Why Markets Dropped After Budget

---

Quick summary

I watched the Nifty50 and BSE Sensex swing violently after the Budget 2026 speech — what began as a mixed, even positive, opening turned into a sharp rout once a few surprise tax and fiscal details landed. In short: markets were spooked by higher transaction taxes, a larger-than-expected borrowing plan and the knock-on effect on rates, liquidity and foreign flows. The fallout was broad-based, with financials, exchanges and some heavyweight names among the hardest hit.

Market reaction (the feel of the day)

• The special Sunday trading session opened with hope but quickly turned nervous as traders digested the speech and tax tweaks. Volatility (India VIX) jumped and intra-day whipsaws became the norm.
• Headlines reported Sensex swings of over a thousand points at times, and the Nifty slipped below the 25,000 mark in the heat of the selling.
• The selling was broad — midcaps and smallcaps fell alongside large-cap heavyweights — reflecting a confidence shock rather than an isolated sector correction.

Top reasons the indices crashed

I distill the market’s reaction into several interconnected drivers:

1) Fiscal deficit and borrowing concerns

• The government’s borrowing plan for FY27 surprised at the upper end of street expectations. When the Centre signals larger gross borrowings, bond supply increases, putting upward pressure on yields and creating uncertainty for banks and long-duration assets. Higher yields act like a tax on equity valuations, particularly for rate-sensitive sectors.

2) Tax proposals — Securities Transaction Tax (STT) shock

• The unexpected hike in STT on futures & options (and options premium) materially raises trading costs for active participants, hedgers and arbitrageurs. Exchanges, brokers and derivative-heavy strategies felt the immediate pain, prompting programmatic and discretionary unwind of positions.

3) Bond yields / interest-rate expectations

• Bigger borrowing + global rate uncertainty = higher bond yields. When yields rise, discounted cash-flow valuations for equities are re-priced lower. Banks and PSU lenders also face MTM pressure on bond portfolios, which amplifies selling in financial names.

4) Global cues and risk-off tone

• The domestic reaction did not happen in isolation. Global risk appetite was fragile, and any negative or cautious signals overseas compounded local nervousness, accelerating outflows or defensive positioning.

5) Liquidity & FII flows

• Higher transaction costs and a perceived reduction in near-term return prospects can curb tactical FPI (foreign portfolio investor) participation. With some FPIs already cautious, any sign of reduced competitiveness for short-duration/derivative strategies can trigger selling.

6) Sector-specific impacts

• Brokerages, exchange-related stocks and derivative-heavy names were direct casualties of the STT change. PSU banks and some large state-owned firms faced selling after bond-yield implications were considered. Select defence, infra or capex beneficiaries may still hold structural interest, but immediate reaction favoured safe capital.

7) Valuation concerns

• Many pockets of the market had run up prior to Budget day. Ahead-of-event profit-booking magnified the move once negative Budget surprises hit, turning modest corrections into steep intra-day declines.

8) Market technicals

• Index intraday support levels were tested and, when broken, triggered program stops and algorithmic selling — a cascade that amplified the drop before buyers stepped back in.

Data / examples I tracked

• Sensex intra-day swings exceeded 1,500–2,800 points from the day’s highs in various reports, and reports showed Nifty sliding by 400–900 points at its worst intra-day readings.
• Nifty reportedly fell below the 25,000 mark during the rout; some articles cited drops of ~1.5–3.4% from day highs depending on time slices.
• Top losers included broker/exchange-linked names and large financials; PSU banks and a few heavyweight industrials were among the biggest drags on headline indices.

Expert perspective (on the floor and in my head)

• As one strategist I follow told me in conversation: “The STT increase is a structural change in market microstructure — it raises friction for hedge and arbitrage flows and forces recalibration of short-term allocations.”
• Another market voice put it plainly: “When a surprise reduces near-term liquidity and coincides with higher borrowing, equities are the first asset class to adjust — often sharply.”

Concluding takeaways — what I think investors should consider

• Stay calm and avoid knee-jerk portfolio churn. Budget-day volatility often overshoots; fundamentals don’t rewrite overnight.
• Reassess trading strategies that rely on heavy F&O activity — higher STT changes the economics of frequent trading and arbitrage.
• For long-term investors: look past the headline noise. Focus on earnings, balance-sheet strength and sectors with clear policy support (capex, manufacturing, semiconductors, infrastructure) that the Budget highlighted.
• For near-term traders and tactical allocators: tighten risk controls, review stop-loss rules and be mindful of thinner liquidity in derivative markets.
• Watch the bond market closely. If yields continue to rise materially, reprice equity exposure to rate-sensitive sectors and be selective about duration risk.

I’ll be monitoring flows, fresh guidance from the exchanges/brokers, and any clarifications from the government in the coming days. For now, the Budget episode is a reminder: policy surprises change market microstructure as much as macro expectations — and both matter to returns.

---

Regards,
Hemen Parekh

---

Any questions / doubts / clarifications regarding this blog? Just ask (by typing or talking) my Virtual Avatar on the website embedded below. Then "Share" that to your friend on WhatsApp.

