What does Budget 2026 have for common man & what more could have been done?

Budget 2026 balances fiscal discipline with capex-led growth. Vinay Jaising explains what it means for the common man, taxes, states, and what more could have been done by FM Nirmala Sitharaman

The Union Budget for financial year 2026-27 (FY27) has continued its balancing act between maintaining fiscal prudence and creating support on the capex and growth front. The reduction estimated in gross fiscal deficit of 4.3 per cent for FY2027 is down 5 bps Y-o-Y and 45 bps over two years -- a commendable act suggesting the burden of fiscal deficit is waning away.  

 

The near-term concern has come in the form of an increase in securities transaction tax (STT) both, for Futures by 150 per cent to 0.05 per cent, and on Options by 50 per cent to 0.15 per cent. This primarily has emanated from the government wanting curb specialty activities. However, it may hamper short term sentiment which are already weak due to the global turmoil.    

 

 

Path to fiscal prudence is laid out

The Finance Minister reiterated the path to maintaining fiscal discipline and lowering India's central government debt-to-GDP to around 50 per cent by FY31. In FY26, it was 56.1 per cent of GDP, which has been estimated to fall to 55.6 per cent in FY27.

 

Key takeaways from Budget 2026

The measures that are expected to have implications for different industries in the budget include a) A higher capex of 12 per cent with Defence budget increasing 22 per cent and an increase in loan for capex to states by an impressive 33 per cent. Doubling of PLI incentive from ₹20,000 crore to ₹40,000 crore for Electronics Components Manufacturing Scheme (EMS) in the next four years is expected to support India for becoming a strong manufacturing hub for the world  b) Tax holidays for Foreign players providing global cloud services using Indian data centre service till 2047; c) Buyback now taxed in the hands of the investor in line with capital gain tax. Corporate promoters would, however, have to pay a higher rate of 22.5 per cent and 30 per cent for non-corporate promoters.

 

The overall fiscal maths seems realistic with corporate tax expected to grow at 11 per cent and income tax at 13 per cent. Indirect tax is estimated to increase by 2 per cent despite a 3 per cent reduction in GST due to the lowering of the duties, partly attributable to increase in Excise duty pertaining to tobacco and other select goods.

 

RBI dividends have been robust in FY26 and expected to maintain in FY27. The budgetary divestment proceeds of ₹80,000 crore seems optimistic.

 

What does this mean to the common man?

The government has made various reforms in the last 12 months, which includes tax reduction in the last budget, reduction of GST during the year, implementing the labour reforms of increasing gratuity. We expect them to continue their path of growth. New age industries like semiconductor, data centres may have positive influence due to tax provisions and increase in capex.

 

What does this mean to States?  

The States have been allotted an increased share of the budget for capex, of 33 per cent, cumulating to ₹2 trillion. This allocation may support States to increase their capex.

 

What could have been done more in the budget?

There was no reduction in income tax for individuals or the corporates to increase their consumption rate. Despite its mass appeal, such a measure may not have given India a way to the gliding path of reduction in fiscal deficit. The budget lacked rural consumption booster, which has grown by only 4 per cent.

 

However,  the budget is not the only day when the government announces reforms. We have witnessed over the last few years that the biggest reforms of corporate tax cuts, GST restructuring as well as excise duty hikes came during the year.

   

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Disclaimer: Vinay Jaising is CIO and Head of Equity Advisory at ASK Private Wealth. The opinion expressed above are personal views of the author. The views of the author may also differ from the views expressed by any other author of ASK Asset and Wealth Management.