Union Budget 2026-27: From Ambition To Execution In A Volatile Global Economy

As India prepares for the Union Budget 2026-27, the global economic environment remains unsettled. Persistent geopolitical tensions, supply-chain realignments, and uncertain trade prospects are shaping fiscal choices worldwide. Against this backdrop, India’s budgetary strategy is expected to be more rigorous, disciplined, and execution-oriented than in previous years.

The Union Budget 2025-26 was already comprehensive and forward-looking, laying out an ambitious framework across agriculture, MSMEs, infrastructure, innovation, exports, and social development. With most major policy levers already announced, the challenge for Budget 2026-27 is not the breadth of initiatives, but their depth of delivery and measurable impact.

A key expectation is the continued prioritisation of capital expenditure, even as fiscal consolidation remains on track. Public capex has emerged as the principal growth engine in recent years, crowding in private investment and strengthening long-term productive capacity. However, going forward, emphasis must shift from capex quantum to capex quality, ensuring timely execution, asset creation, and effective monetisation. Introducing clear metrics such as leverage ratios (private investment per rupee of public spending), project completion timelines, and operations-and-maintenance sustainability would significantly enhance the credibility of public investment.

In agriculture, Budget 2026-27 is likely to sharpen its focus on productivity, resilience, and income stability, rather than expanding subsidies. Improving irrigation efficiency, promoting crop diversification, strengthening post-harvest infrastructure, and deepening institutional credit are critical to raising farm incomes and supporting rural consumption. Importantly, agriculture policy must now move decisively toward outcome-based governance, with transparent district-level monitoring and publicly available dashboards tracking yields, storage creation, diversification, and credit penetration.

The MSME sector, which anchors employment and manufacturing growth, also requires a transition from broad-based support to targeted and accountable delivery. While recent budgets have expanded access to credit and revised classification thresholds, Budget 2026-27 may focus on precision, ensuring that support reaches new-to-credit enterprises, exporters, and labour-intensive clusters. Enhanced transparency through sector- and district-wise reporting of credit flow, utilisation, and early stress indicators would allow policymakers to recalibrate interventions swiftly and effectively.

On the demand side, reviving private consumption remains an important challenge. Despite sustained policy efforts, consumption growth has not reached its potential, with signs of deflationary pressures in certain segments of the economy. Rather than resorting to fiscally costly giveaways, the Budget may opt for structural fine-tuning of direct taxation, simplification of compliance, faster refunds, and reduced litigation. These measures can improve disposable incomes and household confidence while preserving fiscal discipline.

Exports are expected to feature prominently in Budget 2026-27, especially as India seeks to integrate more deeply into global supply chains. The emphasis is likely to shift from generic incentives to sector-specific export promotion, backed by export credit facilitation, logistics efficiency, and faster resolution of non-tariff barriers. Aligning export policy with domestic manufacturing strengths and technology adoption will be crucial for sustaining competitiveness.

Perhaps the most defining expectation from Budget 2026-27 is a clear shift from announcements to execution. Flagship initiatives such as the Urban Challenge Fund, the BharatTradeNet digital trade platform, and the nuclear energy mission now require clearly articulated roadmaps, covering legislative changes, pilot projects, timelines, and measurable outcomes. Publishing execution milestones and progress dashboards for these initiatives would reinforce investor confidence and policy credibility.

In sum, Union Budget 2026-27 is expected to consolidate India’s growth strategy by combining fiscal prudence with execution excellence. By prioritising outcomes, accountability, and productivity across sectors, the Budget can ensure that the ambitious policy architecture built over recent years translates into durable, inclusive, and globally competitive growth.

(By Sunita Ramnathkar, President IMC, Mumbai)