Get correct answer to any question asked by Shri Amitabh Bachchan on Kaun Banega Crorepati, faster than any contestant

Hello Candidates :

• For UPSC – IAS – IPS – IFS etc., exams, you must prepare to answer, essay type questions which test your General Knowledge / Sensitivity of current events
• If you have read this blog carefully , you should be able to answer the following question:

"Which single Budget announcement in 2026 most directly increased trading costs for derivatives and shook intraday liquidity?"

• Need help ? No problem . Following are two AI AGENTS where we have PRE-LOADED this question in their respective Question Boxes . All that you have to do is just click SUBMIT
  1. www.HemenParekh.ai { a SLM , powered by my own Digital Content of more than 50,000 + documents, written by me over past 60 years of my professional career }
  2. www.IndiaAGI.ai { a consortium of 3 LLMs which debate and deliver a CONSENSUS answer – and each gives its own answer as well ! }
• It is up to you to decide which answer is more comprehensive / nuanced ( For sheer amazement, click both SUBMIT buttons quickly, one after another ) Then share any answer with yourself / your friends ( using WhatsApp / Email ). Nothing stops you from submitting ( just copy / paste from your resource ), all those questions from last year’s UPSC exam paper as well !
• May be there are other online resources which too provide you answers to UPSC “ General Knowledge “ questions but only I provide you in 26 languages !

Interested in having your LinkedIn profile featured here?

Submit a request.

Executives You May Want to Follow or Connect

Neelima Burra

Chief Strategy, Transformation and Marketing Officer

Chief Strategy, Transformation and Marketing Officer | Commercial Leadership |Retail and Ecommerce | Sales & Marketing| Business Transformation | P&L and ...

Loading views...

neelima.burra@luminousindia.com

Puneeth Bekal

CMO | Fintech & Consumer Tech

CMO | Fintech & Consumer Tech | Growth & Brand Transformation | Ex-Mastercard | TEDx Speaker | BW Top 100 Marketer | Ex-Godrej · Marketing leader with over ...

Loading views...

puneeth.bekal@hdfcsec.com

Mahesh Basavaraju | Driving Growth in the World of Logistics.

undefined

... manufacturing, retail, service industry, systems and processes, supply chain management… Show more. As the COO of Triumph Supply Chain, I bring to the table ...

Loading views...

mahesh@accessbizindia.com

Sudarshan Kumar

Vice President

19 years of experience in software architecture, product development, and system design, I specialize in building scalable, cloud-native B2B and B2C solutions.

Loading views...

sudarshan.kumar@yatra.com

Mahasena Rao Tuniguntla

Vice President | Certified in Cloud & AI

Vice President - Multi Cloud & Software Engineering | Global Financial Services ... leading and developing software solutions using Microsoft, AWS and ...

Loading views...

mahasena.tuniguntla@bofa.com

The New Growth Map

When the numbers speak, I listen

This morning I woke up to a chart doing the rounds: the International Monetary Fund's projections for 2026 place India ahead of the United States in contribution to global real GDP growth. China still leads, but together China and India are projected to drive roughly 44% of the world's incremental growth. I saw that chart shared by Elon Musk referralprogram@tesla.com with the short line: "The balance of power is changing." Moneycontrol captured the moment well.

I want to reflect on what this means — for India, for the US, for entrepreneurs, and for those of us who try to read the long arc of technology and capital.

The data and the obvious drivers

The IMF's numbers (as circulated via multiple media outlets) show:

• China: ~26.6% of projected global real GDP growth in 2026
• India: ~17.0%
• United States: ~9.9%

These are not statements about total GDP size; they are about incremental growth — who is adding the most real output this year. The drivers are familiar:

• Demographics and large working-age populations
• Strong domestic demand and urbanisation
• Heavy infrastructure and manufacturing investment
• Faster-than-average adoption of digital and AI-enabled services

The IMF itself highlights technology investment (including AI), fiscal and monetary support, and private-sector adaptability as key forces that are lifting growth projections. That potential upside from AI is interesting: if adoption translates into productivity gains, the numbers could look even more tilted toward faster-growing emerging markets.

Why Elon Musk referralprogram@tesla.com's short note mattered

When Elon Musk referralprogram@tesla.com reposted that graphic with a two-line comment, it was a reminder that capital and strategy follow perceived shifts in economic gravity. CEOs and investors watch where demand is accelerating. A simple phrase — "The balance of power is changing" — crystallises a longer trend.

I have been writing about India’s rising economic footprint for years (see my earlier piece When 2 is greater than 7?), and this IMF snapshot is another milepost on that trajectory. The moment matters because projections like these influence decisions: where factories locate, where startups scale, where supply chains are diversified.

What this does — and doesn't — tell us

What it does tell us:

• The centre of contribution to year-on-year growth is shifting toward emerging Asia.
• Policy, infrastructure, and stable macro conditions can amplify demographic advantages.
• Technology and capital flows are likely to follow demand and policy clarity.

What it does not tell us:

• That India (or China) has surpassed the US in overall economic power overnight. Absolute GDP, financial market depth, and institutional influence remain different dimensions.
• That challenges such as fiscal management, skill creation, and supply-chain resilience are solved. High growth is necessary but not sufficient for sustainable prosperity.

