OPINION | Union Budget 2026 charts a path for emergent Bharat

Budget 2026 recognises the next phase of India's economic growth.

At $4.5 trillion GDP, India is poised to overtake Japan as the world’s third-largest economy. Yet Emergent Bharat tells a different story. With per capita income at $3,000, India ranks 136th out of 146 countries, where the top 1% of the population owns 40% of the nation’s wealth. This budget recognises that the next phase of growth must focus on Emergent Bharat, transforming the lives of the lower three quartiles of the economic pyramid to catapult the nation to its rightful place. Finance Minister Nirmala Sitharaman’s Union Budget 2026 reinforces India’s commitment to Viksit Bharat by balancing ambition with inclusion.

The Three Kartavyas: A Framework for Inclusive Growth

The three kartavyas that form the keystone of this budget are: (1) Accelerate and Sustain Economic Growth, (2) Fulfil Aspirations of Our People, and (3) Vision of Sabka Saath, Sabka Vikas.

First Kartavya: Manufacturing as the Engine of Blue-Collar Employment

The first kartavya focuses on manufacturing, which contributes 18% to GDP and employs 25% of the workforce—speaking directly to Emergent India. Blue-collar jobs provide stable livelihoods, and seven sectors have been chosen for scaling up: Bio-Pharma, Semiconductors, Rare Earth Magnets, Capital Goods, Container Manufacturing, Textiles, and Sports Goods. Additionally, 200 industrial clusters have been selected for rejuvenation.

MSMEs will be supported through a ₹10,000 crore SME Equity Growth Fund and liquidity support via TReDS. Infrastructure receives significant backing with a capex budget exceeding ₹12 lakh crore, complemented by an Infrastructure Risk Guarantee Fund, cargo freight corridors, enhanced national waterways, ship repair facilities, and incentives for carbon capture in specified sectors.

The City Economic Region (CER) initiative aims to rejuvenate infrastructure in Tier 2 and Tier 3 cities with an outlay of ₹5,000 crore per CER over five years. Seven high-speed rail corridors spanning the length and breadth of the country will add growth and prosperity to Emergent Bharat. Most importantly, these labour-intensive initiatives directly address India’s employment challenge.

Financial sector reforms include setting up a High-Level Committee on Banking for Viksit Bharat to advance financial inclusion, with special focus on NBFCs. Enhancing corporate bond markets through a market-making framework is a step in the right direction. Significant incentives of ₹100 crore for municipal bond issuances of ₹1,000 crore and above not only widen the resource pool for corporates but also create diversified investment opportunities. A comprehensive review of FEMA (Non-Debt) Rules and restructuring of REC and PFC are additional steps forward.

Second Kartavya: Services Sector as the Gateway for Youth

The second kartavya, with its renewed emphasis on the services sector, is likely to deliver the greatest benefit to Emergent Bharat. Services contribute 54% of GDP and employ 30% of the organised workforce. A High-Powered Education to Employment and Enterprise Standing Committee will focus on driving the services sector as a core engine for Emergent Bharat.

Healthcare and wellness initiatives include new institutions for allied health professionals, developing 150,000 caregivers qualified under the National Skill Qualification Framework (NSQF), five hubs for medical value tourism, three new institutes of Ayurveda, upgrading AYUSH pharmacies and drug-testing labs, and enhancing WHO Global Traditional Medicine Centres.

The Orange Economy receives a boost with content creation labs in 15,000 secondary schools and 500 colleges, a new Institute of Design, and the Khelo India Mission. Educational infrastructure will expand through five university townships near major industrial towns and girls’ hostels in every district.

Tourism and culture initiatives include upskilling 10,000 guides, converting 15 archaeological sites into vibrant cultural destinations, and developing Buddhist circuits in the Northeast. The second kartavya will likely provide the greatest impetus to India’s youth and Emergent Bharat.

Third Kartavya: Transforming the Agrarian Economy

The third kartavya targets sectors of the agrarian economy that have been left behind. Agriculture contributes 18% to GDP, yet 50% of India’s population depends on it. Dedicated programmes will rejuvenate low-yielding orchards producing high-value products like walnuts, almonds, and pine nuts.

Initiatives include loan-linked capital subsidies in animal husbandry, support for high-value agriculture like cashew and coconut, integrated development of 500 reservoirs to strengthen fisheries, sandalwood cultivation and processing, and Bharat Vistaar—which integrates AgriStack and ICAR agricultural practices with AI systems. These measures will promote rural entrepreneurship and generate quality employment in rural and peri-urban areas.

Fiscal Prudence and Ease of Living

On fiscal matters, the target to reach a 50% debt-to-GDP ratio by 2030 continues the government’s prudent leverage policy. Currently at 56%, India’s debt-to-GDP ratio compares favourably with peer countries. The fiscal deficit continues its downward trend, with FY27 budgeted at 4.3%.

The budget also focuses on ease of living and doing business. Persons Resident Outside India (PROI) will be permitted to invest in equities of Indian listed companies through Portfolio Investment Schemes. TCS rates on overseas tour programmes have been reduced to 2%, as have rates for overseas education and medical expenses under the LRS. Tax-regulatory stability, including treating buybacks as capital gains, supports patient capital and shareholders. While the STT increase calls for short-term caution, the net effect channels more resources into productive avenues.

The Road to Viksit Bharat

For India to achieve the developed economy goals of Viksit Bharat, per capita GDP must reach approximately $18,000 from current levels of $3,000—making India a $21 trillion economy. For this dream to materialise, the lives of 1.2 billion Emergent Bharat Indians must be transformed. This gigantic feat would be unparalleled in human history: transforming over a billion people within two decades in a truly democratic environment.

This budget is a step in the right direction. In the years to come, we will need more radical ideas to emerge and be implemented.

Jai Hind!

(Ashok Hinduja, Chairman, Hinduja Group of Companies-India.)

Views are personal, and do not represent the stand of this publication.