Union Budget 2026-27: ₹12.2L Cr Capex Push Meets Fiscal Prudence

Market snapshot: The Union Budget 2026-27, presented on Feb 1, 2026, strikes a calibrated balance between growth and stability. Finance Minister Nirmala Sitharaman announced a record capital expenditure of ₹12.2 lakh crore for FY27—an 11.5% jump over FY26 RE—while simultaneously tightening the fiscal deficit target to 4.3% of GDP. Markets have reacted positively to the continued infrastructure focus and the lack of negative surprises in capital gains taxation.

Summary: FY27 Fiscal Deficit targeted at 4.3% with record Capex of ₹12.2L Cr. Major sectoral boosts for Biopharma (₹10k Cr fund), AVGC, and Semiconductors (ISM 2.0).

Key Takeaways

• Fiscal Glide Path: Deficit target lowered to 4.3% for FY27 from 4.4% in FY26 RE.
• Capex Momentum: Outlay raised to ₹12.2 lakh crore, ensuring infrastructure remains the growth engine.
• Sectoral Alpha: New ₹10,000 Cr 'Biopharma SHAKTI' fund and massive push for AVGC and Rare Earth corridors.
• Macro Stability: Debt-to-GDP ratio pegged at 55.6% for FY27, targeting 50% by FY31.

SAHI Perspective

This is a 'Consolidation-Plus-Growth' budget. By adhering to the fiscal glide path (4.3%) while increasing capex, the government is crowding in private investment without spooking bond markets. The strategic pivot to 'Sunrise Sectors' like Biopharma and AVGC suggests a move up the value chain. For traders, the absence of populist spending despite election cycles in states is a bullish signal for macro stability.

Closing Insight

Budget 2026-27 avoids the trap of short-term populism in favor of long-term structural integrity. With the New Income Tax Act effective April 1, 2026, and a clear roadmap for debt reduction, the setup favors 'Buy on Dips' for core infra and manufacturing themes.

High Performance Trading with SAHI.