For entrepreneurs and investors

• Look beyond nominal GDP rankings. Incremental growth is where new markets, customers, and opportunities appear.
• Consider local adoption curves: payments, logistics, AI-enabled services, and manufacturing clusters will be fertile ground.
• Balance optimism with caution: geopolitical risk, trade policy shifts, and inflation dynamics can change the slope quickly.

For policy thinkers

If India is to convert growth momentum into lasting capability, the priorities are clear: invest in skills, expand manufacturing with technology upskilling, preserve macro credibility, and foster global linkages that move beyond short-term trade cycles.

A small, personal conclusion

Numbers like the IMF’s 2026 contribution chart are both map and mirror. They map where growth is happening and mirror choices made by millions — consumers, engineers, policymakers, and founders. When leaders like Elon Musk referralprogram@tesla.com call attention to them, it amplifies that mirror effect: strategy follows signal.

I don’t pretend the future is settled. But I do believe that recognising these shifts early, and building capability around them, is what separates countries and companies that shape the next decade from those that merely observe it.

Cited: IMF-based coverage and commentary collected by Moneycontrol "Balance of power is changing".

---

Regards,
Hemen Parekh

---

Any questions / doubts / clarifications regarding this blog? Just ask (by typing or talking) my Virtual Avatar on the website embedded below. Then "Share" that to your friend on WhatsApp.

Get correct answer to any question asked by Shri Amitabh Bachchan on Kaun Banega Crorepati, faster than any contestant

Hello Candidates :

• For UPSC – IAS – IPS – IFS etc., exams, you must prepare to answer, essay type questions which test your General Knowledge / Sensitivity of current events
• If you have read this blog carefully , you should be able to answer the following question:

"Why does IMF measure contributions to global real GDP growth by incremental additions rather than total GDP, and what does that tell us about where economic momentum is coming from?"

• Need help ? No problem . Following are two AI AGENTS where we have PRE-LOADED this question in their respective Question Boxes . All that you have to do is just click SUBMIT
  1. www.HemenParekh.ai { a SLM , powered by my own Digital Content of more than 50,000 + documents, written by me over past 60 years of my professional career }
  2. www.IndiaAGI.ai { a consortium of 3 LLMs which debate and deliver a CONSENSUS answer – and each gives its own answer as well ! }
• It is up to you to decide which answer is more comprehensive / nuanced ( For sheer amazement, click both SUBMIT buttons quickly, one after another ) Then share any answer with yourself / your friends ( using WhatsApp / Email ). Nothing stops you from submitting ( just copy / paste from your resource ), all those questions from last year’s UPSC exam paper as well !
• May be there are other online resources which too provide you answers to UPSC “ General Knowledge “ questions but only I provide you in 26 languages !

Interested in having your LinkedIn profile featured here?

Submit a request.

Executives You May Want to Follow or Connect

Amit Barve

Chief Executive Officer | Renewable Energy

A solar energy specialist with more than 20 years of experience in leading various assignments and roles for major solar companies.

Loading views...

amit.barve@rayzonenergies.com

Amarish Karnik

India & SAARC at Veeam Software | LinkedIn

Sales Director & Country Manager - Enterprise & Cloud Service Provider - India & SAARC at Veeam Software · Experience: Veeam Software · Location: Mumbai ...

Loading views...

amarish.karnik@veeam.com

Bhalaajhee Madhanagopal

Vice President

Vice President - Sales | HR Tech | SaaS | Consultative and Solution Selling · Business Development Professional having 16 years of experience in software ...

Loading views...

bhalaajhee.madhanagopal@peoplestrong.com

Hitesh Sahijwaala

Salesforce & ServiceNow Practice @ Digile

Executive Vice President - Salesforce & ServiceNow Practice @ Digile | SaaS, Enterprise Software · With over 30 years of leadership experience in enterprise ...

Loading views...

hitesh.sahijwaala@digile.com

Bharti Khanna

Amarant Lifesciences Pvt. Ltd.

Pharmaceutical Professional, Managing Director - Amarant Lifesciences Pvt. Ltd. · 30+ years of experience in Due-diligence, Research & Development, ...

Loading views...

Blind to Real Crises

I wrote this as the Budget dust settles and as political reactions sharpen. The Union Budget presented this year set an emphasis on higher public capital expenditure, targeted sectoral pipelines and a continued narrative of structural reform. But within hours, a sharp critique from the opposition framed the Budget as "blind to India’s real crises" — a charge that deserves a calm, evidence-driven reading rather than partisan heat.

What the Budget actually delivered

Key headlines from the Budget include:

• A rise in public capital expenditure to the mid-12 lakh crore range for the coming year, with continued push for infrastructure in tier‑II and tier‑III cities.
• Policy moves to spur manufacturing and make India more self-reliant in strategic sectors.
• Incremental measures on tax simplification, expanded credit guarantees for MSMEs, and extended incentives for startups and IFSC units.
• Fiscal arithmetic that aims at modest consolidation: fiscal‑deficit targets edging down in the medium term while keeping room for public investment.India Budget PDF

These are the levers the Centre can use to influence demand, investment and job creation. Capital spending is the most visible device here; its multiplier effects depend on project selection, execution speed and crowding‑in of private investment.

