Budget Boosts Consumption, Fiscal Prudence, Capex: Report

New Delhi: The Union Budget 2025–26 is crafted as a bold statement of fiscal consolidation and long‐term structural reforms, with the government maintaining the fiscal deficit at 4.4 per cent for FY26 while maintaining investment momentum with capital spending rising by 10 per cent to Rs11.2 lakh crore.

This is a delicate balance, ensuring credibility in debt management while not derailing growth, according to a PL Capital report released on Monday.

The government has not only provided for an increase in Capex but central schemes like PM Awas, Rural Drinking Water and solar rooftop scheme have seen sharply higher allocations than FY25RE, the report points out. The focus on domestic manufacturing has been sustained with higher allocations under the PLI, renewable energy and the semiconductor ecosystem.

The budget has also provided relief to the middle class by lowering tax rates in the new regime with a hint of new direct tax code introduction shortly. Continued thrust on Capex and more money in the hands of people will likely boost domestic consumption.