Providing consumption boost to economy through personal income tax cuts and higher disposable incomes for the middle class has been the core theme in the budget 2025-26, Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research said here on Tuesday.

The budget 2025-26 is a major booster for consumption, which should increase private consumption demand and enhance the GDP growth that has moderated to 6.4% in FY25. It paves way to take the economy towards Viksit Bharat 2047.

Acuité Research believes that this budget has presented a host of measures to accelerate private sector investments. While maintaining the focus on infrastructure development, it also enhanced support to the MSME and the agricultural sector. Additionally, the commitment to fiscal consolidation has been maintained with the fiscal deficit pegged at 4.8% and 4.4% for FY25 and FY26 respectively.

The infrastructure sector remains a high priority for the government, notwithstanding a moderate growth in the capex budget from Rs 10.2 lakh crore to Rs 11.2 lakh crore. Several measures have been announced to strengthen the infrastructure and logistics sectors such as the ship building industry. For the maritime sector, a fund with a corpus of Rs 25,000 crore will be set up for long-term financing with 49% contribution by the government and balance mobilized from ports and the private sector. The government has proposed an “Urban Challenge Fund” with a corpus of Rs 1 lakh crore and an initial allocation of Rs 10,000 crore for FY26 which will fund upto 25% of urban infrastructure projects with the balance to be funded through bonds, loans and PPP. Also, the partial guarantee scheme by NABFID on corporate bonds, if well designed, can boost investment in the infrastructure sector.

The budget has brought nuclear power to the forefront. A target of100 GW of nuclear power capacity by 2047 has been set which will involve small modular reactors, which will aid in expediting energy transition from fossils to cleaner energy.

Some long-term measures to expedite private sector investments have been announced in the budget. Concerns on red tapism have been addressed by a high-level committee to be constituted. This committee will recommend regulatory reforms in the corporate sector involving licences, approvals etc. These initiatives will improve the ease of doing business, and aid in sustained growth in private sector investments.

The government’s commitment to the development of the MSME sector is strengthened in this budget. The increase in guarantee cover for micro enterprises has been up to 10 Cr and for startups, the guarantee cover has been increased to 20 Cr. Enhanced access to funds have been provided for women entrepreneurs. Supporting local toy manufacturers with a new scheme to make India a global hub for toys has been also announced. Setting up an Export Promotion Mission to facilitate easy access to export credit, cross-border factoring support and handle non-tariff measures in overseas markets is also announced.

Improving the viability of indigenous advanced technology-based manufacturing; custom duty exemptions or concessions particularly for inputs to some high-technology products or critical raw materials needed, for example, in battery manufacture, makes the government’s support for MSMEs evident.

The slightly better than expected fiscal numbers, with fiscal deficit at 4.8% (RE) for FY25 vs 4.9% (BE) and an aggressive target of 4.4% (BE) for FY26 is a testament to government’s strong commitment to fiscal consolidation. The corporate tax collection targets, however, appear to be somewhat optimistic, given the economic slowdown and corporate profitability burdens.