Answer

Introduction

The Union Budget 2026-27 arrives at a critical juncture where India must transition from “recovery-led growth” to “competitiveness-led expansion.” To navigate global headwinds and domestic consumption disparities, the budget must prioritize high-multiplier capital expenditure while insulating the economy through structural reforms and fiscal prudence.

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Strengthening Domestic Growth Engines

• Private Investment Revival: The budget should offer targeted tax incentives and a “stability guarantee” to encourage corporate India to deploy record cash reserves into new projects.
  Eg: Industry bodies like CII have urged the government to simplify capital gains tax and extend the 15% corporate tax for new manufacturing units.
• Rural Demand Support: Focus on increasing rural incomes through higher MGNREGA allocations and expanding the PM-KISAN coverage to stimulate mass-market consumption.
  Eg: Economists suggest that boosting rural disposable income is essential to counter the current “K-shaped” consumption recovery.
• Infrastructure Momentum (Capex): Sustaining the ₹11.11 lakh crore infrastructure push is vital to reduce logistics costs and create large-scale blue-collar employment.
  Eg: Budgetary focus on Gati Shakti and the National Infrastructure Pipeline has already helped reduce India’s logistics costs to nearly 8-9% of GDP.
• MSME Credit Access: Enhancing the Credit Guarantee Fund Trust (CGTMSE) will provide a safety net for small businesses facing high credit costs in a tight interest rate environment.
  Eg: The PM Vishwakarma scheme and digital credit under OCEN are being viewed as vital “growth engines” for the informal economy.

Improving Global Economic Standing

• Export Competitiveness (RODTEP): Strengthening the RODTEP and RoSCTL schemes to ensure that Indian exporters do not “export taxes” in a protectionist global market.
  Eg: Exporters are seeking higher remission rates to remain competitive against aggressive manufacturing hubs like Vietnam and Bangladesh.
• Green Energy Leadership: Providing a dedicated “Green Subsidy” framework for Green Hydrogen and offshore wind will position India as the global hub for sustainable energy.
  Eg: The National Green Hydrogen Mission aims to produce 5 MMT of green hydrogen annually by 2030, requiring sustained budgetary support.
• Critical Mineral Security: Allocating a “Strategic Acquisition Fund” to help KABIL secure overseas mines of lithium and cobalt to de-risk the EV supply chain.
  Eg: India’s entry into the Minerals Security Partnership (MSP) necessitates a domestic fiscal backup for overseas resource diplomacy.
• Global Capability Centres (GCCs): Policy incentives to attract high-end R&D hubs will transition India from a “back-office” to the “global laboratory” of the world.
  Eg: India currently hosts over 1,600 GCCs, contributing significantly to services exports and high-skilled employment.

Conclusion

Budget 2026-27 must act as a “balancing act” between fiscal consolidation and aggressive growth-oriented spending. By deepening the “Make in India 2.0” initiative and ensuring that the fruits of growth reach the “bottom of the pyramid,” the government can cement India’s position as a resilient and reliable partner in the global supply chain, ensuring long-term shared prosperity.

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