Budget sets the course for making India competitive

The emphasis shifts away from episodic interventions toward the steady accumulation of capability with lower costs through productivity, buffers through diversification, and credibility through consistency

- Amit Kapoor

Protectionism eventually trades growth for fragility; raising productivity can sustain export resilience and macroeconomic stability simultaneously.

(AFP)

Budget 2026-27 elevates competitiveness, rather than welfare, stimulus, or even growth, to a kartavya (duty). ‘In doing so, itsignals a quiet but consequential shift in how India understands its economic challenge.

Growth, the budget implies, is no longer the hard part; remaining competitive ina fractured global economyis. This shift reflects a global environment that has become less appreciative of macroeconomic performance alone. Tradeis increasingly shaped by geopolitics rather than efficiency, supply chains are being reconfigured under strategic pressure, and capital flows have grown more volatile and selective. In such a world, growth alone no longer guarantees stability or insulation.

India enters this phase with notable strengths —real growth near 7%, inflation anchored, banks healthy, and the Union fiscal deficit contained at 4.8% of GDP. Public capital expenditure has risen from 22 lakh crore in FY15 to 212.2 lakh crore in FY27, and credit ratings have improved. Yetcapital remains cautious and the rupee fragile. India, as the EconomicSurvey observes, is “punching belowits weight” in global markets. The reason is structural. As a savings-deficient economy that runs a current account deficit in normal growth phases, India depends on foreign capital to support investment. The Survey highlights thatthis makes the economy more sensitive to global capital flowsand limits the scope for sustained currency stability. Services exports, especially IT and business services, have provided an important buffer by growing faster than merchandise exports, butitis now evidentthat services alone cannotanchor long-term external resilience or raise economy-wide productivity.