Budget 2026: Strengthening the architecture of India's next growth phase

The Union Budget 2026 ties in neatly with India’s economic priorities steadily shifting from acceleration to stability and consolidation. As the economy develops, policymaking is no longer confined to driving growth alone, but to ensuring that it remains sustainable, institutionally supported and globally competitive. The Budget clearly positions itself as a blueprint for the country’s journey to Viksit Bharat, with the government signalling continuity of direction, institutional solidity and a commitment to macroeconomic stability.

 

A calibrated approach aimed at reinforcing stability and predictability has been adopted, as opposed to introducing disruptive policy shifts. With geopolitical tensions, uneven capital flows and technological shifts, the emphasis on continuity is a strategic choice. The refinement of existing frameworks and improved execution capacity gives impetus to long-term business confidence through consistency and regulatory clarity.

 

 

Public investment continues to dominate this strategy. Continued emphasis on infrastructure spending reflects its central role in crowding in private capital, generating employment opportunities and spurring regional development. The increasing reliance on asset monetisation, REITs and market-based financing shows a more mature fiscal approach focused on capital recycling rather than the perpetual expansion of public outlays.

 

The push towards domestic manufacturing further reinforces this long-term orientation. Rising investment outlays, tax rationalisation and other initiatives in areas such as semiconductors, electronics, biopharma, chemicals and critical minerals show an intent to move deeper into global value chains. The agenda here is three-dimensional — to build capacity, deepen technological depth and create supply chain reliability.

 

The proposed banking and financial services sector reforms underscore the importance of preparedness for scale. As businesses expand and investment flows grow more complex, the strength of the banking sector, non-banking financial companies (NBFCs) and capital markets has become increasingly critical. The Budget’s emphasis on reviewing financial sector frameworks, deepening bond markets and broadening investor participation shows that the government views diversified and efficient funding channels as key to long-term economic expansion.

 

One of the most notable shifts is the emphasis on certainty and dispute reduction. The expansion of safe harbour regimes, clearer tax treatment for global services, cloud infrastructure and bonded-zone operations, and the rollout of a new Income Tax Act signal a move towards simplified compliance and reduced interpretational risk. These changes matter far more to investors than short-term tax concessions. Predictability lowers the cost of capital, accelerates decision-making and improves execution timelines.

 

The Budget also actively encourages greater overseas participation and eases cross-border transactions, while simultaneously strengthening compliance, monitoring and governance frameworks. This balance indicates a conscious effort to attract global capital, technology and talent, but within a system that is trust-based and accountable. Technology, particularly artificial intelligence and digital infrastructure, has emerged as a horizontal enabler across these initiatives. Whether in tax administration, customs, logistics or financial supervision, the use of technology has been positioned as a tool to improve quality and institutional capacity.

 

Overall, Budget 2026 does not seek to fundamentally redefine India’s economic direction. Instead, it provides three ‘kartavyas’ to pave the path towards excellence — accelerated and sustained economic growth; capacity-building to fulfil aspirations; and collective growth for the nation. India must also remain deeply integrated with global markets, exporting more and attracting stable long-term investment.

 

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Haigreve Khaitan is senior partner at Khaitan & Co. 

Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper