Budget 2026 Takeaways: Steady Taxes, Higher Capex, MSMEs in Focus

Presenting her ninth consecutive Union Budget, Nirmala Sitharaman, Finance Minister, Government of India, chose continuity over disruption, positioning Budget 2026 as a framework for steady growth rather than headline-grabbing policy resets.

The budget arrives at a moment when India remains the fastest-growing major economy, even as global trade tensions and capital volatility persist. Against this backdrop, Sitharaman’s approach reflects an attempt to anchor confidence among consumers, enterprises, and investors through predictable taxation, sustained public spending, and targeted sectoral support.

Taxes: Relief Without Fiscal Overreach

For the common taxpayer, tax stability and simplification emerged as key themes rather than sweeping rate changes. The budget reaffirmed the new income tax regime, retaining the provision of no tax liability up to ₹12 lakh of annual income, with salaried individuals effectively exempt up to ₹12.75 lakh after the standard deduction.

The Finance Bill, 2026, continues efforts to simplify compliance, rationalise TDS and TCS provisions, and extend filing timelines—moves aimed at reducing friction rather than expanding concessions. The message is clear: incremental relief within a fiscally responsible framework, rather than populist giveaways.

Capex Takes Center Stage Again

A defining feature of Budget 2026 is its continued reliance on public capital expenditure as a growth engine. The government announced a record capital expenditure outlay of ₹12.2 lakh crore for FY27, up from ₹11.2 lakh crore in the previous year.

This sustained capex push targets roads, railways, logistics, urban infrastructure, and connectivity, with the stated objective of crowding in private investment and generating employment. The transport sector, particularly railways, received renewed attention through proposals for high-speed and semi-high-speed rail corridors, aimed at improving mobility across major economic centres.

Manufacturing and Strategic Sectors Get Policy Backing

Manufacturing remains central to the budget’s long-term narrative. Sitharaman outlined focused measures to strengthen domestic capabilities across electronics, semiconductors, rare earth minerals, and biopharmaceuticals, sectors viewed as critical to reducing import dependence and improving supply chain resilience.

This manufacturing push aligns with the Economic Survey’s emphasis on building resilience and expanding domestic capacity, reinforcing the government’s intent to position India as a competitive global manufacturing hub.

MSMEs: Capital, Credit, and Continuity

Support for Micro, Small, and Medium Enterprises (MSMEs) featured prominently once again. The budget announced a dedicated SME growth fund, designed to help high-potential enterprises access capital, scale operations, and generate employment.

Alongside equity support, the government reiterated measures to improve credit flow and ease of doing business, reflecting an understanding that MSMEs remain critical to both job creation and domestic demand. The approach signals continuity with earlier reforms rather than a reset.

Social Sector and Inclusion Remain Anchors

While growth dominates the narrative, the Budget retains a strong inclusion lens. Announcements covered healthcare infrastructure, expanded trauma care facilities, and enhanced social security coverage, including provisions for gig and platform workers.

Agriculture and rural development continue to feature as priorities, with targeted programmes aimed at improving farmer incomes and strengthening rural livelihoods, an acknowledgement that consumption-led growth depends on income stability beyond urban centres.

Economic Context Shapes Policy Choices

The Budget closely tracks the Economic Survey 2025–26, which projects:

• GDP growth of 7.4% for FY26

• 6.8–7.2% growth for FY27

• Average inflation of 1.7% between April and December 2025

These indicators give the government room to prioritise growth-supportive spending while maintaining a path of calibrated fiscal consolidation, rather than abrupt tightening.

What Budget 2026 Flags for Enterprises

For enterprises and the broader B2B ecosystem, Budget 2026 reinforces three signals: policy predictability, infrastructure-led demand creation, and gradual reform execution.

Rather than redefining the economic playbook, the budget doubles down on existing levers: capex, manufacturing scale, MSME support, and tax simplification. For businesses, this translates into a relatively stable operating environment, with fewer surprises but sustained public investment shaping demand.

Budget 2026 does not chase dramatic tax cuts or radical restructuring. Instead, it reflects a careful balancing act, supporting growth without loosening fiscal discipline, offering taxpayer relief without straining revenues, and backing enterprises while sustaining welfare commitments.

For the common man and industry alike, the message is measured but consistent: growth will be driven through execution, not experimentation.