New Delhi: The Union Budget 2026 is just around the corner, with Finance Minister Nirmala Sitharaman set to present it on February 1. Ahead of the announcement, expectations are high across industries, sectors, and among taxpayers for measures that drive growth, provide relief, and support sustainable development.

Experts, industry bodies, and academicians have outlined key priorities for the upcoming budget.

Union Budget 2026: Will the middle class get more income tax relief?
While the new Income Tax Act, 2025, comes into effect on April 1, 2026, experts do not expect major changes to tax slabs. However, there is a strong demand for:

  • Raising the standard deduction from ₹75,000 to ₹1 lakh.
  • Increasing the threshold for the 30% tax slab.
  • Rationalisation of TDS and capital gains provisions.
  • Higher Section 80C limits and clarity on deductions for health insurance under Section 80D, especially for senior citizens.

Experts say the 2025 Budget, which made income up to ₹12 lakh effectively tax-free under the new regime, could be further fine-tuned to alleviate middle-class inflation pressures.

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What to expect in Union Budget 2026?

Exports & Trade
With the rupee at record lows and US tariffs looming, stakeholders expect incentives for export-import substitution, collateral guarantees for small exporters, and funding support for BharatTradeNet. Targeted support is anticipated for labour-intensive sectors like textiles, leather, and toys.

Electronics & Technology
Electronics and semiconductor industries are hoping for GST rationalisation, temporary duty relief for critical components, and measures to boost domestic manufacturing and exports. MSMEs and startups anticipate incentives for cloud services, AI, SaaS, and cybersecurity adoption.

Renewable Energy & Green Economy
Renewable energy firms expect higher allocations, policy clarity, PLI scheme expansion, and support for grid infrastructure under PM-KUSUM and PM Surya Ghar. Smart meter deployment and climate-focused financing are also on the wishlist.

NBFCs & Financial Sector
NBFCs are seeking smoother approvals, better refinancing access, and support for MSME credit flows. Market participants hope for STT reduction and simplification of capital gains taxation to encourage investments, especially for retail investors.

Electric Vehicles (EVs)
Industry bodies are pushing for uniform GST at 5% on all EV components, subsidies for electric motorcycles, and incentives across the EV value chain, from cell manufacturing to charging infrastructure.

Infrastructure, Housing & Logistics
Budget watchers expect rationalisation of affordable housing criteria, focus on green construction, port connectivity, freight corridors, and rollout of Multi-Modal Logistics Parks under PM Gati Shakti.

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Healthcare & Education
The budget may enhance spending on maternal, child, and women’s healthcare, preventive care, diagnostics, and tech-driven healthcare solutions. Education sector expectations include digital classroom infrastructure, teacher training, GST rationalisation on textbooks and digital content, and skilling initiatives through CSR funds.

Defence & Security
The defence sector anticipates stronger support for indigenous manufacturing, faster conversion of DAC approvals, and investment in MRO infrastructure and testing facilities.

FMCG & Restaurant Sector
FMCG players expect continuation of 0% GST on wheat-based products, support for farm-based processing, and sector-specific relief for the restaurant industry, including GST rationalisation for F&B.

What do economists expect from Union Budget 2026?

As the Union Budget 2026 approaches, economists are weighing in on the government's priorities and potential announcements. Osmania University Professor Satish Raikindi also shared his expectations.

While speaking to ANI, Raikindi stated that the government of India is likely to prioritise job creation, agricultural development, inclusive manufacturing, and digital transformation. These sectors are expected to drive sustainable growth and development across the country

He further stated that the budget might focus on several critical areas, including defence, infrastructure development, such as railways, MSMEs, rural development, and the green economy. These areas are expected to receive significant attention and investment, driving growth and development. He also believes the government may announce measures to address these concerns and provide relief to the common man.

Raikindi said, "The present Indian economy plays a vital role, and for sustainable growth, we can look forward with optimism. The government of India is prioritising areas such as job creation, agricultural development, inclusive manufacturing, digital transformation, rural-urban integration, and the green economy. By focusing on these priority sectors, India can achieve sustainable growth nationwide. Every common man is looking forward to relief in tax slabs, affordable housing, healthcare, employment and education. This time, the focus of the Budget might be on defence, infrastructural development such as railway, MSMEs, rural development and green economy."

Osmania University Professor M Ramulu also shared his expectations and concerns regarding the upcoming Union Budget 2026. According to Ramulu, the current investment trend in India is tilted towards capital-intensive industries, particularly in the industrial and manufacturing sectors, where growth rates and profits are high.

Ramulu emphasised the need for investments to percolate to small sectors such as startups, small-scale industries, and area-based industries. He stated that most investments are currently concentrated in capital cities and metropolitan areas, leading to environmental issues, pollution, and excessive population density.

While speaking to ANI, Prof Ramulu said, "Most capital is flowing into capital-intensive industries where growth rates and profits are high, particularly in industrial and manufacturing sectors. These investments should also percolate to small sectors such as startups, small-scale industries, and area-based industries. Currently, most investments are concentrated in capital and metropolitan cities, which creates environmental issues, pollution, and excessive population concentration. I expect that in this budget, investments should be distributed across all states, especially toward agro-based industries, small startup manufacturing units, and decentralised industries, rather than focusing only on large industries."

The professor also highlighted the need for a more targeted approach to welfare schemes.

"In the name of welfare schemes, benefits are often reaching those who are already economically stable. We are not properly identifying the truly needy people. While 70-80% of the population may be receiving benefits, when poverty is taken into consideration, less than 20% of the poor are actually benefiting. My request is to correctly identify needy individuals and exclude others. Welfare is important, but welfare should not be limited to free rice alone; education and healthcare are being neglected. Identifying the needy will reduce unnecessary expenditure. This saved expenditure can be converted into productive investments, benefiting people more effectively," Ramulu said.

On the Goods and Services Tax (GST), Ramulu acknowledged its benefits but raised concerns about the distribution of tax revenues. Ramulu suggested that the government should adopt a horizontal approach by reducing tax rates to include more people in the tax net.

"GST is a good system because it brings all taxes together, and tax centralisation has its advantages. However, distribution remains a major concern. States like Tamil Nadu, Karnataka, and Telangana are demanding a larger share, as the Centre collects a major portion and allocates a smaller share to states, leading to dissatisfaction. Balanced development across all states is essential. Instead of focusing on vertical expansion, the government should adopt a horizontal approach by reducing tax rates to include more people in the tax net. If tax rates are lowered, people will be more motivated to disclose their income voluntarily," he added.

Ramulu also addressed the roles of the private sector and the government. "While private education, private institutions, and private companies are expanding, the government sector is declining drastically. The private sector is receiving significant benefits, but these gains are not adequately distributed among the people," he said. He emphasised the need for the government to ensure that profits are reinvested productively.

He emphasised the importance of efficient utilisation of resources, rationalisation of welfare schemes, and a more balanced approach to taxation and investment. "If available resources, including human resources, are utilised efficiently, the growth rate will definitely increase," he said.