As February 1 approaches, excitement around Union Budget 2026–27 is growing across the country. Everyone is eager to know what the Finance Minister will announce this year. A recent report by HSBC Mutual Fund gives a clear idea of what we can expect from the upcoming budget.
According to the report, even though the government faces financial limitations, it is expected to continue its strong focus on infrastructure spending.
What is Capex?
Capital expenditure, or capex, is the money the government spends on building and improving long-term assets like roads, bridges, railways, and airports. This kind of spending is crucial because it not only strengthens the country’s infrastructure but also creates jobs and boosts economic growth. In Budget 2026, the government is expected to continue its focus on capex, signaling a strong push for infrastructure development across India.
By investing in these major projects, the government aims to support the country’s growth and make long-term improvements that benefit businesses, citizens, and the economy as a whole.
In the last budget, the government allocated around Rs 11.21 lakh crore, which was about 3.1% of India’s GDP, towards infrastructure. HSBC believes the government will maintain this momentum in Budget 2026 as well.
No major Income Tax changes expected
The report suggests that the government has very limited scope for major tax reforms in this budget.
Instead of introducing new policies, the focus will likely be on better implementation of existing tax policies.
More financial support for states
One important highlight of Budget 2026 could be increased support for state governments. The Centre is expected to continue providing long-term, interest-free loans to states.
These funds will help states improve their finances and invest in development projects such as infrastructure, health, and education.
Defense, Agriculture, and Rural Development in focus
HSBC’s report points out that some sectors may get special attention in the budget:
- Defense
- Agriculture
- Rural development
In addition, the government may increase spending on technology and Artificial Intelligence (AI) to ensure India stays competitive in the global tech space.
Boost expected for exports
India’s export sector has been facing challenges due to high tariffs and global pressures. To address this, the government may introduce new incentives or subsidies for exporters.
These benefits could be offered through the newly launched Export Promotion Mission, which aims to strengthen India’s position in the global market.
Frequently Asked Questions (FAQs)
Q1. What is Capex, and why is it important?
A1. Capex is the money the government spends on major projects like roads and railways. This strengthens the country’s infrastructure and provides long-term economic benefits.
Q2. Will there be any changes to income tax in Budget 2026?
A2. According to reports, the government has limited policy options, so any major tax changes are unlikely.
Q3. When will the budget be presented?
A3. The Union Budget 2026-27 will traditionally be presented in Parliament on February 1, 2026.
Q4. Which sectors may receive increased funding in this budget?
A4. Defense, agriculture, rural development, and technology (especially AI) are sectors that may receive special attention from the government.
Q5. What is the Export Promotion Mission?
A5. This is a new scheme of the government which aims to strengthen Indian exporters in the global market by providing them with subsidies and help.
