FY27 Budget to boost manufacturing, infra sectors: Crisil Intelligence

The Union Budget for the financial year 2026-27 keeps the long-term vision for the economy at its forefront, according to a report by Crisil Intelligence.

 

The report noted that the government focused on boosting growth through higher infrastructure spending and welfare support after Covid-19. However, as the economy has stabilised, the need for short-term support has reduced. The Budget now focuses more on reforms, ease of doing business and inclusive growth, it said.

 

Crisil Intelligence said that the Budget aims to strengthen both manufacturing and services to support the next phase of growth. Progress on fiscal consolidation and a move towards medium-term debt targets have also given the government room to think beyond immediate challenges.

 

How will Budget 2026 impact different sectors?

According to the report, the Budget will have a positive impact on manufacturing, infrastructure, textiles, pharma and energy. The impact on agriculture and allied sectors, chemicals, capital goods, tourism, and rare earths is expected to be largely neutral.

 

Noting that agriculture remains crucial for the rural economy, employing around 55 per cent of the population, the report said that the Budget focuses on improving farm productivity, quality, climate resilience and stable farmer incomes.

Infrastructure biggest winner  

Infrastructure is a key winner in the Budget, Crisil Intelligence said. Capital spending for FY27 is set to rise by 17.7 per cent, mainly for roads, railways, waterways and aviation. About 53 per cent of infrastructure spending is earmarked for transport to reduce logistics costs, improve efficiency and support the goal of raising manufacturing’s share in gross domestic product (GDP).

 

The Budget will also strengthen support for clean and secure energy, the report said, adding that it backs solar, wind, power distribution, green hydrogen, energy storage and carbon capture, while also supporting grid integration and lower manufacturing costs. This approach supports India’s target of adding 500 GW of renewable energy by 2030.

 

Manufacturing continues to contribute just 16-17 per cent of GDP, well below global peers. The budget focuses on scaling up key sectors, boosting value addition and supporting exports, said Crisil. Measures include direct support for sectors like textiles and pharmaceuticals, backing emerging areas such as electronics and critical minerals.

 

The report noted that even as the Budget outlines several steps for promoting and developing thematic tourism, the implementation in the past has been challenging.

Growth outlook

According to the report, real GDP growth for the current financial year is expected to rise to 7.4 per cent, helped by higher consumption driven by tax relief and lower GST rates.

 

However, nominal GDP growth is seen slowing to 8 per cent from 9.8 per cent, which puts pressure on tax collections. Despite this, the government met its fiscal deficit target of 4.4 per cent of GDP.

 

The report said that the trend is expected to reverse in the next financial year. Nominal GDP growth could rise to 10 per cent, while real GDP growth is likely to moderate to 6.7 per cent, still slightly above pre-pandemic levels.