By Shivanand Pandit
Budget 2026 reinforces confidence among markets and long-term investors by sustaining high capital expenditure of ₹12.2 lakh crore while keeping the fiscal deficit anchored around 4.3%. Measures to deepen the corporate bond market and relax NRI and foreign portfolio investment limits enhance liquidity, improve price discovery, and facilitate the flow of long-term capital. The thrust on tax simplification through a new Income Tax law, removal of the TAN requirement for resident buyers, and reduction in TCS on overseas spending lowers compliance friction for households. A strong push towards biopharma, biologics, biosimilars, clinical trials, and new NIPER institutions positions India as a global healthcare manufacturing hub, while initiatives such as ISM 2.0, ECMS expansion, support for heavy machinery, and VGF for sea-planes strengthen India’s ambition to emerge as a global manufacturing powerhouse.
At the same time, the Budget offers little direct relief to the middle and lower-middle class, with no immediate stimulus to boost consumption. Fiscal devolution to states remains unchanged at 41%, constraining their ability to fund welfare and development priorities. The increase in STT raises trading costs, potentially reducing derivative volumes, adding near-term market volatility, and pressuring brokerage revenues. Although public capex has risen, it may still fall short of what is required to decisively crowd in private investment. Overall, Budget 2026 prioritises predictability, regulatory stability, and long-term capacity creation over short-term demand support—making it structurally strong and investor-friendly, but politically and consumption-wise underwhelming. The 2026 Budget aims to support long-term economic growth by emphasizing infrastructure expansion, strengthening the manufacturing sector, encouraging technology-led development and improving export competitiveness. At the same time, it has raised concerns due to its negative impact on financial markets, limited immediate measures to stimulate consumer spending, welfare and doubts about the effective implementation of its ambitious proposals.
(Tax specialist, financial adviser, author, guest faculty and public speaker based in Goa.)