The opposition’s critique — the substance behind the soundbite

The opposition distilled its reaction into a few pointed claims: persistent youth unemployment; weakening manufacturing; falling household savings and capital flight; rural distress among farmers; and insufficient recognition of global headwinds. One representative formulation read (indicative):

"Youth without jobs. Falling manufacturing. Investors pulling out capital. Household savings plummeting. Farmers in distress. Looming global shocks — all ignored." (indicative)

Those are serious charges, and some align with measurable trends. India's labour‑force participation, the manufacturing share of GDP, farm incomes in lagging districts and household financial savings have all been areas of concern in recent years. A Budget that leans heavily on supply‑side infrastructure while doing little for immediate demand support or targeted income shocks invites that critique.

Centre’s likely counterarguments

Expect the government’s response to follow three themes:

• Emphasis on public capex as a long‑run job and growth multiplier: by financing roads, ports, urban projects and industrial corridors, the government will argue that it is laying the groundwork for sustained private investment.
• Fiscal prudence and risk management: the Centre will stress that it must balance short‑term relief with long‑term debt sustainability, especially amid global uncertainty.
• Structural reform narrative: the government will point to policy steps — credit guarantees, MSME relief, and sectoral missions — as tools that will revive manufacturing and boost formal job creation.

Those are defensible lines, but their force depends on implementation. Promises of pipelines and missions require rigorous monitoring to translate into jobs and higher household incomes.

What the data and experts say

• Capital expenditure does raise GDP growth potential, but its immediate impact on employment depends on labour intensity of projects and procurement practices.India Budget PDF
• Several think‑tank analyses over the last few years have flagged a slow recovery in manufacturing’s GDP share; unless private capex follows public investment, the structural shift back toward manufacturing will be gradual.PRS/Analysis 2025–26
• Rural distress is heterogeneous: some regions show recovery in output and prices, others lag. Budget allocations targeted at pulses and procurement support are necessary but not sufficient to stabilize rural incomes.

I have argued before that focusing on basic employment‑creating sectors — agriculture, textiles, construction — and simplifying rules for small entrepreneurs can have outsized effects on livelihoods. See earlier pieces where I urged policy attention to these basic industries and micro‑enterprise support systems.My blog on rural and employment policy and on creating jobs through low‑cost enterprise.

Political implications

The Opposition’s sharp framing — calling the Budget "blind" — is aimed at two audiences: urban swing voters concerned about jobs and rural voters facing localized distress. The immediate goal is to shape the parliamentary debate and force the government to defend its priorities before state elections.

But rhetoric alone will not shift the political arithmetic unless the opposition can offer a clear alternative narrative: a credible program of demand support, targeted rural income measures, or a well‑costed «shadow budget» showing how resources can be re‑prioritized to deliver near‑term relief without sacrificing fiscal credibility.

Closing analysis — what this means for opposition politics

For the opposition, labeling the Budget as "blind to real crises" helps crystallize grievances: unemployment, farm distress and the slow revival of manufacturing are tangible problems many voters feel. The strategic bet is simple — convert economic unease into political momentum by offering visible alternatives.

For the Centre, the challenge is execution. Capital spending announcements will be judged on on‑ground outcomes: faster project completion, more PPPs that create jobs, and measurable uplifts in incomes in lagging districts. If the government can show quick wins, the opposition’s critique will remain a sharp line in speeches rather than a lasting political lever.

As a commentator, I find this moment a test of political economics: meaningful debate requires both critique and constructive alternatives. The opposition’s soundbite frames the debate; the hard work now is in data‑driven policy proposals and local political organising that translate macro announcements into people’s livelihoods.

---

Sources

• Union Budget documents and key features: India Budget — Budget Highlights (Budget 2026) indiabudget.gov.in
• News coverage and immediate reactions aggregated across national outlets (indicative): Economic Times, Moneycontrol, News18, Times of India
• Analysis trends and fiscal context: PRS/independent budget analysts (indicative)
• My prior writings on jobs, rural livelihoods and manufacturing (Hemen Parekh blogs): Pushing Pulses — pre‑budget reflections and In State of Denial — jobs and manufacturing

---

Regards,
Hemen Parekh

---

Any questions / doubts / clarifications regarding this blog? Just ask (by typing or talking) my Virtual Avatar on the website embedded below. Then "Share" that to your friend on WhatsApp.

Get correct answer to any question asked by Shri Amitabh Bachchan on Kaun Banega Crorepati, faster than any contestant

Hello Candidates :

• For UPSC – IAS – IPS – IFS etc., exams, you must prepare to answer, essay type questions which test your General Knowledge / Sensitivity of current events
• If you have read this blog carefully , you should be able to answer the following question:

"What are the primary channels through which increased public capital expenditure in a national budget can translate into short‑term job creation for local communities?"

