India Inc prepares for Budget 2026 as Finance Minister Nirmala Sitharaman is set to present fiscal interventions and policy announcements in Parliament on February 1, 2026. Market experts are calling for efficient government capex, reduced interest costs, and enhanced deregulation across various sectors.

Environmental Concerns Impact Foreign Investment

Ajay Srivastava, MD of Dimensions Consulting, highlighted India's primary challenge in an exclusive interaction with NDTV Profit on January 7, 2026. According to Srivastava, the efficiency of government spending, including capex, remains the country's main concern for 2026.

The market veteran warned that foreign capital inflows to India may stay muted due to the country's environmental challenges. "When we talk of FIIs, FDI coming in, let's understand how the investments enter because environmentally, we have a problem," Srivastava stated, referring to deteriorating air quality across metropolitan cities like Delhi and Mumbai.

Quality of Life Concerns Deter Foreign Investment

Srivastava emphasized how environmental degradation affects India's investment attractiveness. The rising levels of AQI and pollution have made daily life difficult across major cities, with quality of life drastically declining due to increasing cases of respiratory diseases, allergies, and reduced immunity levels across all age groups.

"How do you convince a foreigner to invest and live in this country if this is what we present?" the expert questioned. He stressed that overseas companies express concerns about bringing personnel to India due to existing health hazards.

The market expert seeks more efficient government capex from Budget 2026 that is "accountable and in-line with strengthening the living standard of this country." He argued that economic prosperity becomes meaningless without basic health and environmental security.

Interest Costs and Deregulation Priorities

Srivastava identified interest costs as the biggest component of India's budget and a major factor constraining growth. The current interest cost structure limits Indian corporates' ability to produce globally competitive goods.

With Budget 2026, the Centre is expected to deepen its deregulation push across sectors. Srivastava views deregulation through two key aspects:

• Improving performance of Public Sector Undertakings (PSUs)
• Enhancing ease of doing business in the country

The expert highlighted that with state governments borrowing at 7.70%, corporate borrowing costs remain prohibitively high, questioning how businesses can remain competitive under such conditions.

Path Forward for Economic Growth

Srivastava emphasized that the government must focus on capital retention and preventing money outflows from the country. "You got to get capital and get people to stop taking money out of this country," he stated, identifying this as the real challenge for India in 2026.

The expert's recommendations for Budget 2026 center on three critical areas:

• Efficiency of government spending and environmental crisis resolution
• Better city infrastructure development
• Reduced interest costs to enhance corporate competitiveness

According to Srivastava, addressing these fundamental issues is essential for sustaining foreign investment flows and maintaining India's economic growth trajectory in the coming fiscal year.

The Union Budget 2026-27 represents a continuation of India's comprehensive reform trajectory, with the government preparing to accelerate deregulation initiatives across various sectors. Policymakers are developing a budget framework that prioritizes the simplification of business operations, positioning deregulation and decriminalisation as the cornerstone themes for the fiscal year 2027.

Key Reform Areas Under Consideration

The budget preparation process focuses on streamlining business registration and approval procedures for both companies and individuals. The Finance Ministry is currently reviewing proposals submitted by multiple ministries and departments, all aimed at simplifying existing regulatory frameworks and operational procedures.

Compliance and Oversight Transformation

A significant aspect of the proposed reforms involves restructuring the current inspection regime. Routine inspections, which businesses have consistently identified as a major compliance burden, are expected to be substantially reduced. The government plans to replace traditional inspection methods with risk-based, technology-driven oversight mechanisms that focus resources on areas of genuine concern rather than blanket compliance checks.

The decriminalisation initiative aims to restrict criminal action to serious offences only, while most procedural lapses would be addressed through alternative mechanisms. This approach reflects the government's broader strategy to create a more business-friendly environment while maintaining necessary regulatory oversight.

Budget Presentation Timeline

Finance Minister Nirmala Sitharaman is scheduled to conduct consultations with state finance ministers in the coming days to gather comprehensive inputs for the Union Budget preparation. These consultations form a crucial part of the budget-making process, ensuring coordination between central and state-level fiscal policies.

The Union Budget for 2026-27 is expected to be tabled on February 1, 2026, according to officials familiar with the budget preparation process. This date maintains the government's established practice of presenting the Union Budget on February 1 annually, a schedule implemented since 2017 regardless of which day of the week it falls on.

Historical Context and Parliamentary Procedures

The February 1, 2026 presentation date will require a Sunday sitting of Parliament, making it a rare weekend session for the annual financial statement. Parliament has historically convened on Sundays only under limited circumstances, with previous instances occurring during special situations in 2020 and 2012.

The broader reform agenda for fiscal year 2027 is designed to span multiple sectors, with the primary objective of enhancing productivity and improving overall economic efficiency. This comprehensive approach reflects the government's commitment to creating a more streamlined regulatory environment that supports business growth while maintaining appropriate oversight mechanisms.