India’s Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026–27 in the Lok Sabha on February 1 at 11 am IST. This will mark the first time the Budget speech is scheduled on a Sunday. It is also her ninth consecutive Budget and the third full Budget of the National Democratic Alliance (NDA) 3.0 government.
The presentation comes amid global economic uncertainty, trade tensions and rising tariff pressures initiated by the United States. This backdrop makes the Budget an important policy signal for India’s medium-term growth and fiscal strategy.
Economic Growth and Revenue Outlook
India is forecast to remain one of the fastest-growing major economies in the world. Official projections suggest growth of around 7.3–7.4 per cent in the current fiscal year, supported by strong domestic demand and resilient services and manufacturing sectors.
However, nominal GDP growth is expected to moderate. Weak nominal growth can constrain revenue collection, putting pressure on the government’s fiscal planning. Economic watchers will be watching how the government balances fiscal consolidation with growth-boosting spending.
The government is also expected to continue its glide path toward a lower fiscal deficit and debt-to-GDP ratio. Reports indicate a possible fiscal deficit target of 4.4 per cent of GDP for FY27, with a gradual reduction in the coming years.
Tax Relief and Personal Income Tax
Taxpayers are entering budget week with high hopes after the 2025 Budget expanded the income tax exemption threshold under the new regime. Analysts now expect further tweaks to the tax brackets and deductions to benefit salaried individuals and middle-income earners.
Expectations include higher standard deductions, rationalisation of tax rates and simpler compliance rules. These moves may help boost consumer spending at a time when domestic demand is a key growth driver.
NRIs and Overseas Income Rules
For non-resident Indians (NRIs), clarity on the taxation of overseas income and smoother repatriation norms remain top priorities. India continues to receive strong remittance inflows, exceeding $125 billion annually, which supports foreign exchange stability.
Market watchers also want clearer rules on capital gains taxes and reduced procedural hurdles for foreign investors and returning NRIs. This could stimulate investment flows into equities, real estate and alternative assets.
Markets and Investment Signals
Equity markets are watching for signs of policy continuity and predictable regulatory frameworks. With benchmark indices such as the Sensex correcting from recent highs, investors want assurance that fiscal discipline and growth strategies remain intact.
Key areas of interest include export incentives, customs duty rationalisation to cushion the impact of potential U.S. tariff actions, and support for manufacturing and logistics. Experts also expect measures to deepen bond markets, expand retail participation, and promote long-term savings instruments.
Startups and Innovation
India’s startup ecosystem has pushed for stronger incentives in areas such as deep tech, artificial intelligence (AI) and R&D. Industry leaders are calling for enhanced R&D tax credits, simplified ESOP rules and reduced infrastructure costs to retain and attract global talent.
There is also demand for clearer GST treatment of software as a service (SaaS) exports and easier access to domestic capital, which could spur growth in early-stage tech companies.
Infrastructure and Urban Development
Infrastructure spending remains a core theme. Experts say improvements in project execution and long-term asset productivity are essential. Real estate developers are seeking higher allocations to urban housing programmes and revisions to affordable housing thresholds to match rising costs.
Policy makers are expected to focus on urban connectivity, transport networks and tier-2 city development to support broader economic expansion.
Energy, Electric Vehicles and Sustainability
Reducing import dependence and boosting energy security are likely Budget priorities. Industry voices want rationalised taxes in oil and gas, transport fuels under GST and more support for biofuels, electric vehicles (EVs) and renewables.
The EV sector is looking for stronger incentives to scale domestic manufacturing and lower costs while aligning with climate goals.
Agriculture and Rural Economy
The agricultural sector remains vital, employing nearly half the workforce. Stakeholders in rural India are calling for faster rollout of credit schemes, productivity missions and seed development programmes to stabilize incomes and strengthen consumption demand.
What Markets Will Watch Closely
Beyond broad announcements, investors will scrutinise the fiscal deficit roadmap, borrowing plans and capital expenditure allocations. Policy continuity, credible consolidation and targeted growth spending are likely to be key benchmarks for markets and rating agencies as the economy navigates external risks and internal opportunities.
