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Budget 2026: Defence, Capex & Fiscal Discipline in Focus as Sitharaman Presents

Finance Minister Nirmala Sitharaman is set to present the Union Budget for 2026-27, with a reported emphasis on defence, capital expenditure, and infrastructure while maintaining fiscal discipline. Economists expect the budget to balance growth priorities with fiscal consolidation against a backdrop of global geopolitical uncertainty. The approach to stimulating consumption is expected to be more selective compared to the previous budget, with a focus on strategically important sectors. The Economic Survey projects FY27 growth at 6.8-7.2%, and live trading will occur on budget day despite it being a Sunday.

Key Points: Budget 2026 Focus on Defence, Infrastructure & Fiscal Prudence

  • Defence & strategic capex boost
  • Infrastructure & affordable housing push
  • Fiscal discipline & deficit control
  • Balancing growth with global uncertainty
2 min read

Budget 2026 to focus on defence, capex, infrastructure, fiscal discipline

FM Nirmala Sitharaman to present Union Budget 2026-27, emphasizing defence, capital expenditure, infrastructure, and fiscal discipline amid global uncertainty.

"The Budget is likely to strike a deft balance of sustaining growth momentum and maintaining fiscal consolidation. - Economists"

New Delhi, Jan 31

As Finance Minister Nirmala Sitharaman gears up to table the Union Budget 2026-27 in Parliament on February 1, economists say the emphasis this year will be on defence, infrastructure, capex, power, and higher growth in affordable housing, apart from balancing social welfare with fiscal prudence.

Besides, policymakers will also balance growth priorities with fiscal discipline amid heightened global uncertainty.

The Budget is likely to strike a deft balance of sustaining growth momentum and maintaining fiscal consolidation.

It also needs to address near-term challenges emanating from unprecedented geopolitical flux, said economists.

The government has been steadfast on the path of fiscal consolidation, with the fiscal deficit easing from Covid induced high of 9.2 per cent to 4.4 per cent for FY26E (estimated).

According to experts, government will largely maintain its "fiscal rectitude and do not expect major deviation from this path".

FM Sitharaman will present the 15th Budget of the PM Modi government on February 1. This will also be the second full Budget since the National Democratic Alliance (NDA) came to power for a third consecutive term in 2024. Sitharaman is also the first woman finance minister of the country to present the Budget in Parliament for the ninth consecutive time.

While the FY26 Budget was more tilted towards stimulating middle-class consumption with tax reliefs, the FY27 Budget's approach to stimulating consumption will be selective, they added.

According to economists, the budget is likely to focus more on capital expenditure, especially in sectors deemed to be strategically important owing to prevailing geopolitical compulsions, said Motilal Oswal Financial Services Ltd in its 'India Strategy' report.

Meanwhile, investors are likely to be focused on the debt metrics, deficit outcome and scheduled borrowings for the next year Budget to align with strategic objectives. The size of borrowings will be an important consideration for the bond markets, said a note by DBS Bank.

Notably, the 'Economic Survey 2025-26' presented a comprehensive assessment of the economy, projecting FY27 growth at 6.8-7.2 per cent from 7.4 per cent this year, higher than street estimates.

Moreover, India's stock exchanges will hold a regular live trading session on the Union Budget 2026-27 on February 1, despite being a Sunday.

- IANS

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Reader Comments

P
Priya S
Defence and fiscal discipline are crucial, no doubt. But as a middle-class taxpayer, I'm a bit disappointed that the focus on consumption seems to be "selective" now. After the last budget's relief, many were hoping for more permanent changes to the tax slabs to increase disposable income.
R
Rohit P
Power and affordable housing are excellent priorities! The housing push can really boost the economy from the ground up. Hope the policies are implemented effectively at the state level too. Jai Hind! 🇮🇳
S
Sarah B
Bringing the fiscal deficit down from 9.2% to 4.4% is a remarkable achievement, especially post-pandemic. This kind of discipline is what gives foreign investors confidence. The focus on strategic capex makes perfect sense in the current global climate.
V
Vikram M
Balancing social welfare with this infrastructure push is the real challenge. Hope the budget allocates sufficient funds for health and education as well. We need strong foundations (infrastructure) and a healthy, skilled population (social welfare) to truly grow.
K
Karthik V
Madam Sitharaman presenting her 9th budget! That's consistency. Markets trading on a Sunday for the budget shows how important this event is for the economy. Let's see if the borrowing numbers spook the bond market or not.

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