Budget 2026 Unveiled: Infrastructure Push, Price Relief & Tax Revisions Shape Economic Landscape
Finance Minister Nirmala Sitharaman presented the third Union Budget of the Modi government for the fiscal year 2025-26 on Sunday, February 1, marking a significant policy direction with substantial emphasis on accelerating infrastructure development and capital expenditure. The budget outlines a comprehensive framework aimed at bolstering domestic industries while implementing measures that directly affect consumer prices and market operations.
Dual Approach: Price Reductions and Increased Transaction Costs
The budget introduces targeted relief measures designed to lower costs for consumers and producers. Through extended policy support, duty-free imports, and customs exemptions, the government has proposed significant price reductions for several essential items. Leather products, cancer drugs, and seafood are among the key beneficiaries, with the objective of easing financial burdens on patients and strengthening domestic manufacturing capabilities.
In contrast, the budget adopts a stricter stance on certain financial activities. Proposed revisions to buyback taxation, securities transaction tax (STT), and tax collected at source (TCS) are expected to increase costs for trading activities and specific corporate cash-distribution mechanisms. These changes indicate a focused approach toward minimizing tax arbitrage and enhancing compliance within the financial markets.
Expert Analysis: Long-Term Stability Over Short-Term Momentum
Market experts have weighed in on the budget's implications for capital markets. Manish Jain, Managing Director & CEO of Bajaj Broking, emphasized that Budget 2026 prioritizes building confidence and ensuring macroeconomic stability rather than chasing short-term gains. He highlighted several key factors:
- The commitment to a fiscal deficit glide path
- Capital expenditure allocation of ₹12.2 lakh crores
- Focus on manufacturing-driven growth
According to Jain, these elements create a conducive environment for long-term capital formation and provide visibility for investors. The strategic emphasis on sectors like infrastructure, semiconductors, bio-pharma, and advanced manufacturing broadens the investment landscape beyond traditional sectors, enhancing India's overall investment narrative.
While increased transaction costs in specific capital market segments may temporarily affect trading sentiment, Jain noted that continuity and fiscal prudence remain paramount for long-term investors. He anticipates that markets will increasingly reward quality, robust balance sheets, and businesses aligned with India's structural growth themes.
Comprehensive List: What Gets Cheaper and What Gets Costlier
The budget document, which requires approval from both Houses of Parliament, outlines specific items affected by the new fiscal measures. Here's a detailed breakdown:
Items That Will Become Cheaper
- Personal use imported goods
- 17 drugs or medicines for cancer patients
- Drugs, medicines and Food for Special Medical Purposes (FSMP) for 7 rare diseases
- Leather items (footwear)
- Textile garments
- Seafood products
- Tour packages (overseas)
- Lithium-Ion Cells for batteries
- Solar glass
- Critical minerals
- Biogas-blended CNG
- Aircraft manufacturing components
- Microwave ovens
- Foreign education
Items That Will Become Costlier
- Alcohol
- Cigarettes
- Nuclear Power Projects components
- Minerals, iron ore, coal
- Misreporting of income tax
- Stock options and future trading
The budget's balanced approach—combining consumer relief with fiscal tightening—reflects the government's strategy to foster sustainable economic growth while maintaining regulatory oversight. As the proposals move through parliamentary approval, stakeholders across industries will closely monitor their implementation and impact on India's economic trajectory.
