Union Budget 2026-27: A Kartavya-led push to sustain growth momentum

Budget FY27 bets on fiscal discipline, public investment and technology-led reforms to sustain growth and build long-term economic resilience

In the FY27 Union Budget, Finance Minister Nirmala Sitharaman has prioritised economic growth, emphasising comprehensive reforms, fiscal prudence, and sustained public investment. Amid evolving global dynamics marked by fluctuations in trade, capital flows, and supply chains due to geopolitical and economic uncertainties, the Budget underscores a deliberate strategy to uphold growth momentum while fortifying India’s long-term economic resilience. 

Rather than relying on immediate fiscal stimulus, the government remains committed to fiscal consolidation, directing resources towards infrastructure, manufacturing, employment generation, and capacity enhancement. This strategic approach maintains macroeconomic stability, reinforces policy credibility, and fosters conducive conditions for private sector investment, an increasingly crucial factor given current global volatility. 

By decisive action, the government demonstrates its commitment to enduring structural reforms, monetary stability, and governance grounded in trust, all centred on inclusive growth. This duty-driven philosophy aligns with the Viksit Bharat vision, translating aspirations into tangible progress and unlocking potential by 2047. 

Ensuring India’s growth trajectory 

The Budget outlines six priority areas that form an integrated framework for improving efficiency, technology adoption, and global competitiveness. Key initiatives include expanding manufacturing in strategic sectors, developing ‘Champion MSMEs’, accelerating infrastructure projects, and enhancing security. These establish an inclusive, forward-looking growth agenda. 

The India Semiconductor Mission 2.0, following the initial success of ISM 1.0, marks a significant step toward building comprehensive domestic capabilities. With a proposed outlay of ₹40,000 crore, this recognises semiconductors as essential to modern infrastructure, secure communications, and advanced computing. Strengthening this domain is vital for reducing import dependency, managing supply chain risks, and positioning India as a leading global semiconductor hub. Similarly, the introduction of dedicated rare earth corridors across mineral-rich states reflects strategic foresight. As critical minerals become pivotal for industrial competitiveness, this promises to enhance manufacturing, support clean energy transitions, and bolster supply security for advanced technologies. 

Technology as a catalyst for growth 

India’s emergence as a global technology centre is further supported by proposed tax incentives for foreign entities operating cloud services through Indian data centres until 2047. This underlines India’s goal to be a trusted digital and data infrastructure provider. In parallel, emphasis on AI and emerging technologies positions innovation at the heart of productivity, governance, and economic advancement. 

People-centric economic development 

The Budget advances a people-centric growth model that extends beyond welfare to promote education, skilling, productivity and participation. Targeted programs for women entrepreneurs, youth skill development, farmers, and persons with disabilities strengthen the social fabric. Initiatives in agricultural value chains, AI-driven advisory, and assistive technologies are poised to broaden workforce engagement and foster local value creation. 

Fiscal prudence as a driver of growth 

Public capital expenditure has seen substantial growth, rising from ₹2 trillion in FY15 to ₹11.2 trillion in BE FY26, with a further increase anticipated for FY27. Continued focus on infrastructure development, particularly in Tier-II and Tier-III cities, is expected to bolster medium-term growth prospects. Adherence to the outlined fiscal consolidation path — with the deficit projected at 4.3 per cent for FY27 reinforces confidence in India’s macroeconomic management. 

Collective mission for sustainable growth 

Ultimately, Budget 2026 makes a clear statement: Sustaining India’s growth momentum will now depend equally on intent as on execution. The emphasis has decisively now shifted to businesses to respond with investment, innovation and job creation, particularly across MSMEs, manufacturing and digital infrastructure. If followed through with consistency, this Budget could define the shift from potential-driven growth to performance-led outcomes, positioning India not just as a fast-growing economy, but as a structurally agile and strong one. 

The writer is CEO, KPMG