subsidies to promote balanced nutrient use and innovation, investing in logistics and port infrastructure to cut costs, and reducing import vulnerability through strategic reserves and overseas resource partnerships. 

The Budget should also incentivise green ammonia and alternative fertilisers to lower carbon intensity and import dependence, while streamlining taxation and digital trade processes to strengthen domestic production and global competitiveness.

WATCH: Budget 2026 preview: GDP, fiscal policy & CapEx investment outlook

WATCH: Budget 2026 preview: Will there be any big income tax relief for the middle class?

Agriculture in Budget: Why the next leap must be strategic, not incremental

As Budget 2026–27 approaches, agriculture is positioned as India’s first engine of development, employing over 46% of the workforce. While nominal allocations to agriculture have risen sharply over the past decade, its share in overall government spending has steadily declined. Much of the expenditure remains concentrated on income support, subsidies and risk mitigation, improving welfare delivery but not productivity. Structural constraints—weak seed systems, inefficient water use, soil degradation, poor extension and post-harvest losses—remain under-addressed. To drive productivity-led growth, the Budget must pivot from managing distress to enabling value chains, research, infrastructure and market integration through sharper prioritisation rather than higher spending.

Top expectations from Budget 2026–27

* Income tax: Transition rules, FAQs and clarifications for the new Income Tax Act, 2025, effective April 1

* Standard deduction: Possible hike to encourage a shift to the new tax regime

* TDS reform: Rationalisation into fewer rates and slabs

* Customs overhaul: Fewer duty rates, amnesty scheme to unlock ₹1.53 lakh crore stuck in disputes, procedural simplification

* Fiscal strategy: Clear roadmap to reduce debt-to-GDP from FY27

* Defence: Higher allocation amid rising geopolitical tensions

* Viksit Bharat schemes: Outlay for VB–G RAM G with 60:40 Centre-state funding

* Pay Commission: Budgetary provision for the 8th Pay Commission, effective January 1, 2026

* State finances: Tax devolution as per 16th Finance Commission recommendations

* MSMEs & exports: Incentives for MSMEs and tariff-sensitive sectors like gems & jewellery, garments and leather

* Critical minerals: Funding for exploration and processing of lithium, cobalt and rare earths

Sitharaman’s 9th Budget: Key numbers markets will track closely

* Customs reforms: Major expectations around customs duty rationalisation

* Fiscal deficit: FY26 deficit pegged at 4.4% of GDP; markets eye FY27 target near 4%

* Capex push: FY26 capex at ₹11.2 lakh crore; 10–15% hike likely in FY27

* Debt roadmap: Focus on bringing debt-to-GDP on a declining path from FY27

* Borrowings: FY26 gross market borrowing at ₹14.8 lakh crore

* Tax revenue: FY26 gross tax collections estimated at ₹42.7 lakh crore

* GST: FY26 GST revenue seen at ₹11.78 lakh crore; FY27 growth cues awaited

* Growth outlook: FY27 nominal GDP growth may be projected at 10.5–11%

* Spending watch: Allocation trends for key schemes, health and education in focus

Why Budget may rethink gold and silver duty cuts

With FPIs continuing to sell Indian equities, there is speculation around possible Budget relief on capital gains taxes, though clarity remains elusive. A more immediate concern for policymakers is the surge in gold and silver imports following the sharp cut in customs duties in the 2024 Budget. Rising investor interest in bullion ETFs risks widening the current account deficit and pressuring the rupee. The Centre may therefore consider hiking duties on gold and silver despite the resulting increase in Sovereign Gold Bond costs, betting that higher customs revenues and lower imports outweigh the trade-offs.

Eighth Pay Commission: What it could mean for Budget maths

Pay Commission awards, announced once every decade, lead to sharp pay hikes for Central government employees and have economy-wide ripple effects. The Seventh Pay Commission raised basic pay by a fitment factor of 2.57, significantly boosting salaries, pensions and consumption. The Eighth Pay Commission, constituted in October 2025, will submit its report within 18 months, with recommendations effective from January 1, 2026. If the Centre provides for these payouts in the upcoming Budget, establishment expenses—already 17% of total expenditure—could rise sharply, supporting consumption but potentially widening the fiscal deficit and constraining future spending.

Will Budget FY27 pass the capex baton to private sector?

Post-Covid, the Centre became the main driver of India’s investment cycle as private capex was slow to revive. Central capital expenditure and grants for asset creation rose sharply from ₹5.2 lakh crore in FY20 to ₹15.5 lakh crore in FY26, lifting capex from 2.6% to 4.3% of GDP. Government spending, led by roads, railways and defence, now accounts for about a quarter of total investment. However, slower revenue growth, limited headroom in infrastructure sectors and rising welfare and Pay Commission costs may constrain capex growth going forward. FY27 allocations will signal whether the Centre sustains spending or hands over the investment baton to the private sector.

Budget 2026: Budget borrowings to set the tone for bond yields in FY27

Interest rates on loans and debt investments are shaped more by bond market demand and supply than RBI repo rate moves. Despite a 125-basis-point repo cut, G-Sec and corporate bond yields have barely eased, highlighting the government’s borrowing role. The Union Budget’s fiscal deficit targets, borrowing size and mix for FY26–FY27 will be key cues. Higher deficits and borrowings can push yields up, hurting bond prices but improving future returns.

Who’s who in the Finance Ministry team preparing Budget 2026-27

As Finance Minister Nirmala Sitharaman starts to give finishing touches to her record ninth Budget in a row, she is being assisted by an experienced team of bureaucrats at the Finance Ministry.​

Budget 2026-27: Officials behind Nirmala Sitharaman’s ninth Union Budget

As FM Nirmala Sitharaman readies Budget 2026-27, meet the top Finance Ministry officials shaping tax policy, spending plans and reforms.

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Nirmala Sitharaman, the longest serving Finance Minister, to present 9th Budget in a row

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Nirmala Sitharaman, the longest serving Finance Minister, to present 9th Budget in a row

Finance Minister Nirmala Sitharaman, who will present her ninth consecutive Budget on Sunday, is the longest-serving finance minister to hold the post continuously.

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Budget 2026: History of Union Budget from 1947 to 2026

History of Budget (1947-2026): Who led as Finance Ministers?

History of Union Budget in India: Here is list of Finance Ministers of India since Independence who presented the Union Budget from 1947 to 2026.

Budget 2026 Insights: Five Budget cues to look out for

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Budget: 5 Budget cues to look out for

Explore five crucial Budget cues that will indirectly influence investment decisions in the upcoming Union Budget 2026.

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Budget 2026 Insights: India holds the line while others slip in fiscal prudence

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India holds the line while others slip in fiscal prudence

India’s fiscal prudence contrasts with global profligacy, positioning it favorably amid rising debt levels in major economies.

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