New Delhi, January 28 (IANS). In the Union Budget 2026 to be presented on February 1, more attention will be given to sectors like defence, critical minerals, power, electronics, infrastructure and affordable housing. A Motilal Oswal report released on Wednesday said policymakers will maintain a balance between growth priorities and fiscal discipline amid global uncertainty.
According to the ‘India Strategy’ report of Motilal Oswal Financial Services Limited, there may not be very big announcements in the budget, but some selected decisions can also create a good environment in the stock market.
In the budget for the coming financial year 2026-27, the government will have to strike the right balance between maintaining economic growth and keeping the deficit under control. Along with this, it will also be important to keep in mind the challenges arising from the ongoing geopolitical tensions in the world.
The report said that during the talks it was realized that investors were not expecting big and heavy decisions. There are many issues facing the Finance Minister, so expectations regarding the budget are low, which could be a positive surprise if any good decision is taken.
According to the report, the impact of the budget has decreased slightly in the last few years, because the government has been taking many economic decisions apart from the budget. In such a situation, the stock market is now expecting those special steps from the budget, which will promote development in some selected sectors and strengthen the confidence of investors.
The government is continuously moving towards maintaining financial discipline. While the fiscal deficit had reached a high of 9.2 percent during the Covid period, it is now likely to come down to 4.4 percent by the end of FY 2026.
The report said that the government will generally keep expenditure under control and no major changes are expected in this direction. However, a new target of debt and GDP will be set in the financial year 2027 and consumption has not yet increased completely, so the possibility of some additional expenditure cannot be ruled out.
If additional government spending is in the right direction, such as on productive capital investment or increasing people’s consumption, then equity markets may support it. But it will be important to avoid unnecessary administrative expenses or low-impact payments.
In the budget of financial year 2026, the government had given income tax relief of Rs 1 lakh crore to increase the consumption of the middle class, the full effect of which is yet to be seen. Therefore, the report believes that very limited steps will be taken to increase consumption in the budget for FY 2027.
According to the report, the upcoming budget will focus more on capital investment, especially in those sectors which are considered strategically important for the country due to the current global situation.
–IANS
DBP/ABM
