India has started preparations for the Union Budget for the financial year 2027-28, and the process should be very much about long term development strategy and vision for a Viksit Bharat. The budget exercise is the key stage of the government’s annual economic planning process and involves all ministries, departments, policymakers and other stakeholders to identify priorities for the year to come in the next financial year.
The Union Budget is one of the most important economic policy documents issued by the central government every year. It lays out government revenues and expenditure with an analysis of government expenditure, policy measures and a much wider picture of economic priorities. In the next fiscal year (FY28) the Budget should be closely watched to ensure that India’s economic growth is sustained for the investment-driven infrastructure, employment, investment, manufacturing, social development and fiscal stability.
The Viksit Bharat vision has become a core theme of India’s long term policy framework. In the context of India’s wish to become a developed country, the vision would entail more investments in the economy, improved infrastructure, technological advancements, productivity, better human capital and a greater opportunity for the people. And so the FY28 Budget should not only be an annual budget of India, but should also be seen as part of the long term plan.
One of the areas to be watched is the economic growth. India is one of the world's largest emerging economies and maintaining growth rate will require continued investment across the economy. Public infrastructure spending is an important driver of economic activity, supporting sectors such as construction, transportation, manufacturing and logistics. So the Budget could be focused on sustaining investment momentum and encouraging more private investors.
Infrastructure development is of particular importance to achieve the Viksit Bharat objective. The economy requires roads, railways, ports, airports, urban infrastructure, digital networks and energy systems. Continued government spending in these areas can also create employment and improve demand in many industries.
Manufacturing and industrial development are also one area in which we need to focus. India wants to improve manufacturing capabilities, attract domestic and foreign investment and enhance its capacity to compete in world supply chains. Budget measures that make business easier, encourage technology adoption and encourage investment can help in that process.
Employment generation is also likely to be a major policy issue. India’s huge and relatively young workforce provides both opportunity and challenge. Productive employment growth will also need to be expanded in manufacturing, services, technology, construction and new sectors. Skill development and vocational education could be part of the government’s economic strategy.
Small businesses and the MSME sector are another key part of the Indian economy. Micro, small and medium enterprises contribute greatly to employment, production and exports. Measures aimed at improving access to credit, technology and digital infrastructure can help these businesses expand and become more competitive. Supporting MSMEs would also enhance the larger aim of creating employment beyond India’s largest cities.
The budget process will have to balance development spending with fiscal discipline. Governments are required to finance infrastructure and social programmes while maintaining public finances to remain sustainable. Fiscal deficits, government borrowing, revenue collection and expenditure management will likely continue to be important factors for the preparation of the FY28 Budget.
Tax policy is also one area to be actively examined. Businesses and individual taxpayers are usually looking for things to simplify compliance, provide clarity, and encourage investment. Direct or indirect tax changes would have a direct and indirect impact on consumption, savings, corporate investment and government revenues. But the final proposals will be influenced by the government’s assessment of fiscal needs and economic conditions.
The digital economy and emerging technologies are also becoming increasingly important to India's development strategy. Artificial intelligence, semiconductors, digital public infrastructure, cybersecurity and advanced manufacturing will be major players in the economy. Investments and policy support in these domains can support India to build more domestic capabilities which will create opportunities for businesses and skilled workers.
Energy security and the transition to cleaner energy will be relevant as well. India needs reliable and affordable energy to sustain growth and to address environmental problems. Renewable energy, electric mobility, green hydrogen, energy efficiency and modern power infrastructure are likely to be part of the broader policy conversation around the Budget.
Agriculture and rural development are equally important to India’s economic strategy. Rural incomes, agricultural productivity, irrigation, storage infrastructure and food processing are all important to the economy as well as household consumption. Strengthening rural infrastructure and creating more value-added opportunities for farmers could contribute to inclusive growth and help build the Viksit Bharat vision.
Healthcare and education are also crucial for long-term economic growth. A developed economy needs a healthy and skilled population able to participate productively in the workforce. Budget allocations for healthcare infrastructure, education, skill development and research could therefore have long-term implications beyond the immediate financial year.
Budget preparation should also involve consultations with various stakeholders. Industry bodies, economists, businesses and others often provide recommendations on taxation, investment, regulations and sector-specific policies. These consultations can enable the government to understand the challenges of different parts of the economy before finalising its proposals.
For financial markets, the FY28 Budget will be of particular interest to investors looking for signals about government spending, taxation, borrowing and economic reform. Investors will be watching the budget announcement for the impact of a Budget announcement on banks and infrastructure, manufacturing, energy, automobiles, technology and consumer businesses. That kind of expectations will affect the market mood even before the budget has a chance to be expressed by the market.
The Budget may be seen by ordinary people differently, however. Household taxation, employment opportunities, inflation, public services, healthcare, education, cost-of-living concerns are among the issues that can shape public expectations. The interplay between these immediate needs and long-term national development will be a key challenge for policymakers.
Thus the start of the FY28 Budget process marks the beginning of months of policy discussions and economic assessments. The government will also have to consider domestic growth as well as international developments such as commodity prices, geopolitical risks, trade flows, interest rates and international investment flows. The Viksit Bharat vision provides a framework within which these priorities can be considered. Achieving developed-economy status requires sustained progress across multiple areas rather than a single policy initiative. Strong infrastructure, competitive industries, skilled workers, innovation, social development and sound public finances will all be required.
As we are getting closer to preparing for the FY28 Union Budget from now on, the expectations for the Union Budget are likely to increase. The final document will tell us how government is going to translate its vision which is long-term in scope into specific financial allocation, policy and reforms. For companies, investors and citizens, the Budget will give us a good idea of the direction of India’s economy in the year 2024.
So the start of the FY28 Budget exercise is much more than the beginning of another annual financial cycle. It is an opportunity for the government to align such short-term economic policy to India’s longer-term vision to become developed nation. Given the growth, investment, infrastructure, employment, innovation and fiscal stability to be the key issues at play in the budget and the economy going to work from now on the budget could be quite important to shape India’s economic priorities for the years to come.
