Union Budget 2026: Fiscal Discipline, Selective Capex Growth Take Center Stage

• The Union Budget for FY27 is expected to prioritize fiscal consolidation, aiming for a fiscal deficit of 4.2-4.3% of GDP, signaling continuity.
• Amidst a fragile global economy, India seeks to maintain stability, but domestic fiscal headroom is limited due to modest revenue growth and tax collection shortfalls.
• Public capital expenditure will continue to be a growth driver, with central government capex projected to cross ₹12 lakh crore in FY27, but growth will be selective.
• The budget will likely focus on sector-specific capex for railways, defence, power, energy transition, and manufacturing, with slower growth for roads and highways.
• No major tax changes are anticipated, with personal income tax slabs and capital gains taxes expected to remain unchanged, and disinvestment receipts modest.

Why It Matters: Budget 2026 emphasizes fiscal discipline, selective capital expenditure, and policy continuity amidst global uncertainty.