• Need help ? No problem . Following are two AI AGENTS where we have PRE-LOADED this question in their respective Question Boxes . All that you have to do is just click SUBMIT
  1. www.HemenParekh.ai { a SLM , powered by my own Digital Content of more than 50,000 + documents, written by me over past 60 years of my professional career }
  2. www.IndiaAGI.ai { a consortium of 3 LLMs which debate and deliver a CONSENSUS answer – and each gives its own answer as well ! }
• It is up to you to decide which answer is more comprehensive / nuanced ( For sheer amazement, click both SUBMIT buttons quickly, one after another ) Then share any answer with yourself / your friends ( using WhatsApp / Email ). Nothing stops you from submitting ( just copy / paste from your resource ), all those questions from last year’s UPSC exam paper as well !
• May be there are other online resources which too provide you answers to UPSC “ General Knowledge “ questions but only I provide you in 26 languages !

Interested in having your LinkedIn profile featured here?

Submit a request.

Executives You May Want to Follow or Connect

Anjaneyulu Kuchibhotla

AI Executive | Deep Tech Platforms Leader

AI Executive | Technology & Innovation Leader | AI/ML Product Strategist | Deep Tech Platforms Leader · Seasoned Technology and Innovation Leader with over ...

Loading views...

Sachin Narayanan

Global Innovation Center Leader

Global Innovation Center Leader | Business of Cloud | Technology Executive | Cloud Infra, SRE and Engineering | Executing FinOps and SRE Best practices ...

Loading views...

sachin.narayanan@verint.com

Ashwin C

Sr. Vice President | Strategy & PMO | Financial Services

Sr. Vice President | Strategy & PMO | Financial Services | Growth Innovator · As Sr. Vice President of Strategy & PMO (CEO office), I specialise in ...

Loading views...

Hussain Zaidi

Vice President

Vice President -Kyndryl India | Growth & Transformation | Digital Services ... Financial Services in their journey to growth and transformation. Kyndryl ...

Loading views...

Varun Dhingra

Leadership | Healthcare | Global Delivery

Leadership | Healthcare | Global Delivery | Account Management | Digital Transformation ... Director | Healthcare Global Account Delivery & P&L Leader.

Loading views...

varun.dhingra@tcs.com

# SHE Gets a Boost

Introduction

I write this as someone who has long followed and written about rural livelihoods and women’s economic empowerment. This year’s Union Budget places a visible, programmatic emphasis on the next phase of women’s participation in India’s growth story: moving from credit-led livelihoods to enterprise ownership. I welcome the clarity of intent and the pragmatic measures announced for community-owned Self-Help Entrepreneur (SHE) Marts, district-level support for girls in STEM, and other ecosystem improvements that collectively aim to make women economic owners rather than only beneficiaries [1][2].

Key budget measures

• Economic empowerment

• Self-Help Entrepreneur (SHE) Marts: The Budget proposes community-owned retail outlets run through cluster-level federations of self-help groups. These are intended to give women producers market access, a shared brand presence and the institutional architecture to scale beyond micro‑credit models [1][2].

• Building on the Lakhpati Didi gains: The SHE concept explicitly builds on earlier SHG progress and seeks to create a pathway from credit to ownership [2].

• Healthcare and care economy

• Care workforce development: The Budget includes plans for a strengthened care ecosystem, with training targets for caregivers to professionalize geriatric and allied care roles [1][4]. This recognizes unpaid care work but leaves room for deeper gendered policy design.

• Education and skills

• One girls’ hostel in every district: To improve access and retention for girls pursuing higher education—especially in STEM—hostel infrastructure will receive viability gap funding or capital support to reduce one important barrier to advanced study [1][3].

• University townships near industrial corridors aim to co-locate skill, research and residential facilities, increasing women’s proximity to quality education and employment [1].

• Entrepreneurship and finance

• Innovative financing for SHE Marts: The Budget signals “enhanced and innovative” finance instruments (beyond traditional microcredit) to support inventory, branding, and working capital for women-owned micro-enterprises [1][2].

• Continued support to MSME and startup ecosystems (pipeline schemes and dedicated funds) will indirectly benefit women-led enterprises that can access these channels [1].

• Safety and enabling infrastructure

• District-level hostels and campus safety measures: By prioritizing safe residential infrastructure for students, the Budget addresses an enabling condition for women’s sustained participation in higher education and research [1][3].

Impact analysis

Short-term (1–3 years)

• Market access: SHE Marts can rapidly increase visibility and local market leverage for SHG-produced goods—improving turnover for many micro-sellers and reducing dependence on middlemen [2].
• Employment and income stability: Consolidating production, branding and retail can stabilize incomes where SHG members currently rely on seasonal or irregular sales.

Medium-term (3–7 years)

• Business formalization: With access to institutional finance and common branding, a subset of SHE Marts can graduate into formal micro enterprises, enabling bankability, digital payment flows and participation in broader supply chains.
• Education outcomes: District hostels for girls should raise retention in STEM streams where distance and safety are known deterrents.

Risks & gaps

• Implementation fidelity: The promise of “innovative financing” must translate into clear operational products (inventory financing, receivables financing, digital storefront integration) or the schemes risk becoming another label without scale.
• Care economy gender gap: While caregiver training is useful, the Budget stops short of a fully gender-responsive care policy that would rebalance unpaid work and create wider labour market effects [4].

Stakeholder reactions (summarised)

• Women entrepreneurs and SHG federations: Coverage in mainstream press captured optimism about market access and brand-building potential; many SHG leaders see SHE Marts as a tangible next step from microcredit to enterprise ownership [2][3].

