Big Spend, Tight Purse: Budget Pushes Infrastructure While Holding the Tax Line

In a Sunday address to Parliament, the government unveiled Union Budget 2026 presented by Finance Minister Nirmala Sitharaman a forward-looking Budget focused on growth momentum, infrastructure and reform rather than tax cuts for individuals. Public capital expenditure has been boosted to around ₹12.2 lakh crore to catalyse connectivity and economic activity, including seven proposed high-speed rail corridors linking major urban centres.

Initiatives such as Rare Earth corridors, expansion of semiconductor manufacturing under “ISM 2.0,” and a ₹10,000 crore SME growth fund aim to strengthen manufacturing and technology ecosystems. While income tax slabs remain unchanged, compliance has been simplified and TCS rates on overseas education, medical and travel remittances have been cut, signalling caution on direct relief but emphasis on long-term productivity. Fiscal consolidation remains a priority with the deficit targeted around 4.3–4.4 % of GDP.

Beyond macro numbers, the Budget allocates substantial funds to social and rural sectors, health, and employment generation. Schemes like the Viksit Bharat-Guarantee for Rozgar Aajeevika Mission and increased outlays for the Jal Jeevan Mission underscore rural development goals, while plans to make cancer and rare disease drugs more affordable reflect a health-sector push.

Support for tourism, fisheries and traditional knowledge sectors and measures to deepen corporate and municipal bond markets further reflect a multi-pronged strategy to spur jobs and investment. Markets reacted unevenly, with indices fluctuating on the day as analysts digested a blend of reform, spending and regulatory tweaks that together signal a steady, continuity Budget aimed at long-term structural growth.

• Ms. Devika P
  Political Analyst & Assistant Professor, Mysuru