A long-game Budget

Sitharaman calls for building capabilities to ensure growth resilience; tightens fiscal deficit target at 4.3% of GDP

- RAJESH KUMAR

The Union Budget for 2026-27, presented by Finance Minister (FM) Nirmala Sitharaman on Sunday, which was a first, had an excellent domestic macro backdrop. According to the first advance estimates, gross domestic product (GDP) in constant prices is projected to grow 7.4 per cent in the current financial year, against 6.5 per cent in 2024-25. Higher growth has been achieved with benign inflation conditions and continued fiscal consolidation. Further, as stated in the Economic Survey, India's potential growth has increased to 7 per cent from 6.5 per cent estimated three years ago.

However, there are concerns on the external front, which was also reflected in the initial paragraphs of Sitharaman's speech. "Today, we face an external environment in which trade and multilateralism are imperilled and access to resources and supply chains are disrupted," she noted. The focus, therefore, was on building capabilities, including in the services sector, to sustain growth over the medium-to-long term.

Among other things, to improve competitiveness in the services sector, the FM proposed setting up a "High-Powered 'Education to Employment and Enterprise' Standing Committee,'" which will recommend measures to make India a leader in services with a global share of 10 per cent by 2047.

To sustain the growth momentum, the FM announced measures in six key areas: Scaling up manufacturing in seven strategic and frontier sectors; rejuvenating legacy industrial sectors; creating champion micro, small and medium enterprises; sustained push to infrastructure building; ensuring long-term energy security and stability; and developing city economic regions.