Budget 2026 | Holding the line to sustain growth as India dreams big

The budget presented by finance minister Nirmala Sitharaman on Sunday comes at a pivotal moment as India navigates global economic uncertainties, volatile trade conditions and domestic aspirations for growth, stability and inclusivity.

Like the previous few budgets, this budget too has balanced the twin objectives of fiscal discipline and much-needed growth support for the economy through targeted measures. The budget focuses on making India an investment grade economy over the long term rather than just providing fiscal stimulus or undertaking populist measures. It aims to create an environment for accelerated and sustained economic growth by enhancing productivity and improving competitiveness.

The budget aligned closely with previous budget themes, presenting no major surprises in fiscal calculations. The themes of conservatism and consolidation remain prominent. The fiscal stance highlighted a balanced approach - prioritising growth while maintaining a credible consolidation path, especially in a year marked by global economic instability and elevated tariff pressures.


As anticipated, the government is targeting a fiscal deficit of 4.3% of GDP in 2026-27, thus maintaining a medium-term fiscal consolidation path. This move is seen as essential for consolidating fiscal health while avoiding excessive borrowing that could lead to inflationary pressures. It reflects the government's intent to reduce its reliance on debt, which will have a positive effect on long-term economic stability. For the first time in our history, planned capital expenditure figures are higher than net market borrowing numbers. Despite the lower fiscal deficit target, there is double-digit growth in planned capital expenditure, which is a positive development.

It delivers on the push towards manufacturing, attracting data centre investments and maintaining the pace of public capex. However, the unexpected hike in securities transaction tax on equity derivatives is a negative surprise for equity markets. There are no changes on the direct taxation side.

Overall, we have seen a well-coordinated fiscal and monetary response to supporting growth, while ensuring macro stability. This should go a long way in getting the economic growth momentum firmly back. Finally, continuing focus on fiscal prudence will keep India's risk premium low and provide greater leeway for monetary policy adjustments going forward.

Road ahead for investors
The correction in equities over the past few months has resulted in large-cap valuations falling to almost long-term average levels. Relative valuation comfort is more for the large-cap segment than the mid-cap and small-cap segments. However, the external environment continues to be hazy and may remain volatile. Hence, investors are advised to adopt the time-tested route of systematic and regular investing with a long-term focus. Top beneficiary sectors: Healthcare, logistics, capital goods and engineering and electronics manufacturing.