• NGOs and civil-society groups: Many NGOs welcome district hostels and the SHE concept but call for stronger safeguards around governance, supply-chain parity, and capacity building at federation level [3][4].

• Economists and budget commentators: Analysts have called the Budget’s women-focused measures an incremental but important shift—lauding the focus on ownership but asking for clearer fiscal allocations and monitoring indicators to judge impact [1][3].

Data and projections

• SHG scale: Public reporting indicates millions of women participate in SHGs and that Lakhpati Didi progress has reached multi-million counts; SHE Marts are framed as scaling that base into retail ownership and a visible local brand [2].
• Macro link: Economic assessments cited around the Budget note that raising women’s workforce participation materially supports longer-term GDP resilience; institutionalizing enterprise pathways for SHG women is a plausible lever in that direction [1][2].

Policy context and comparison to previous budgets

This Budget is evolutionary rather than revolutionary. It leans on earlier investments—credit access, SHG formation and specific MSME/startup supports—and shifts emphasis from standalone credit to ownership and market integration. Where earlier budgets focused heavily on increasing access to credit and startup funds, the current approach emphasizes market-facing infrastructure (SHE Marts), district-level education infrastructure and enabling finance instruments—an ecosystem play that complements past supply-side measures [1][5]. My prior writing on strengthening SHG linkages and digital market access anticipated precisely this move from credit to formal market participation [5].

Actionable takeaways

For women entrepreneurs and SHG leaders

• Organize federations to define shared product standards, inventory practices and simple digital catalogues so SHE Marts have consistent supply and quality.
• Pursue basic business literacy and bookkeeping training (many government and NGO modules can be accessed online) to be ready for working-capital products.

For policymakers

• Specify financing products: public agencies and banks should co‑design inventory finance, receivables discounting and micro‑insurance tailored for SHE Marts.
• Set transparent metrics: roll-out KPIs (number of functional SHE Marts, average monthly turnover per Mart, % women transitioning to formal enterprise) and publish dashboards.
• Complement care policies: integrate caregiver training with paid work pathways and incentives to address the gendered time burden.

Conclusion

I see this Budget as a welcome, evidence-aligned nudge toward transforming women’s economic roles. The structural shift—from microcredit to enterprise ownership and market integration—recognizes that dignity and scale come from ownership, not just access. For SHE Marts to succeed, the real test will be in productized financing, strong federation governance, digital market linkages and measurable public reporting. If implemented well, this can be a generational lever for rural women’s income and agency.

References

[1] Union Budget 2026 speech (full text)

[2] Economic Times: Budget 2026 – Community-owned SHE Marts to be set up for women SHG entrepreneurs

[3] NDTV / mainstream coverage: Budget 2026 measures for women, girls' hostels and SHE Marts

[4] DownToEarth analysis: Union Budget 2026 — enterprise, education and caregiving implications for women

[5] Hemen Parekh blog posts on SHG empowerment and women’s livelihoods (selected posts, 2024)

---

Regards,
Hemen Parekh

---

Any questions / doubts / clarifications regarding this blog? Just ask (by typing or talking) my Virtual Avatar on the website embedded below. Then "Share" that to your friend on WhatsApp.

Get correct answer to any question asked by Shri Amitabh Bachchan on Kaun Banega Crorepati, faster than any contestant

Hello Candidates :

• For UPSC – IAS – IPS – IFS etc., exams, you must prepare to answer, essay type questions which test your General Knowledge / Sensitivity of current events
• If you have read this blog carefully , you should be able to answer the following question:

"How can community-owned SHE Marts change market access dynamics for women-led self-help groups in rural India?"

• Need help ? No problem . Following are two AI AGENTS where we have PRE-LOADED this question in their respective Question Boxes . All that you have to do is just click SUBMIT
  1. www.HemenParekh.ai { a SLM , powered by my own Digital Content of more than 50,000 + documents, written by me over past 60 years of my professional career }
  2. www.IndiaAGI.ai { a consortium of 3 LLMs which debate and deliver a CONSENSUS answer – and each gives its own answer as well ! }
• It is up to you to decide which answer is more comprehensive / nuanced ( For sheer amazement, click both SUBMIT buttons quickly, one after another ) Then share any answer with yourself / your friends ( using WhatsApp / Email ). Nothing stops you from submitting ( just copy / paste from your resource ), all those questions from last year’s UPSC exam paper as well !
• May be there are other online resources which too provide you answers to UPSC “ General Knowledge “ questions but only I provide you in 26 languages !

Interested in having your LinkedIn profile featured here?

Submit a request.

Executives You May Want to Follow or Connect

Bhaskar Ghosh

CEO & C

Experience · Independent Director · Chief Strategy and Innovation Officer · Advisor to the CEO · Group Chief Executive - Technology Services · Global Service ...

Loading views...

Viswanath Ramaswamy

Vice President, Technology Lifecycle ...

IBM Technology Sales. Vice President - Cloud, Cognitive & Security Software (India/South Asia). IBM India Private Limited, Bangalor. Aug 2020 - Jan 2021 6 ...

Loading views...

Kanishka Agiwal

Vice President

Vice President - Sales at QpiAI | Quantum Computing | AI | Cloud · I head sales, marketing and partnerships at QpiAI, a Quantum Computing and AI company, ...

