Union Budget 2026 - 27: The Skewness in our ‘Kartavyas’

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Sri City: The Union Budget 2026 - 27 arrives at a moment of immense economic fragility shaped by both global shocks and domestic structural weaknesses. While the government frames this as a “budget for difficult times,” a closer look reveals a pattern we have already seen from our 3 times running central government -  fiscal restraint where expansion is needed, ambitious announcements without funding clarity, and growth strategies that disproportionately benefit organised capital while leaving large sections of the economy behind.

At the broad level, the Union Budget for 2026 - 27 lays out how much money the government expects to earn, spend, and borrow. Non-debt receipts (mainly taxes and other income) are estimated at ₹36.5 lakh crore, while total expenditure is much higher at INR 53.5 lakh crore, showing that borrowing will continue to play a major role. Net tax receipts are expected to be INR 28.7 lakh crore. To bridge the gap, the government plans gross market borrowings of  INR 17.2 lakh crore, with net borrowings of  INR 11.7 lakh crore. 

Compared to the previous year’s revised estimates, both receipts and spending have gone up, but the gap between income and expenditure remains large. The fiscal deficit is projected at 4.3% of GDP next year, slightly lower than the 4.4% estimated for 2025–26, while the debt-to-GDP ratio is expected to fall marginally from 56.1% to 55.6%, signalling a cautious attempt at fiscal consolidation rather than a big shift in priorities.

Within this overall framework, the government’s first major focus is on boosting economic growth through manufacturing, infrastructure and investment-led expansion. Large allocations are proposed for strategic sectors such as biopharma, semiconductors, electronics, textiles, chemicals and rare earths, alongside schemes to revive old industrial clusters and support small and medium enterprises. Public capital expenditure is set to rise to INR 12.2 lakh crore, with a strong push for freight corridors, waterways, ports, high-speed rail and city economic regions. 

A Weakening Macro - Look for Home

India’s economic slowdown cannot be read in isolation. Global trade disruptions, declining capital inflows, and a weakened balance of payments have led to a depreciation of the rupee against the dollar, intensifying inflationary pressures. The uncertainty generated by this external environment has further dampened domestic investment sentiment. On the demand side, export prospects have worsened due to protectionist tariff policies under Donald Trump, aggravating an already sluggish private investment climate. Yet, instead of responding with a demand push, the budget doubles down on fiscal consolidation.

The Big Demand Problem

From a macroeconomic perspective, the core weakness of the budget lies in its refusal to stimulate demand. Government expenditure as a share of GDP is estimated at 13.6% in 2026 - 27, down from 14.2% in 2025 - 26 and 14.3% in 2024 - 25. The primary deficit is also projected to decline further to 0.7%, compared to 0.8% and 1.4% in the previous two years. In simple terms, neither spending nor deficit policy is being used to revive demand. This is particularly troubling in an economy marked by rising inequality, where consumption demand is concentrated among the wealthy while the majority struggle to maintain purchasing power. We have to know by now that a growth that remains confined to the organised sector cannot sustainably absorb labour or generate broad-based demand. 

Agriculture and Rural India

Agriculture remains India’s largest employer (approx. 40% of the population) and home to its poorest citizens. Yet, expenditure on agriculture and allied activities has been cut from INR 1,58,838 crore to INR 1,51,853 crore in the current year, with only a 2% increase planned for next year, barely enough to even match inflation. Rural development tells a similar story - against a planned INR 2,65,817 crore,  the expenditure fell to INR 2,12,750 crore, nearly 20% lower, with next year’s allocation rising by only 3%.

These aggregate cuts are seen sharply at the scheme level as well. The Jal Jeevan Mission will see only INR 17,000 crore spent instead of INR 67,000 crore, while PMAY housing expenditure has dropped from INR 54,832 crore to INR 32,500 crore. Across dozens of centrally sponsored schemes, allocations exist on paper, but spending falls short in practice allowing the government to project generosity without delivering outcomes (all the Mr. Modi beautiful banners speak for themselves). 

Announcements Without Allocation

The budget also announces several new initiatives like five university townships, girls’ hostels in every district, Bharat-VISTAAR, SHE-Marts etc. yet provides no clear resource allocations for many of them. While expanding universities and research infrastructure is essential, credibility matters. When existing universities face systematic interference and funding starvation, the promise of better treatment for new institutions rings hollow.

Infrastructure for the Few

The announcement of seven high-speed rail corridors underscores the budget’s skewed priorities. India’s bullet train project has remained unfinished for nearly a decade, yet elite transport continues to dominate planning. These high-speed systems like Vande Bharat sleeper trains are priced at a premium and accessible only to a small elite minority. Meanwhile, millions rely on overcrowded general trains operating in inhumane conditions. More importantly, high-speed corridors integrate non-urban lands into markets dominated by organised capital, often accelerating the decline of unorganised producers rather than strengthening them. 

Fisheries and The Forever Story of Community Neglect

For 2025 - 26, the Department of Fisheries saw its budget revised down sharply from INR 2,703.67 crore to INR 1,732.95 crore. The flagship PMMSY was cut from INR 2,465 crore to INR 1,500 crore; Against this backdrop, the INR 2,500 crore allocation for next year feels less like expansion and more like restoration. 

While seafood exports reached ₹62,408 crore in 2024 - 25, small-scale and artisanal fishers remain economically insecure. Public investment increasingly favours capital-intensive aquaculture, logistics, and export chains, while community-based fisheries and marine commons receive uncertain support. At the same time, the government is pushing ₹10,000 crore into ports, waterways, container manufacturing, and rare earth corridors across coastal states.

Minorities

The Ministry of Minority Affairs has been allocated INR 3,400 crore, up from INR 3,350 crore last year, a nominal INR 50 crore increase. But behind this figure lies withdrawal of support. Key schemes such as the Maulana Azad Medical Aid Scheme, Bicycle Yojana, Nai Manzil, USTTAD, and Hamari Dharohar have been discontinued.

Scholarships show an even starker erosion. The merit-cum-means scholarship fell from INR 302 crore in 2014 - 15 to INR 0.06 crore in 2026 - 27. Pre-matric and post-matric scholarships have repeatedly seen large allocations revised down to token spending, with actual expenditures collapsing to near zero in recent years. The Maulana Azad National Fellowship, officially discontinued, continues to face delayed or stopped payments for existing scholars. 

And Who Really Gains from Growth?

The government highlights a 4.3% fiscal deficit, ₹12.2 lakh crore capital expenditure, and rising corporate tax collections. But as critical political economy analysis points out, this consolidation relies on cutting welfare rather than progressive taxation. Large allocations to infrastructure, defence, semiconductors, rare earths, chemicals, and cloud services disproportionately benefit monopoly capital, while labour-intensive sectors see stagnation.

Now we can see how tax holidays for foreign cloud providers, subsidies for capital-intensive manufacturing, and defence-led growth sit uneasily with falling allocations for gender budgets, housing, health, education, and rural employment.

The ‘Kartavyas’ and Redistribution

Finance Minister Mrs. Nirmala Sitharaman framed the budget around three “kartavyas” - growth, capacity-building and inclusion. Yet inclusion remains rhetorical when demand is suppressed, welfare spending eroded, and growth strategies rely on trickle-down assumptions. As we know, growth without redistribution does not correct structural inequality. 

I don’t think this budget is in any way short of ambition. It is however short of political will to address inequality, unemployment, and demand stagnation. For a country where the majority still live in the informal economy, these new changes are literally an economic gamble with very real social consequences for 90% of India’s livelihoods.