Union Budget 2026 emphasises the imperative of sustained growth as a key kartavya
In this context, the Finance Minister, presenting her ninth consecutive Union Budget, a first in India’s history, is to be commended for presenting a budget that balances short-term requirements with long-term objectives, or as the Economic Survey aptly puts it, running a marathon as sprint.
Union Budget 2026-27 documents
Particularly noteworthy was the framing of the government’s economic agenda as kartavya, signalling a shift in perspective towards governance as a statement of duty. This article focuses on the first kartavya, namely accelerating and sustaining economic growth by enhancing productivity and competitiveness while building resilience to volatile global dynamics.
Towards this objective, the Finance Minister announced interventions across six key areas: scaling up manufacturing in seven strategic and frontier sectors; rejuvenating legacy industrial sectors; creating champion MSMEs; delivering a strong push to infrastructure; ensuring long-term energy security and stability; and developing City Economic Regions.
Manufacturing remains central to India’s growth strategy given its role in large-scale employment generation, export competitiveness, supply chain resilience and Atmanirbharta.
The expansion of the India Semiconductor Mission into ISM 2.0 marks a decisive deepening of India’s manufacturing strategy. Moving beyond fabrication, the mission now extends to semiconductor equipment, materials, full-stack intellectual property and industry-led research and training, recognising that resilience in this critical sector requires an integrated end-to-end ecosystem. This is complemented by a strong push to electronics manufacturing, including electronics components and rare earth magnets, supported through cluster-based development and the creation of dedicated Rare Earth Corridors.
Textiles and sports goods manufacturing also receive focused attention, reflecting their employment intensity and export potential. Modernised clusters, technology upgradation and integration with global value chains are expected to help these sectors move up the value ladder while supporting large-scale job creation. Targeted interventions are proposed for biopharma through Biopharma SHAKTI, aimed at positioning India as a global hub for biologics and biosimilars; chemicals and capital goods are similarly supported through cluster-led and scale-oriented interventions. Taken together, these manufacturing initiatives are designed to achieve scale efficiencies, reduce import dependence and reinforce supply chain security in a more fragmented global economy.
Equally important is the emphasis on rejuvenating legacy industrial sectors. Leveraging existing ecosystems is a cost-efficient approach that allows maximum economic returns from each rupee spent while supporting employment-intensive industries and regional industrial bases.
The strong focus on MSMEs is heartening, given their role as the building blocks of a large and competitive manufacturing sector and a key source of employment. CII has consistently advocated enhanced capital support to address the resource constraints faced by MSMEs. The budget acknowledges these challenges and proposes a comprehensive set of measures. The creation of Champion MSMEs is backed by a concrete financial architecture, including a ₹10,000 crore SME Growth Fund, additional support to the Self-Reliant India Fund, and a significant overhaul of MSME liquidity mechanisms through TReDS. Improved access to timely liquidity is expected to provide a meaningful boost to MSME growth and competitiveness.
Public capex continues to serve as the macroeconomic anchor of the growth strategy. While headline capital expenditure has increased to ₹12.2 lakh crore in 2026-27 (Be) from ₹10.96 lakh crore in 2025–26 (RE), reflecting a growth of 11.5%; effective capital expenditure, which includes grants-in-aid for capital creation, is set to rise to ₹17.15 lakh crore from ₹14 lakh crore, marking a growth of 22.1%. A wide array of infrastructure projects, ranging from dedicated freight corridors and seven new high-speed rail corridors to inland and coastal waterways, will sustain the momentum in infrastructure creation. Measures such as the proposed Infrastructure Risk Guarantee Fund directly address construction-phase risks that have historically constrained private participation.
Energy security
Energy security and sustainability are integrated into the growth narrative through a pragmatic lens. Investments in carbon capture utilisation and storage reflect a clear recognition that India’s transition pathway must address emissions in hard-to-abate sectors.
With tier II and tier III cities emerging as important economic nodes, the focus on City Economic Regions represents a significant innovation. By mapping functional economic geographies and allocating ₹5,000 crore per region over five years through reform-linked financing, the budget seeks to harness agglomeration economies beyond the largest metropolitan centres.
Underlying these interventions is a strong commitment to fiscal credibility. The Finance Minister had set an ambitious consolidation path in 2021–22, when the fiscal deficit had reached 9.2% of GDP during the pandemic, committing to bring it below 4.5% of GDP by 2025–26. This target has been exceeded, with the fiscal deficit estimated at 4.3% of GDP in 2026–27. The budget also marks a new phase of fiscal management with public debt as the anchor, further strengthening macroeconomic resilience.
Taken together, the first kartavya articulated in the Union Budget 2026–27 represents a coherent and well-calibrated growth strategy. By aligning manufacturing policy, infrastructure investment, MSME finance and urban development within a fiscally responsible framework, the government has sought to translate ambition into execution.
The writer is the Director General, CII
Published – February 01, 2026 08:15 pm IST
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