STABILITY TRUMPS SPECTACLE

BUDGET GIVES A LEG-UP TO MANUFACTURING WITH SUPPORT FOR 7 STRATEGIC SECTORS GOVT CAPEX JUMPS TO ₹12.2 LAKH CRORE

- KG NARENDRANATH

THE BUDGET FOR 2026-27 bears clear evidence of a widening resource gap for the government, even as it remains ambitious in positioning the State as the principal exogenous driver of growth.

In the short to medium term, the government will continue to see itself as the architect of structural reform and an enabler of job creation, but the constraints on public spending are becoming more apparent.

Presenting her ninth consecutive Budget in Parliament on Sunday, Finance Minister Nirmala Sitharaman soft-pedalled on fiscal consolidation as tax revenues and buoyancy faltered, yet maintained that her foremost "kartavya" (duty) was to accelerate and sustain economic growth.

The Budget, however, fell short of addressing the immediate concern of persistent capital outflows — a reflection of extraordinary external headwinds and a key factor behind the rupee’s undervaluation.

The Economic Survey 2025-26 had flagged this vulnerability, warning of the premium India must pay to attract foreign capital given its low domestic savings rate, and argued strongly for policies that could deliver “sustained external surpluses”.

Sitharaman broadly echoed the Survey’s prescriptions, announcing new schemes and reinforcing existing ones to revive India’s sluggish manufacturing base, with a focus on “seven strategic and frontier sectors”. These include textiles, capital goods, semiconductors, rare earths, electronic components and biopharma, with additional budgetary allocations for the latter two.