Budget 2026 Foreward
It is my pleasure to write to you from the RNM India stall at World Forum of Accountants 2026 (WOFA2.0) being hosted at Greater Noida by ICAI on a Sunday, a few hours after Mrs. Nirmala Sitharaman, Hon’ble Union Minister for Finance presented the first ever Union Budget on the floor of the Parliament on a Sunday. When it comes to messaging, it clearly shows the intention of the current Modi Government in maintaining Business As Usual (BAU) when it comes to the Economy, in spite of severe global uncertainties and disruptions. That theme of BAU continued through the Budget Speech where no significant tinkering was announced, except a tax holiday till 2047 for cloud services to customers globally from data center services from India.
As it is the Income Tax Act, 2025 replacing the Income Tax Act, 1961, which is going to become effective from 1 April 2026, and the GST 2.0 changes introduced in September 2025, brings ease of doing business in India. Too many regulatory tax changes becomes counterproductive. The stock market unfortunately has given a thumbs down to the Budget with the Sensex and Nifty ending in the red, driven by unmet expectations in few sectors such as defence sector and surprise increase of Securities Transaction Tax (STT) on Futures by 0.03%. The Budget has increased spending on Defence to 11% of Budget as against 10% last year in line with geopolitical trends.
The good news is that the trajectory of fiscal deficit is declining to 4.3% Budget Estimate for 2026-27 as against 4.4% last year. The other good news for India Inc. and foreign investors is that the trend of tax receipts as a percentage of GDP is declining to 11.2% in 2026-27 from 11.4% in 2025-26. Lastly the other attractive data point is increase of capital expenditure as a percentage of GDP to 4.4% in 2026-27 from 3.9% in 2025-26.
To summarize, the Bhagavad Gita reminds us to focus on Nishkama Karma (selfless action), efficiency and ethical sustainable practices. For the common man and business community it’s a good Budget, even though the sentiment on Dalal Street is down near term.
Jai Hind!