Loading views...

Sunil Thamaran

SVP, Chief People Officer, Managing Director

Consultant on Semiconductor business growth strategies, IoT applications (home, power, pollution, energy, healthcare, industrial, etc.), and solar energy ...

Loading views...

sthamaran@enphaseenergy.com

Anila Vavilla

Vice Chairman & Managing Director

Telangana State Renewable Energy Development Corporation Limited Dr. B.R. Ambedkar Open University (BRAOU), Hyderabad ...

Loading views...

Budget 2026: IT's Turning Point

What Budget 2026‑27 Means for Indian IT: 8 Biggest Announcements

I write this as someone who has watched India’s tech story unfold for decades — from the early software exports era to the current moment where compute, chips and AI sit alongside services as strategic national priorities. This Budget delivers an unusually coherent set of moves aimed at both the old engine (IT services) and the new stack (data centres, cloud, semiconductors and AI). Below I sketch the eight biggest announcements, why they matter, and what leaders — founders, CTOs, CFOs and policy watchers — should do next.

Quick reference: the official Budget booklet and related notes capture these measures in detail Key Features of Budget 2026‑2027. Journalists and industry summaries also provide helpful quick reads (Times of India summary, PIB release).

I have written about budgets and predictions before — budgets have long been a mirror of where a nation wants to place its bets A Laughing Matter?.

The 8 biggest announcements (and why they matter)

1) Clubbing IT services under one category + a uniform safe‑harbour margin (15.5%)

• What: Software development, ITeS, KPO and contract R&D relating to software are to be treated as one category — "Information Technology Services" — with a common safe‑harbour margin of 15.5%.
• Why it matters: Simplifies transfer‑pricing treatment and reduces tax uncertainty across business models that often blur the lines between services and R&D.

2) Big increase in safe‑harbour eligibility threshold (₹300cr → ₹2,000cr)

• What: The turnover threshold for availing safe‑harbour protection for IT services is proposed to rise sharply from ₹300 crore to ₹2,000 crore.
• Why it matters: Mid‑cap and larger IT firms will have access to faster dispute resolution and predictability — lowering compliance overhead and litigation risk.

3) Automated, rule‑driven safe‑harbour approvals and 5‑year continuity option

• What: Approval of safe‑harbour for IT services via automated rule‑driven processes; once chosen, a company can continue it for up to five years.
• Why it matters: Less human discretion → fewer surprises. Continuity helps long‑range planning, pricing and margin modeling.

4) Fast‑track Unilateral APAs for IT services and related procedural ease

• What: The Unilateral Advance Pricing Agreement (APA) process is to be fast‑tracked with an aim to conclude within two years (extendable on request); modified returns facility extended to associated entities.
• Why it matters: Firms with complex transfer‑pricing arrangements can lock in certainty faster — important for global delivery models and consolidation.

5) Tax holiday till 2047 for foreign cloud providers using India data centres (with conditions)

• What: Foreign companies providing cloud services to global customers from India‑based data centres can be offered tax holidays till 2047, subject to conditions (e.g., services to Indian customers routed via Indian reseller); related entities providing data‑centre services can get a 15% safe‑harbour on cost.
• Why it matters: A potential game changer for the data‑centre and cloud ecosystem — could catalyze large‑ticket, long‑gestation investments and make India an export hub for compute and AI training capacity.

6) ISM 2.0 and significant boost for electronics/components manufacturing (ECMS outlay ↑)

• What: Launch of India Semiconductor Mission (ISM) 2.0 and a proposed increase in the Electronics Components Manufacturing Scheme outlay (to large multi‑thousand crore numbers according to Budget notes).
• Why it matters: Signals a move from assembly to design, equipment, materials and IP building. Strengthening domestic supply chains matters for hardware startups and for the country’s digital sovereignty.

7) AVGC labs, Bharat‑VISTAAR and explicit pushes for AI adoption

• What: Creation of AVGC (Animation, VFX, Games & Comics) labs across thousands of schools/colleges; Bharat‑VISTAAR — a multilingual AI tool to integrate AgriStack and ICAR advisories; and a High‑Powered standing committee to study AI’s impact on jobs and skills.
• Why it matters: Demand‑side initiatives for creative and AI talent; an explicit public commitment to operational AI tools (not just rhetoric).

8) Continued Digital India/DPI investments, display fab support and public capex tailwinds

• What: Sustained allocations to Digital India programs, support for display fabs and production‑linked incentives in electronics/IT hardware; a larger public capex envelope.
• Why it matters: Public capital and targeted incentives create markets, spur private capex and lower the time‑to‑scale for hardware and infrastructure plays.

What this means — distilled into four shifts

• Predictability over friction: Transfer‑pricing safe‑harbour and automated approvals reduce a major source of uncertainty for exporters.
• From services hub to compute‑plus‑services nation: The cloud/data‑centre incentive signals a push to host global workloads — not only serve them.
• From assembly to design and supply‑chain depth: ISM 2.0 and ECMS funding push the ecosystem higher up the value chain.
• AI goes operational: Bharat‑VISTAAR and AI in public programs show a practical, sectoral approach to adoption (agriculture, ports, governance, education).

