C.A. Sandip Bhandare breaks down Budget 2026-27 which could mark a decisive step for India, if executed well
If there is one document that crores of Indians wait eagerly for, it is the Union Budget presented on 1st February each year. Taxpayers, especially salaried individuals, expect an increase in the basic exemption limit and standard deduction. The Indian entrepreneurs look for various incentives and schemes that encouraging manufacturing and business expansion. The investors watch for the Sensex and Nifty to achieve new highs. The tax professionals are dreadful of the changes that may affect their planning and compliances requirements. The Economic and business magazines look forward to dissecting every paragraph, word, comma and the full stops. Finally, the
‘Aam Janata’ hopes for populist measures, sometimes called ‘rewadis.’ The Finance Minister Nirmala Sitharaman presented her 9th consecutive Budget and the first from Kartavya Bhavan on Sunday, 1st February 2026. The Budget had something for everyone. However, the stock market reaction was adverse, with both Sensex and Nifty declining sharply on the day.
Context and Background
A budget is never a standalone document but has to be viewed both in vertical context and horizontal context. The
vertical context includes longterm fiscal goals and reforms such as GST, the Insolvency and Bankruptcy Code, digital
governance platforms, Direct Benefit Transfers, the National Infrastructure Pipeline, and the Labour Codes. These
reforms shape policy direction. The horizontal context this year was quite wide in scope. The Ukraine–Russia war and global trade tensions added uncertainty. Tariff measures by the Trump administration affected global trade flows. China’s restrictions on critical minerals and pharmaceutical ingredients created supply concerns. Regional instability and drone warfare required higher defence allocations. Another context point was the evolution of Artificial Intelligence (AI) and the impact it would have on the sovereignty of the nation as well as the disruption in the existing jobs and the simultaneous creation of job opportunities in cutting-edge technologies. Considering all this, our Finance Minister has done a very good job to remain focused on the long-term path and not be deviated on account of current disruptions.
Fiscal Prudence
Fiscal prudence remains the anchor of Budget 2026. The government has set a fiscal deficit target of 4.3% of GDP for 2026–27, an improvement over the current year, while the debt-to-GDP ratio is projected
to decline to 55.6%. This consolidation is notable given the 11% increase in capital expenditure to `12.2 lakh crore. This gradual consolidation balances growth needs with debt sustainability and inflation management.
Tourism
The Budget contains a number of proposals in respect of tourism. The government desires to promote India as
a tourism place for heritage and cultural tourism. Further the government also desires that India becomes the first destination in the minds of tourists be it for meetings or events or weddings or conferences. There is also a plan to promote sea planes. A national destination digital knowledge grid is planned for creating jobs for local
researchers, historians, content creators and technology partners, which can help the sector to digitally document all places of significance. The Government also wants to develop tracking and hiking experience, promote temple tourism as also bird watching trails. While Goa has not been specifically mentioned in these multiple proposals, the
government of Goa can and should take necessary steps to align itself with the Budget proposals. Chorao Island is very well known for Dr. Salim Ali Bird Sanctuary. Places like Ponda in South Goa and Mulgao in North Goa are already known as temple towns. Goa has a rich cultural heritage and is also known as a wedding destination.
Our rivers and the seas provide us with good opportunities for starting Sea planes. Goa can therefore be a big beneficiary of the current Budget.
MSME Focus
MSME have been a backbone of the Indian Manufacturing Economy as well as of employment. The twin issues before the MSMEs have been in terms of growth of business and liquidity. The Budget has measures to address both these issues. It has marked `10,000 crores towards SME Growth Fund to create future champions. It is planned to provide equity support and risk capital to promising MSME. Addressing a long-standing structural constraint, the government has mandated Central Public Sector Enterprises to route MSME payments through TReDS. Combined with its integration with the Government e-Marketplace and credit guarantees under CGTMSE, this move promises faster, cheaper access to working capital. The proposal to securitize TReDS receivables could further deepen liquidity
through secondary markets. The introduction of ‘Corporate Mitras’ in Tier-II and Tier- III cities attempts to address compliance challenges that often limit MSME formalization and scale, particularly outside major urban centers.
