India's economic trajectory is poised for sustained growth, driven by strategic capital expenditure and a push for supply-side reforms in the upcoming fiscal year 2026-27. Several reports and analyses project a robust growth rate, with estimates ranging from 6.5% to 6.9%. This positive outlook is underpinned by the government's continued focus on infrastructure development, manufacturing, and easing the tax burden for the middle class.
The Union Budget 2026, scheduled for presentation on February 1st, is expected to build upon this foundation by prioritizing increased capital expenditure, particularly in roads, highways, and rural development. This emphasis on infrastructure is seen as crucial for enhancing logistics efficiency, creating employment opportunities, and driving overall economic growth. The government is estimated to need to spend $4.51 trillion on infrastructure by 2030 to achieve its $5 trillion economy vision. To that end, the finance ministry has lined up ₹17 lakh crore PPP infra pipeline through 2027-28.
A significant aspect of the government's strategy involves promoting Public-Private Partnerships (PPPs) to attract private investment in infrastructure projects. The Department of Economic Affairs has created a three-year pipeline of infrastructure projects with estimated costs of over ₹17 lakh crore, which are sought to be developed through PPPs. This pipeline includes 852 projects across various infrastructure ministries and states, offering early visibility to investors and developers. Of this, the central government projects are estimated at ₹13.16 lakh crore.
Furthermore, the budget is likely to include measures aimed at rationalizing customs duties and promoting domestic manufacturing through initiatives like the Drone Shakti program. The manufacturing sector is expected to play a significant role in India's economic growth, with a focus on improving infrastructure, cost competitiveness, and technology adoption. The government is also likely to focus on trade facilitation and simplification of compliance procedures to enhance exports and global integration.
In addition to infrastructure and manufacturing, the budget is expected to address the concerns of individual taxpayers, particularly the middle class, by providing more income tax relief. This could include higher exemption limits, lower tax rates, and a simpler, more transparent tax system. The new Income-tax Act, 2025, is also expected to be a key area of focus, with taxpayers hoping for easier compliance and reduced financial pressure.
India's commitment to green energy transition is also expected to be reflected in the budget, with measures to drive investment, innovation, and inclusive growth in renewables. This aligns with India's ambitious targets of achieving 500 GW of non-fossil fuel capacity by 2030 and net-zero emissions by 2070.
Overall, the Union Budget 2026 is anticipated to be a crucial step in accelerating India's economic transformation and achieving its long-term vision of becoming a developed nation. By sustaining capital expenditure, promoting supply-side reforms, and addressing the needs of various sectors and taxpayers, the budget is expected to pave the way for continued growth and resilience in the face of global uncertainties.
