R. Dinesh, Executive Chairman of TVS Supply Chain Solutions and former President of the Confederation of Indian Industry, has outlined a comprehensive vision for Budget 2026, emphasizing the need to consolidate recent economic gains and accelerate India's growth trajectory. According to Dinesh, the upcoming budget presents an opportunity to develop measurable outcomes and effective delivery mechanisms while building on significant policy reforms.

Economic Formalization Shows Strong Progress

Recent tax and policy reforms have demonstrated substantial impact on India's economic formalization. The GST system has shown remarkable growth, with collections more than doubling over a four-year period.

Dinesh notes that this growth represents "clear evidence of deeper formalization of the economy" rather than merely revenue expansion. The GST reforms implemented in September 2025 have simplified what was previously a complex system.

Infrastructure Investment Maintains Momentum

Infrastructure spending has continued its upward trajectory, with investment rising 11% to reach ₹11.11 lakh crore, maintaining capital expenditure at 3.4% of GDP. Dinesh emphasizes that as this scale of spending continues, the focus must shift from capacity creation to debottlenecking and efficiency gains.

The PM Gati Shakti data, announced in the previous budget, now provides visibility to investors and users as a planning tool. This system helps identify where removing bottlenecks can deliver the quickest returns across ports, airports, connectivity infrastructure, and first- and last-mile logistics networks.

Global Supply Chain Integration Strategy

To enhance India's integration into global supply chains, Dinesh proposes creating mechanisms for Indian companies to acquire overseas manufacturing capacity. He suggests establishing a dedicated sovereign-backed vehicle or a focused fund under the National Investment and Infrastructure Fund.

The automotive aftermarket presents a significant opportunity, with India currently holding approximately $3 billion of an estimated $300 billion global market. A ₹1 lakh crore fund for R&D and innovation, provisioned in the previous budget, is now being operationalized to enable Indian companies to acquire overseas intellectual property and technology capabilities.

Employment Generation and Skill Development Focus

The Employment Linked Incentive (ELI) scheme provides a foundation for job creation by linking employment generation with formalization and skilling. Dinesh advocates for prioritizing specific sectors that offer high employment potential.

He recommends focused certification and upskilling through National Skill Training Institutes (NSTIs), with a target of enabling at least 100,000 jobs in logistics and tourism sectors. This approach would translate policy intent into measurable outcomes.

MSME Support and Industry Collaboration

Micro, small and medium enterprises continue serving as the backbone of job creation, supported by multiple schemes with increased funding. Dinesh suggests coordinated cross-functional collaboration with industry bodies such as CII and sectoral Centres of Excellence to improve connectivity with MSMEs.

This collaboration would help align initiatives more closely, enable large corporates to support MSMEs, and translate policy intent into measurable growth and employment outcomes.

Business Process Reforms and Global Competitiveness

Dinesh emphasizes evaluating policies through two key lenses: ease of doing business and cost of doing business. As India integrates more deeply into the global economy, he calls for benchmarking processes such as mergers, demergers, and acquisitions against global best practices to achieve world-class timelines.

The finance minister's recent references to customs and trade facilitation reforms are particularly relevant as global supply chains continue reconfiguring. Beyond rate rationalization, Dinesh advocates for deeper digitization and technology-led processes that speed up approvals and clearances to strengthen India's competitiveness.

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for 2026-27, market participants are closely monitoring how India plans to navigate the delicate balance between supporting economic growth and maintaining fiscal discipline. According to Axis Securities, the upcoming budget will likely prioritize sustaining growth momentum without compromising medium-term fiscal consolidation objectives, particularly given the current environment of global uncertainties and volatile capital flows.

Growth Outlook and Economic Fundamentals

India's economic performance continues to demonstrate resilience, with real GDP growth estimated at around 7.40% in FY26. This growth trajectory has been supported by sustained government capital expenditure, robust services exports, and gradual improvement in private investment sentiment. However, Axis Securities has highlighted concerns regarding moderation in consumption demand and persistent global risks, which necessitate a carefully calibrated fiscal strategy for the upcoming budget period.

Capital Expenditure Strategy and Sectoral Focus

Axis Securities expects capital expenditure to remain the cornerstone of the government's growth strategy in Budget 2026-27. The brokerage anticipates allocations in the range of ₹12-13 trillion, representing a 10-15% year-on-year increase from previous levels.

For global investors, sustained public capital expenditure is viewed as critical for encouraging private investment participation and supporting medium-term earnings visibility, particularly within infrastructure-linked sectors.

Fiscal Consolidation Targets

Axis Securities expects the government to maintain its commitment to fiscal consolidation, targeting a fiscal deficit of approximately 4.20-4.40% of GDP for FY27. Achieving this target range would demonstrate strong policy credibility to both domestic and international investors, reinforcing India's position as a stable investment destination amid global economic volatility.

Consumption Support and Rural Development

The brokerage has identified balancing capital expenditure-led growth with consumption support as one of the key challenges for Budget 2026-27. With urban consumption showing signs of moderation and rural demand remaining uneven, the government may implement support measures through several channels:

• Rural infrastructure development programs
• Enhanced agriculture support mechanisms
• Employment generation and skilling initiatives
• Targeted welfare spending programs

Revenue Generation and Fiscal Buffers

Axis Securities expects disinvestment and asset monetization to play important roles in supporting non-tax revenues, with potential targets ranging from ₹50,000-70,000 crore. While historical execution has faced challenges, the brokerage suggests that a clearer and time-bound roadmap could receive positive market reception.

The brokerage also highlighted the potential role of higher-than-budgeted dividend transfers from the Reserve Bank of India as a key fiscal buffer, which could help offset revenue pressures and limit market borrowings without compromising growth expenditure allocations.

Structural Reforms and Market Expectations

Beyond headline fiscal numbers, Axis Securities indicated that markets will closely monitor signals regarding structural reforms across multiple areas. These include ease-of-doing-business improvements, labor and logistics efficiency enhancements, digital public infrastructure development, and legal and regulatory simplification measures. Such reforms are considered essential for boosting productivity, attracting long-term foreign capital, and sustaining India's investment-led growth trajectory.