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New Delhi | February 1, 2026 (Preview)
As Finance Minister prepares to present the Union Budget 2026 on February 1, expectations are running high across industry and households for a policy roadmap that balances fiscal discipline with growth acceleration.
With India navigating global economic uncertainty, volatile commodity prices and slowing demand in key export markets, Budget 2026 is widely expected to prioritise capital expenditure, job creation and middle-class relief, while maintaining a steady path towards fiscal consolidation.
Capex to Remain the Cornerstone
Infrastructure spending is likely to remain the government’s primary growth lever. Analysts expect sustained allocations for roads, railways, urban infrastructure, renewable energy and digital connectivity, reinforcing the multiplier effect on employment and private investment.
A continued focus on logistics efficiency and industrial corridors could further support India’s manufacturing ambitions under the Make in India and PLI frameworks.
Income Tax Relief in Focus
With inflation impacting household budgets, the middle class is watching closely for income tax relief. Market participants expect rationalisation of tax slabs, higher standard deduction or incentives to boost consumption, particularly in housing, automobiles and consumer goods.
Any targeted tax relief is seen as a catalyst for reviving discretionary spending without significantly straining government finances.
Fiscal Discipline Under Watch
Despite spending pressures, the government is expected to stay committed to fiscal consolidation, with a calibrated reduction in the fiscal deficit. Economists believe a credible deficit glide path will help sustain investor confidence and keep borrowing costs under control.
Sectoral Expectations
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Energy & Green Transition: Higher allocations for renewable energy, green hydrogen and EV infrastructure
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Manufacturing & MSMEs: Credit support, easier compliance and export incentives
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Digital Economy: Push for AI, data centres and telecom infrastructure
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Agriculture & Rural Economy: Targeted welfare and productivity-linked schemes
Market Outlook
Equity markets are expected to remain volatile ahead of the Budget, with investors tracking announcements on taxation, capex and reforms. A growth-oriented yet fiscally prudent Budget could provide a positive trigger for markets in the medium term.
As the Finance Minister rises to present Budget 2026, the focus will be on whether the government can deliver a blueprint that supports growth, protects vulnerable sections and strengthens India’s long-term economic resilience.