Union Budget 2026 expected to balance growth push and fiscal discipline amid global uncertainty
The Union Budget for FY 2026-27 is expected to focus on sustaining India’s economic growth while maintaining fiscal discipline, even as global geopolitical and geo-economic uncertainties continue to weigh on the outlook.
The Union Budget for FY 2026-27, to be presented on February 1, 2026, is expected to walk a tightrope between boosting economic growth and preserving fiscal discipline amid persistent global geopolitical and geo-economic uncertainties, according to market expert Sharad Kohli.
Kohli said India is currently witnessing a rare “Goldilocks moment”, driven by low inflation and robust economic activity, with GDP growth projected to exceed 7 per cent. He pointed out that this outlook has found support from global institutions, including the IMF, the World Bank and international rating agencies, even as global challenges, particularly from the US, continue to weigh on the broader economic landscape.
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“The budget is coming at a time when India is in a strong domestic position, but global uncertainties remain elevated. The government is expected to factor in these risks while charting its fiscal roadmap,” Kohli said.
He said the upcoming budget is likely to maintain its focus on growth-led spending without compromising fiscal prudence, highlighting that the country’s fiscal deficit has remained under control over the past few years.
Kohli expects infrastructure development to remain a central pillar of government spending, along with a renewed thrust on manufacturing as India seeks to leverage opportunities arising from China’s waning dominance in the sector. Agriculture, he said, is also likely to stay in focus, with possible measures related to irrigation, fertilisers, seeds and minimum support prices.
According to him, sectors such as railways, civil aviation and research and development are expected to receive continued policy backing. Green energy and rare earth minerals may gain increased attention in line with India’s energy transition ambitions, while startups and space technology could also emerge as priority areas.
On the tax front, Kohli said major changes are unlikely, given that several reforms were already introduced in the previous budget. However, limited tweaks to standard deduction, TDS and TCS, as well as steps to smoothen the shift to the new Income Tax Act from April 1, 2026, remain possible.
He added that as the government pursues its long-term vision of Viksit Bharat 2047, the Budget will be required to accelerate growth while ensuring macroeconomic stability remains intact.
Published: 24 Jan 2026, 06:33 pm IST
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