FM Nirmala Sitharaman’s ninth Union Budget is about 3 Cs

The 9th consecutive Union Budget presented by Finance Minister Nirmala Sitharaman against the backdrop of the Goldilocks scenario of over 7% GDP growth and all-time low inflation is about 3 Cs: cautious optimism, conservative and ensuring continuity of policy reforms and programmes initiated during the last few years.

The Budget 2026-27 (FY27), which comes into effect from April 1, 2026, continues to adopt the ‘infra push’ approach to bolster economic growth through the multiplier effect of employment, income, savings and investment cycle.

The heavy lifting of capital expenditure (CAPEX) has again been frontloaded with a huge allocation of Rs 12.20 lakh crore (Rs 11.11 lakh crore FY26) for infrastructure.

The nominal GDP growth for FY27 is estimated at 10% — around Rs 400 lakh crore (8% for the present financial year) — with a hawkish eye to achieve a fiscal deficit of 4.3% for FY27. This is highly commendable in a time of global uncertainties coupled with US President Donald Trump’s tariff tantrums.

The Budget has proposed a tax holiday until 2047 to foreign companies providing ‘cloud services’ to customers anywhere in the world, with a rider that companies use data centre services based in India.  This will strengthen ‘services infra’ and provide the right ecosystem for cloud computing, AI and machine learning. It will also push foreign companies to establish global capacity centres (GCC) in India.

With the railway budget allocation of Rs 2.81 lakh crore, the big proposal is to ‘connect India’ by building 7 high-speed rail corridors that will work as ‘growth connectors’. Coupled with an allocation of Rs 10,000 crore for a new ‘container manufacturing’ scheme, this will supplement the holistic infra development of railways, roadways and waterways.

This ‘growth pole’ model will lead to the creation of employment, income and housing requirements, both in urban and tier II and tier III locations.

Continuing the thrust of supporting MSMEs as ‘champions’, the Budget dedicates a special fund of Rs 10,000 crore SME growth fund.

The Budget has not directly addressed the critical sector of affordable housing. This is because of the ‘Big Bang’ concessions accorded, the IT slabs revised during the previous budget and the GST slab revisions that came into effect from September 2025.

(The writer is a former banker)