Practical next steps (for founders, CFOs, CTOs, and industry leaders)

• Revisit transfer‑pricing strategy: Evaluate eligibility for the new safe‑harbour and factor a 5‑year continuity horizon into pricing and margins.
• Re‑examine corporate structure for cloud and data‑centre engagements: If your business touches global cloud delivery from India, model the reseller constraints and potential tax benefits carefully.
• Tap manufacturing incentives early: If you are in electronics, sensors, boards, displays or semiconductors, map capabilities to ISM/ECMS and PLI windows — the funding timelines and eligibility gates will matter.
• Invest in AI adoption use‑cases, not experiments: Look for public programs (agri, ports, education) where pilot scale can convert into long‑term contracts.
• Build talent pipelines for AVGC and AI: The budget’s education/skill moves will create demand — ensure hiring and training plans match.
• Watch the fine print: Policy design (conditions, eligibility, anti‑avoidance, reseller clauses) will determine real outcomes — legal and tax teams must be engaged early.

Risks and caveats I’m watching

• Implementation matters: Promises on paper need rules, notifications and operational clarity. The reseller condition for cloud tax breaks, and how safe‑harbour cost bases are computed, will be decisive.

• Incentives skew investment timing: A long calendar incentive (till 2047) can compress investor timelines; expect rushes, then longer tails.

• Skills gap vs demand surge: Creating hardware ecosystems and AI infrastructure is capital‑intensive and long‑term; bridging the talent gap remains non‑trivial.

My take — an optimistic but measured outlook

This Budget is not a single bold stroke; it is a set of aligned nudges. It treats the Indian IT story as multi‑layered: services, compute, chips and creative/content industries. For those who run businesses in this space, the message is clear — there is now a policy scaffold to scale both software services and the compute/hardware stack together. What matters next is speed of execution, clarity in rule‑making, and how industry and academia convert incentives into capability.

If you are building in India today, you need to plan for five parallel tracks: tax/transfer‑pricing clarity, cloud/data‑centre partnerships, semiconductor/electronics supply‑chain integration, AI productization for domain play, and aggressive talent building.

For readers who like context: I’ve been writing about budgets and the interplay of policy and tech for years — see my earlier piece on how budgets reveal priorities and create momentum A Laughing Matter?.

---

Regards,
Hemen Parekh

---

Any questions / doubts / clarifications regarding this blog? Just ask (by typing or talking) my Virtual Avatar on the website embedded below. Then "Share" that to your friend on WhatsApp.

Get correct answer to any question asked by Shri Amitabh Bachchan on Kaun Banega Crorepati, faster than any contestant

Hello Candidates :

• For UPSC – IAS – IPS – IFS etc., exams, you must prepare to answer, essay type questions which test your General Knowledge / Sensitivity of current events
• If you have read this blog carefully , you should be able to answer the following question:

"Which eight key Budget 2026‑27 announcements most directly affect India’s IT industry and why?"

• Need help ? No problem . Following are two AI AGENTS where we have PRE-LOADED this question in their respective Question Boxes . All that you have to do is just click SUBMIT
  1. www.HemenParekh.ai { a SLM , powered by my own Digital Content of more than 50,000 + documents, written by me over past 60 years of my professional career }
  2. www.IndiaAGI.ai { a consortium of 3 LLMs which debate and deliver a CONSENSUS answer – and each gives its own answer as well ! }
• It is up to you to decide which answer is more comprehensive / nuanced ( For sheer amazement, click both SUBMIT buttons quickly, one after another ) Then share any answer with yourself / your friends ( using WhatsApp / Email ). Nothing stops you from submitting ( just copy / paste from your resource ), all those questions from last year’s UPSC exam paper as well !
• May be there are other online resources which too provide you answers to UPSC “ General Knowledge “ questions but only I provide you in 26 languages !

Interested in having your LinkedIn profile featured here?

Submit a request.

Executives You May Want to Follow or Connect

Tinju Augustine

Senior Director, Business Value @ NTT DATA

Senior Director, Business Value @ NTT DATA | Leading Multi-Tower Transformation | C-Suite Advisory | Strategy, CX & Tech-Led Innovation | Customer Obsessed ...

Loading views...

Neetan Chopra

Chief Digital and Information Officer at IndiGo

business value and transformation using technology and innovation ... top executives leading innovative business transformation efforts. On the ...

Loading views...

neetan.chopra@goindigo.in

Gopala K Dasika

BVSc, PhD

Vice President & Head - Global Biologics R&D India. Pfizer. 2012 - 2014 2 ... Vice President - Biotechnology. Unichem Laboratories Limited. 2010 - 2012 2 ...

Loading views...

Paroma Chatterjee

CEO

CEO - Revolut India | Transforming the Indian Fintech industry · I am a seasoned professional, with 20 plus years of rich experience in the Indian Banking ...

Loading views...

paroma.chatterjee@revolut.com

KV Arangasamy

Founder & Managing Director @ RUGR

Founder & Managing Director @ RUGR | Fintech, Rural Financial Inclusion , Fintech of Bharath, Digital banking. · As the Founder and Managing Director of ...

Loading views...

kva@rugr.com