Union Budget 2026-27: A Blueprint for Economic Resilience

The Union Budget for 2026-27 aims to bolster economic growth by supporting domestic demand. Despite potential revenue sacrifices from tax reforms, the Government may achieve fiscal targets through additional non-tax revenue. New excise duties on tobacco and a public health cess have been legislated to enhance revenue.

The Union Budget for 2026-27 is poised to play a crucial role in reinforcing economic growth by bolstering domestic demand through targeted fiscal support. This aligns with the RBI's growth-centric monetary policies, according to the latest EY Economy Watch report released on Tuesday.

Despite potential revenue setbacks due to recent reforms in income tax and GST, unbudgeted receipts from non-tax revenues and reduced revenue expenditures might allow the government to meet its fiscal and capital expenditure targets. Additionally, new excise duties on tobacco products and a public health cess have been legislated to boost revenue.

Looking ahead, India's growth trajectory relies on robust domestic demand, with the Union Budget for FY27 expected to provide further impetus. With the presence of global economic challenges, net exports may continue to detract from GDP growth, but India is projected to maintain a medium-term growth average of 6.5%, bolstered by private investment and easing global supply chain issues.

(With inputs from agencies.)