Nitin Agarwal, CEO of Mutual Funds at InCred Money, has outlined his expectations for Budget 2026, emphasizing the critical balance between fiscal discipline and economic growth stimulus. Speaking about India's economic trajectory amid global uncertainties, Agarwal highlighted the country's remarkable resilience, achieving robust 8% growth in the first half of FY26.

Budget 2026 Priorities and Fiscal Strategy

Agarwal expects Budget 2026 to prioritize three key areas while maintaining fiscal discipline. His recommendations focus on sustained investment, consumption revival, and export competitiveness.

The CEO emphasized that the transition from a $4.00 trillion to a $5.00 trillion economy depends on capital deployment willingness rather than risk containment. He stressed that the government must encourage private sector investment while maintaining fiscal discipline, even if it requires containing revenue expenditure growth.

Historic DII-FII Market Divergence

A significant shift in market ownership patterns emerged during 2025, marking a historic divergence between domestic and foreign institutional investors. The data reveals a fundamental change in Indian equity market dynamics.

Agarwal attributed FII outflows to competing attractions from US markets driven by AI investments, elevated US interest rates making emerging markets less attractive, and concerns about India's premium valuations. Conversely, DII inflows were sustained by robust SIP contributions and growing insurance and pension fund participation.

Mutual Fund Strategy Evolution

Current macro trends and global cues are reshaping mutual fund strategies significantly. Agarwal identified several key strategic shifts occurring in the industry.

Fund managers are increasingly adopting diversified and defensive allocations, with a major shift toward multi-asset allocation funds. These funds balance equity, debt, and other assets, delivering superior performance relative to many standard equity categories in 2025. The strategy benefits from precious metals rallies, with dynamic gold allocation serving as a natural hedge to equity volatility.

Debt fund positioning has adapted to the rate cycle scenario, with shorter-duration debt funds proving successful. Additionally, investments are focusing on India-specific stories as global trends move away from globalization toward protectionism.

Quantitative Investment Growth

The relevance of quantitative strategies is experiencing significant growth in India, representing a fundamental maturation of capital markets. Agarwal noted that quant investing, traditionally a Western phenomenon, has reached an inflection point in India.

The growth is evident across multiple dimensions, with smart beta funds experiencing substantial AUM expansion. Index providers have launched numerous smart beta and factor-based indices, offering investors richer portfolio construction options as active managers' ability to generate alpha in the large-cap segment has declined.

Gold as Strategic Asset Class

Gold's role has evolved significantly, transitioning from a purely defensive hedge to a more dynamic strategic asset class. Agarwal highlighted gold as one of the best-performing asset classes in 2025, driven by inflation concerns and ongoing central bank purchases.

Central bank behavior provides clear indicators of gold's institutional acceptance, with official sector purchases driving gold's proportion of global reserves above the euro for the first time in decades. This creates structural demand supporting sustained appreciation. Multi-asset funds now use dynamic gold allocation, with professional managers actively adjusting exposure based on market conditions rather than maintaining static positions.

As India approaches Union Budget 2026, the real estate sector stands at a critical juncture where policy decisions will significantly impact housing affordability and urban development. The industry has demonstrated unexpected resilience over the past two years, maintaining steady demand across housing segments while navigating global uncertainties and domestic policy changes.

Sector Resilience and Market Dynamics

The real estate market has shown remarkable stability, with premium and luxury segments continuing to attract buyers seeking long-term asset security. This sustained momentum reflects improved regulatory maturity, enhanced governance standards, and rebuilt trust between developers and homebuyers. The sector's performance has been supported by RERA-compliant disclosures and digital transaction platforms that have increased transparency and buyer confidence.

Key Budget Expectations and Policy Priorities

Industry stakeholders anticipate several critical policy measures in the upcoming budget. The primary focus remains on maintaining continuity in long-term housing and urban development programs, which enables better project planning and sustained employment across construction and allied industries.

Infrastructure Status and Capital Access

Granting housing infrastructure-equivalent status would unlock access to patient, long-tenure capital at reduced financing costs, enabling more sustainable project development and improved affordability for end-users.

Affordability Enhancement Measures

The revision of affordable housing price caps represents a crucial area requiring immediate attention. The current threshold of ₹45 lakh needs updating to reflect contemporary urban land and construction costs that have evolved significantly over the past decade.

Proposed Affordability Reforms

• Price Cap Revision: Updating the ₹45 lakh limit to reflect current market realities
• Interest-linked Incentives: Enhanced home-buying benefits for first-time buyers
• Tax-related Support: Improved buyer confidence through fiscal measures
• Market-aligned Benefits: Ensuring policy relevance to today's homebuyers

These measures would help bridge the gap between housing aspiration and access, particularly benefiting first-time buyers while encouraging developers to launch projects in affordable and mid-income segments.

GST Rationalization and Cost Management

Streamlining GST on construction-related items emerges as another priority for reducing cost pressures across the value chain. Current taxation structures on construction inputs significantly impact project viability and delivery timelines.

A simplified tax framework would enhance the sector's ability to deliver projects at scale while maintaining quality standards and meeting delivery commitments.

Industry Transformation and Future Outlook

The real estate sector has undergone significant institutional transformation, characterized by improved regulatory oversight, technology adoption, and enhanced buyer awareness. RERA compliance has standardized disclosures, while digital platforms have revolutionized transaction processes. This evolution positions the industry for sustainable growth with appropriate policy support.

The upcoming budget presents an opportunity to reinforce this positive trajectory through progressive policy measures focusing on affordability, rationalization, and stability while recognizing evolved market conditions and supporting the vision of housing for all.