Reflections on a ‘Historic’ Budget
Today I watched — as many of us did — the immediate reactions to the Union Budget 2026. The Prime Minister called it "historic" and described it as a "highway of opportunities" and a foundation for a Viksit Bharat by 2047. Those phrases matter because budgets are narrative devices as much as they are fiscal plans: they tell a nation what it values and where it wants to fly.
I want to be candid: I feel both hopeful and guarded. Hopeful because the Budget leans visibly into long-term capabilities — semiconductor ambitions, bio-pharma, rare-earth corridors, a fresh push for MSMEs and data-center incentives — all elements of a strategy to move the country from low-cost production toward high-value, resilient value chains Times of India. Guarded, because strategy is only as good as implementation and institutions.
What struck me most
Investing in capability, not just consumption: The emphasis on sectoral missions — Bio-Pharma Shakti, Semiconductor Mission 2.0, electronics components, and champion MSMEs — signals a purposeful industrial policy that seeks to upgrade the economy rather than merely prop it up.India Budget Speech
Infrastructure with intent: Higher capital expenditure and projects like freight corridors, waterways and high-speed rail are not just about mobility; they are about reducing logistics cost, knitting regional supply-chains, and making Tier-2/Tier-3 cities credible growth hubs.
Strategic minerals and rare-earth focus: Announcing a Rare Earth Corridor and attention to critical minerals is geopolitical economics — building supply resilience and industrial sovereignty.
Youth and women as central actors: Calling this a "Yuva Shakti" budget and highlighting women’s role in the economy is right in tone. Policies that meaningfully translate into jobs, skilling and entrepreneurship will define whether those words become reality.
Where my instincts ask tougher questions
Fiscal trade-offs: The Budget tries to balance lower fiscal deficit, inflation control and high CapEx. That balancing act is politically neat, but fiscally tight. Delivering big public investment while keeping deficits in check requires strong revenue performance or tough prioritization at the margin.
Implementation bottlenecks at state and municipal levels: Municipal bonds, asset monetization and regional projects need local capacity, transparent project pipelines, and predictable governance — not just central allocations.
MSMEs and the pathway to global markets: Credit guarantees and incentives help, but MSMEs need consistent product-quality upgrades, digital integration, and export-market access. Translating policy into sustained competitiveness takes time and patient capital.
Data and privacy when chasing the data-center dream: Incentives to become a global data-hub will attract investment. But we must pair that with strong norms and infrastructure for data protection and cross-border flow governance.
A continuity I’ve been writing about
This budget’s ambition for structural reforms and technology-led manufacturing echoes themes I have argued for in earlier pieces — that the real lever for long-term growth is structural reform plus targeted capability building. Years ago I urged a focus on structural reforms and on creating incentives for domestic industry to scale and export. See my older reflections on structural reforms and budgeting-by-objectives for context[^1]. That continuity comforts me: ideas, when persistent, reach policy traction over time.
[^1]: My earlier essay on structural reforms and budgetary priorities: STRUCTURAL REFORMS ?
What I’d watch next — the three practical tests
Flow of capital: Are public capex and incentives converting into committed private capex? Watch tender awards, land clearances, and private investment announcements over 6–12 months.
Jobs and skills metrics: Is there measurable placement and quality-of-jobs improvement from programs tied to manufacturing missions? Benchmarks and quarterly reporting will matter.
MSME exports and upgrading: Are MSMEs moving from local supply to global buyers? Export orders, quality certifications, and clustering outcomes will be the signals.
A small, personal note to end with
As someone who writes about policy and business, I love the audacity of big national narratives. The phrase "Viksit Bharat 2047" gives us a horizon — a useful one. But horizons are reached by daily choices: by honest measurement, disciplined execution, and the humility to correct course when a policy falters.
This Budget places a bet on capability — on technology, on minerals, on makers and micro-enterprises. I’d rather place bets like that than ones aimed only at short-term political windfalls. Now the work begins: turning the highway of opportunities into durable roads that India’s entrepreneurs and citizens can drive on for decades.
Regards,
Hemen Parekh
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