Budget 2026-27 pushes for future-proofing India should be followed up with execution

REITs at take-off stage, big opportunity for investors amid PSU land monetisation

Finance Minister Nirmala Sitharaman's ninth Budget blends a mix of pragmatism to make the Indian economy future ready.

While higher borrowings and securities transaction tax on futures and options unsettled markets, the Budget’s focus on sectors such as AI, semiconductors and creating SME champions is a leap from the PLI-focused policymaking.

Finance Minister Nirmala Sitharaman’s Budget speech highlighted key sectors expected to drive future growth. A notable shift this year is the sharper focus on expanding India’s services-led economy.

A tax holiday for foreign companies offering cloud services to customers globally is one of the most significant measures to drive skills and future jobs into India. The tax holiday comes with a caveat that the companies use data centres based in India. Some of the other such future-ready measures include setting up a biopharma manufacturing hub with an outlay of Rs10,000Cr, expansion of India’s semiconductor mission, near doubling of the allocation of the Electronics Component Manufacturing Scheme to Rs40,000 crore, establishing dedicated rare earth mineral corridors, a scheme for container manufacturing, modernising textiles, setting up training for care providers, push for medical tourism, creating champion SMEs are all good measures.

From a fiscal perspective, India’s fiscal prudence shines in a world being defined by fiscal profligacy. Fiscal deficit at 4.3 percent of GDP for FY27,  a reduction from 4.4 percent projected for the current financial year (FY26) and India’s commitment to increasing public capex from Rs11.2 lakh crore in BE 2025-26 to Rs12.2 lakh crore is all that can be considered good policy moves.

However, the emphasis must now shift to execution. In November, a Rs 1 lakh crore RDI fund was announced, of which only Rs 20,000 crore has been allocated to catalyse private sector research. Flagship schemes like Jal Jeevan  Mission have been mired by underutilisation of funds. In FY25, only 52 percent of the budgeted amount was utilised because of various complexities.  Streamlining of customs duties and decriminalisation are all encouraging moves – considering the levers available for the finance minister.

Her ninth consecutive Budget comes amid a tumultuous backdrop of geopolitical uncertainty, slowing nominal growth, exporters reeling under Trump’s tariffs and a private sector that has remained reluctant to invest. If the 2025-26 budget was about a consumption boost, this Budget is about shifting the structural gears of the Indian economy.

The intention is much lauded, markets will eventually shrug off the overhang of the increase in STT, but the real test would be in communication, getting the narrative on the reforms packed in this Budget across to all relevant stakeholders and executing the ambitious plans.