India’s government presented its 2026-27 budget to Parliament on Sunday, with Finance Minister Nirmala Sitharaman linking the plan to sustaining economic growth amid volatile financial markets and uncertainty around trade. The budget comes as major economies face high interest rates, geopolitical tensions and renewed protectionism that has weighed on global trade and capital flows, according to the finance minister’s remarks.
Sitharaman said the government would focus on boosting investments in infrastructure and domestic manufacturing while sticking to fiscal prudence. In her speech introducing the budget, she framed the approach as a balance between ambition and inclusion as the country moves toward what she described as “Viksit Bharat (Developed India).”
The finance ministry’s economic survey, released Thursday ahead of the budget, forecast India’s economy to grow between 6.8% and 7.2% in the next fiscal year, with the projection buoyed by increasing domestic consumption. The budget also reiterated the government’s goal of fiscal consolidation, targeting a deficit of 4.3% of gross domestic product next year, slightly lower than the 4.4% deficit India’s government says it is on track to achieve in the fiscal year ending in March.
Sitharaman said the budget would not include populist giveaways, and that New Delhi would instead emphasize building resilience at home while positioning India more firmly in the global supply chain. She said the main emphasis would be structural reforms, mainly in manufacturing, alongside stepped-up investments in niche industries including biopharma and artificial intelligence.
The budget set India’s capital expenditure for 2026-27 at 12.2 trillion rupees ($133 billion), up from 11.2 trillion rupees last year. Sitharaman said the government plans to scale up manufacturing in seven strategic sectors, including biopharma, semiconductors, electronics components and rare earth magnets, and that it will set up three chemical production parks to reduce import dependence.
To address concerns about slowing job creation, particularly in manufacturing, the budget announced additional credit support and a growth fund for micro, small and medium enterprises. It also outlined steps aimed at strengthening financial markets, including measures to support the corporate bond market and ease certain rules for foreign investors.
Sitharaman said she proposed a “comprehensive review” of Foreign Exchange Management (Non-debt Instruments) Rules to create what she described as a more contemporary, user-friendly framework for foreign investments, aligned with India’s changing economic priorities. The budget also said the move is intended to help attract capital as global investors become more selective amid higher interest rates in the West.
On transport, Sitharaman said India would promote environmentally sustainable travel with seven high-speed rail corridors connecting major cities including Mumbai and Pune, Hyderabad and Bengaluru, Pune and Hyderabad, and Chennai and Bengaluru. For cargo movement, she said the government would set up an unspecified number of new dedicated freight corridors and operationalize 20 new waterways over the next five years, and it would also create dedicated freight corridors for rare earths to support mining, processing, research and manufacturing.
The finance minister added that the government would develop ecologically sustainable mountain and coastal trails to promote ecological tourism. While the budget emphasizes domestic investment and industrial expansion, it also underscores the government’s focus on sustaining growth and attracting longer-term financing during a period when external markets are under strain.