OPINION FY27 disinvestment target of Rs 80,000 crore may face execution risks amid global headwinds and weak earnings visibility

Pradeep Gupta of Lighthouse Canton shares Budget analysis

• Budget presents a balanced, disciplined and inclusive framework
• Budget maintains a core focus on stability, fiscal discipline and sustained growth
• Rather than relying on headline incentives, Budget reinforces confidence through continuity, predictability and execution-oriented policy choices

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The Union Budget FY27 reflects a clear policy choice to prioritise macroeconomic stability, fiscal discipline and policy led growth at a time when continuity, rather than disruption, was widely expected. Against the backdrop of balancing growth with macro stability, the budget outlines a strategic framework centred on growth acceleration, aspiration fulfilment and inclusive development, reinforcing predictability as a key signal for long-term growth.

Commitment to the fiscal glide path and the quality of spending has not been compromised, continuing to remain a hallmark of this government’s approach. Public capital expenditure has been maintained at Rs 12.2 lakh crore and will continue to serve as the primary engine of growth. Including grants-in-aid to states for capital asset creation, overall public capex works out to 4.4 percent of GDP. This sustained emphasis reflects a deliberate preference for structural policy measures leading up to sustainable growth over short-term consumption stimulus, supporting long-term capacity creation.

Manufacturing and Make in India-centric initiatives remain a key focus area. Continued support under the Production Linked Incentive framework for sectors such as electric vehicles, electronics, renewable energy and defence signals policy continuity. More importantly, the emphasis is shifting from demand-led expansion to productivity-led growth, with greater focus on improving infrastructure, institutional capacity and supply-side efficiency. Policy thrust towards semiconductors, rare earths, biosimilars and clean technology is aimed at repositioning India as a future-growth story embedded within global value chains.

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Structural measures aimed at MSMEs adopt a three-fold approach focused on equity access, liquidity support and compliance simplification. These initiatives address long-standing constraints faced by smaller enterprises and support balance sheet strengthening and formalisation. For AI and digital entities, policy measures announced are structural in nature and reinforce policy seriousness. The focus on digital public infrastructure, data platforms, skilling initiatives and compute access is well placed to expand the addressable market for AI applications across sectors.

Measures to boost tourism are timely, given the sector’s significant potential for employment generation across services, logistics and regional economies. In addition, policy initiatives to accelerate the recycling of significant real estate assets of central public sector enterprises through the setting up of dedicated REITs represent an important step towards unlocking strategic capital and improving asset efficiency. Collectively, these measures reflect an expansion of policy focus into areas of long-term and futuristic relevance.

On the fiscal and capital markets front, the FY27 disinvestment target has been set at Rs 80,000 crore, which could face execution challenges given global headwinds, geopolitical distortions and subdued domestic earnings visibility. Estimates around nominal GDP growth appear conservative at around 10 percent, supporting fiscal credibility.

Allowing persons resident outside India to increase equity investments is a positive move, particularly following intensified foreign institutional investor outflows in the previous year. There have been no negative shocks in terms of changes to capital gains taxation, while the budget has refrained from announcing new income tax incentives. Markets, however, have reacted negatively to the increase in Securities Transaction Tax in the F&O segment.

The budget has also lowered Tax Collected at Source under the Liberalised Remittance Scheme for education and medical payments from 5 percent to 2 percent, while TCS on overseas tour programme packages will now be levied at a flat 2 percent. This rationalisation aligns with the broader emphasis on ease of living and reduced compliance friction, improving comfort and liquidity for globally mobile families with cross-border financial commitments.

Notably, consumption-centric measures seem to have been restrained and have largely been executed outside the budget framework. This suggests an awareness of the lagged effects of earlier fiscal and monetary policy actions, and a preference to allow those measures time to transmit through the economy.

Overall, the FY27 Budget presents a balanced, disciplined and inclusive framework, with a core focus on stability, fiscal discipline and sustained growth. Rather than relying on headline incentives, it reinforces confidence through continuity, predictability and execution-oriented policy choices.