FM’s Budget speech set to be different; Record ninth Budget for FM Sitharaman

NEW DELHI: Union Finance Minister Nirmala Sitharaman is all set to deliver a Union Budget speech on Sunday that is expected to look markedly different from the tradition followed for the past 75 years with the second Part B stealing the focus.

In doing so, she will be breaking from long-standing tradition as in the past Union Budgets the substance lay in Part A while Part B was restricted to tax proposals and policy announcements, government sources said here. She is expected to devote significant time and use Part B of her speech to unveil a detailed vision for India’s economic future and priorities.

“Part B of the Budget speech will place strong emphasis on both short-term and long-term goals,” sources said. Officials described this year’s Budget presentation as a rare departure from convention, noting that earlier speeches typically contained extensive detail in Part A, while Part B remained relatively brief.

This would be Sitharaman’s record ninth straight Budget. She had in her first Budget in 2019 replaced the usual leather briefcase - which had been in use for decades for carrying Budget documents - with a traditional ‘bahi-khata’ wrapped in red cloth. She will present the budget in paperless form, as done in the last four years. The presentation of the Budget for April 2026 to March 2027 fiscal (2026-27) will be on Sunday, a first in independent India’s history.

Expectations are high around reforms and planned government expenditure. The government’s health report of the Indian economy, the Economic Survey 2026 was tabled in Parliament on January 29. The Indian economy is expected to expand by 6.8-7.2 per cent in FY27, supported by strong macro fundamentals and a series of regulatory reforms. The survey also found that India’s core and headline inflation rates are likely to be higher in FY27 than in FY26. However, it is unlikely to be a concern. As of November 2025, India’s fiscal deficit stood at 62.3 per cent of the Budget Estimates, and the government aims to attain a fiscal deficit target of 4.4 per cent of GDP by FY26, the survey noted.

It would be interesting to look at the key sectors in this year’s Budget which include railways, infrastructure, urban development, manufacturing, auto, defense, electronics, MSME, renewable energy and AI among others. Other areas like healthcare, tourism, agriculture, and logistics are also likely to get healthy allocations from the government for their benefit.

The Budget is expected to unveil measures to sustain growth momentum, maintain fiscal discipline, and contain reforms that could buffer the economy from global trade frictions, including US tariffs. Sitharaman’s sweeping income tax and GST cuts, together with spending on infrastructure and the RBI’s interest rate reductions, have so far helped the Indian economy withstand the punitive 50 per cent tariff US President Donald Trump has imposed on Indian goods. But now, she has to come up with measures to sustain the momentum.

The FY27 Budget comes against a complex backdrop. While domestic demand has held up and inflation has moderated from recent highs, global uncertainties - including geopolitical tensions, volatile commodity prices and uneven monetary easing by major central banks - continue to cloud the outlook.

At home, the government faces pressure to boost consumption, accelerate job creation and step up capital spending, while keeping the fiscal deficit on a downward path.

However, the tax cuts have nibbled into government revenue, limiting her options to support the economy in the new Budget.

Her biggest challenge will be to find a new growth driver, particularly against the backdrop of a global economy ravaged by heightened uncertainty and fragmentation, financial markets on a precipice, and global commodity prices on a continued uptrend.

Sitharaman, economists said, also faces the difficult task of restoring investor confidence in the near term, as uncertainty over India’s trade talks with the US has unsettled financial markets, with foreign investors continuing to sell Indian equities and pushing the rupee to a record low.

She may focus on simplifying regulations and pushing structural reforms to attract domestic and foreign investment.

Despite the tight purse strings, she is not expected to cut spending and may include new measures for the poll-bound states -- West Bengal, Tamil Nadu, Kerala and Assam. Some schemes may be re-packaged.

Capital expenditure is expected to remain the central pillar of the budget. Over the past few years, the government has sharply increased spending on roads, railways, defence manufacturing, urban infrastructure and logistics to crowd in private investment.

For FY27, economists expect another meaningful rise in capex, though at a more measured pace compared to the post-pandemic surge. Railways, renewable energy, power transmission, defence and urban transport are seen as priority areas, with continued support for state-level infrastructure through interest-free loans.

On the tax front, major changes seem unlikely. The government has repeatedly signalled a preference for stability and predictability, especially in direct taxes. Any tweaks to personal income tax are expected to be incremental, potentially aimed at easing the burden on the middle class to support consumption.

Corporate tax rates are also likely to remain unchanged, with the focus instead on improving compliance and widening the tax base through digitisation and data-driven enforcement.

JOBS, MANUFACTURING & MSME

Job creation is expected to feature prominently, with possible incentives linked to labour-intensive manufacturing, skilling and apprenticeships.

Schemes supporting micro, small and medium enterprises (MSMEs), which have faced margin pressures from high input costs and tight credit conditions, could see enhanced allocations or credit-guarantee support.

GREEN TRANSITION & ENERGY SECURITY

With India pushing ahead on its energy-transition goals, the FY27 Budget is expected to strengthen support for renewable energy, green hydrogen, battery storage and electric mobility.

Measures to enhance domestic manufacturing of clean-energy equipment and reduce import dependence are also likely.

Though not an election year, the Budget FY27 will be closely read for its political signals ahead of key state polls.

Balancing welfare spending with fiscal prudence will be a delicate task, especially amid calls for higher rural support and targeted subsidies.

Overall, Sitharaman’s FY27 Budget is expected to prioritise continuity over surprise, reinforcing the government’s long-term growth strategy while navigating near-term economic risks. Markets will look for reassurance that India can sustain high growth without compromising macroeconomic stability.

In last year’s Budget, Sitharaman gave a mega boost to the taxpayers by cutting income tax on earnings up to ₹12 lakh, benefitting millions of middle-class taxpayers. For the salaried class, the non-taxable income under the new tax regime increased to ₹12.75 lakh after standard deduction.

According to experts in the industry, Budget 2026 income tax expectations can be limited to tax rationalisation and some changes in terms of TDS and standard deduction.

No major income tax cut is anticipated this year, given the FM already announced an overhaul during the last Budget itself.