Agriculture and Rural Transformation
Agriculture diversification is a key focus. High-value crops such as coconut, cashew, cocoa, and sandalwood will be promoted, especially in coastal states. The Coconut Promotion Scheme aims to rejuvenate plantations, while dedicated programmes for cashew and cocoa seek to transform India into a premium global brand by 2030. Goan coconut and cashew farmers can definitely benefit from these proposals.
Artificial Intelligence and Technology
The Budget is offering a long term tax holiday (till 2047) for foreign cloud providers to setup AI data centers in India. Further the budget purposes to set up a high powered committee ‘Education to Employment and Enterprise” to assess the impact of emerging tech including AI on jobs and skills requirements and recommends measures to embed AI in training and employment. The Budget has also announced BHARAT VISTAAR which is a multilingual AI platform that can integrate with agricultural digital system to provide better and more localized data to farmers on crops choices, Inputs and Productivities.
Infrastructure Push
Infrastructure remains the centrepiece of India’s growth model and has grown from `2 lakh crore in FY2014-15 to
`12.2 lakh crore in FY2026-27 − a six fold increase in a decade. Infrastructure spending has high multiplier effects, creating jobs, lowering transaction costs, and attracting private capital. A record capital expenditure of `2.93 lakh crore has been given to Railways to improve freight movement, reduce logistics costs, decongest high-density
corridors, and enhance passenger experience through modern trains and redeveloped stations.
Education and Employment
The Government purposes to bring education and employment together. One of the ways is to set up educational
institutions near industrial corridors so that industry could hand hold and guide the type of education and skills which are needed for creating employment. The total education budget has also been significantly increased to `1.39 lakhs cores which is an increase of 8.27%. Further `100 Crores have been also allocated for centers of excellence in Artificial Intelligence for education. Proposal to set up AVGC labs in 15,000 schools and 500 colleges and a new National Institute of Design will strengthen India’s creative industries.
Reducing Import Dependence
A central pillar of the Budget is manufacturing, particularly in strategic and frontier sectors, reflecting India’s ambition to de-risk from China-centric supply chains and strengthen Atmanirbhar Bharat. Rare earth corridors will be developed in mineral-rich states, and three chemical parks will be supported through a challenge-based model to reduce import dependence on critical chemicals. A major new initiative is Biopharma SHAKTI, with an outlay of `10,000 crore over five years to build India as a global biologics and bio similars manufacturing hub. The plan includes new and upgraded NIPER institutions, over 1,000 clinical trial sites, and regulatory capacity strengthening. The government announced India Semiconductor Mission (ISM) 2.0, focusing on fullstack domestic IP, equipment manufacturing, and supply chain fortification. The Electronics Components Manufacturing Scheme outlay
has been increased to `40,000 crore, reflecting strong industry response.
Income Tax
While there is no additional tax relief offered in the current Budget for the common man, one must keep in mind that
during the previous year the Budget had given a tax rebate for incomes earned (except capital gains) up to `12 lakhs.
For Goan families who earn income from business and other sources and are governed by the provisions of section 5A of Income Tax Act, family income up to `24 lakhs will not carry any tax burden. The current Budget is the first budget after introduction of new Income Tax Act 2025 and therefore the stress in the Budget is more on
simplification of the language, clarification on disputed issues and staggering of timelines for submission of returns including revised and updated returns.
Defence and Strategic Autonomy
In a decisive push to strengthen national security and focus on indigenous defence production, the Union Budget has allocated a record `7.85 lakh crore to defence services, marking the highest-ever outlay for the sector. Defence spending now constitutes 14.67% of the Union government’s total expenditure, the highest among all Ministries. By promoting a strong industrial policy, self reliance in technology and gaining access to critical minerals, the nation is
reinforcing its national security framework.
Conclusion
Budget 2026 is not a populist budget; it is a structural and reformist roadmap that blends fiscal discipline with
ambitious public investment. By doubling down on manufacturing, infrastructure, services, and human capital, while simplifying taxation and promoting inclusion, the government signals continuity in India’s reform trajectory.
In the long run, the success of this Budget will hinge on execution; especially in manufacturing localisation, MSME financing, and AI-driven skilling. If implemented effectively, Budget 2026 could mark a decisive step toward India’s transformation into a globally competitive, inclusive, and resilient economy on its path to Viksit Bharat 2047.
The writer is a senior Chartered Accountant and former President of Goa Chamber of Commerce & Industry
