The Union Budget is likely to use higher capital spending and a simpler tax regime to cushion the blow from steep US tariffs that threaten Indian exports and sentiment. The focus seems to be on keeping growth steady, while still signalling seriousness about fiscal discipline.<\/p>\n\n\n\n
First, the government is expected to push public investment in roads, ports and energy so that domestic demand stays strong even if exports suffer, and analysts see capital spending crossing 12 trillion rupees in the coming year. This can create jobs, crowd in private investment over time and support supply chains. At the same time, the finance minister is likely to stick to a lower fiscal deficit target near 4.2 percent of GDP to keep borrowing costs and inflation risks under control.<\/p>\n\n\n\n
Second, the budget is seen simplifying the import duty structure and easing compliance for small businesses so that firms can handle tariff shocks with lower domestic frictions. The government is also working on trade diversification, including a major free trade agreement with the European Union, so India is less dependent on the US and China. To fund the planned spending, policymakers may lean more on higher dividends from the Reserve Bank of India and financial institutions, while divestment receipts stay modest.<\/p>\n\n\n\n\n
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