The Union Budget 2025-26 laid out a visionary roadmap aimed at fostering sustainable and inclusive growth, seamlessly integrating strategies for capital formation, knowledge accumulation, and private investment. According to analysts at the State Bank of India (SBI), the budget reflects a strong commitment to fortifying the agrarian ecosystem, invigorating MSMEs, and positioning India as a global manufacturing and investment hub amidst a rapidly evolving world order.
Building on the momentum of previous budgets, the SBI report highlights continuity in next-generation reforms across ten broad areas, focusing on Garib (the poor), Yuva (youth), Annadata (farmers), and Nari (women). These objectives will be driven by four key growth engines: agriculture, MSMEs, investments, and exports. Additionally, transformative reforms are set to reshape six critical sectors—taxation, power, urban development, mining, financial markets, and regulatory frameworks—enhancing India’s global competitiveness.
India’s nominal GDP growth is projected at 10.1% for FY26, with the fiscal deficit targeted at 4.4% of GDP (Rs 15.68 lakh crore), marking an improvement from 4.8% (Rs 15.69 lakh crore) in FY25. The government’s gross market borrowings for FY26 are estimated at Rs 14.8 lakh crore, with net borrowings at Rs 11.5 lakh crore. SBI analysts note that this fiscal consolidation underscores a strategic shift from pandemic-driven public spending towards enabling private sector-led growth. Interestingly, the budget’s conservative fiscal estimates leave room for potential upside surprises, suggesting a cautious yet optimistic outlook.
The budget places a strong emphasis on revitalizing the rural economy. The Prime Minister Dhan-Dhaanya Krishi Yojana, in collaboration with state governments, aims to benefit 1.7 crore farmers across 100 districts with low productivity and limited credit access. Complementing this, the Rural Prosperity and Resilience program seeks to tackle underemployment through skilling initiatives, technology adoption, and local investments, particularly targeting women, young farmers, and landless families. To further support rural credit growth, the government plans to enhance interest subvention under the Kisan Credit Card (KCC) scheme and introduce a Grameen Credit Score framework, enabling better credit access for Self-Help Group (SHG) members and rural communities, the SBI report notes.
Infrastructure development remains a cornerstone of the budget, with Rs 11.2 lakh crore (3.1% of GDP) allocated for capital expenditure, rising to Rs 19.8 lakh crore when accounting for state grants and CPSE investments. This sustained focus on infrastructure is expected to catalyze economic activity, boost job creation, and attract private investments, SBI analysts highlighted.
The Union Budget 2025-26 strikes a delicate balance between fiscal prudence and growth imperatives. By focusing on rural prosperity, private sector participation, and structural reforms, the budget lays a robust foundation for India’s long-term economic resilience and global competitiveness, according to SBI analysts.