Indian Budget 2026 aims to promote prosperity at home and abroad

In the backdrop of an estimated GDP growth of 7.4 percent (with nominal GDP growth at 8 percent) for FY 2025-26, the Finance Minister of India, Ms. Nirmala Sitharaman, presented the Union Budget for 2026 on 1 February in New Delhi. Describing the Budget 2026 as historic, Indian Prime Minister Shri Narendra Modi asserted that it reflects the aspirations of the 140 crore (1.4 billion) Indians, strengthens the economic reform journey, and charts a clear roadmap for Viksit Bharat, or a Developed India, by 2047.

Strong macroeconomic fundamentals

The budget shows that the macroeconomic fundamentals of the Indian economy are strong. The country’s GDP has passed USD 4.13 trillion. IMF states that while India accounts for 17 percent of the projected worldwide economic growth, the USA sits at less than 10 percent. The fiscal deficit for 2027 is estimated at 4.3 percent of India’s GDP, while the debt-to-GDP ratio is expected to be 55.6 percent of GDP in 2026-27, slightly lower than 56.1 percent in 2025-26. The services sector remains the primary growth driver, expanding by 9.1 per cent. Manufacturing and construction have grown by 7 per cent. Domestic demand continues to anchor growth. India’s total exports (merchandise and services) reached USD 825.3 billion in FY25, with continued momentum in FY26.

Forward-looking and reform-oriented

Some of the significant initiatives of the Budget 2026 include the plans to develop seven High-Speed Rail corridors between cities as ‘growth connectors’ to promote environmentally sustainable passenger systems, significant outlay for Carbon Capture Utilization and Storage technologies, establishing dedicated Rare Earth Corridors, launching the BharatVISTAAR (a multilingual AI tool to improve agriculture sector), various tax related measures to attract global investment and improve ease of doing business and the like.

It is pertinent to mention that since August 2025, almost 350 new economic reform measures have been unveiled, including GST simplification, notification of Labour Codes, and rationalization of mandatory Quality Control Orders. More efforts are expected, focusing on deregulation and reducing compliance requirements.

The budget has been inspired by three ‘kartavyas’ or duties of the Government of India, namely, (a) accelerating and sustaining economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics, (b) fulfilling the aspirations of people and building their capacity, making them strong partners in India’s path to prosperity, and (c) ensuring that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation. Also significantly, the budget is focused on the youth.

International cooperation

India’s Union Budget comes in the wake of a series of important developments in India’s external engagement, like the India-EU FTA, India-Arab League cooperation, India-GCC engagement, besides the active bilateral commercial and trade links between India and countries around the world, in particular in the GCC area. The clear and unmistakable message is India's commitment to multilateral cooperation and pursuing close ties with all economic partners around the world. This augurs well for India-Bahrain bilateral relations, especially as we celebrate the 55th anniversary of the establishment of diplomatic relations. Equally significant is the Kingdom of Bahrain’s presidency of the GCC and its participation in the UN Security Council for the two-year term that started in January 2026. India strongly supports Bahrain’s role and looks forward to working together to take the bilateral relations forward.