FM Sitharaman's Union Budget 2026-27 proposes a 9% hike in capital expenditure to Rs 12.2 lakh crore. Industry bodies like CII hailed the budget as positive, fulfilling the demands of industries including MSMEs and focusing on services.
Union Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026-27 in Parliament, proposing a significant 9 per cent increase in capital expenditure to Rs 12.2 lakh crore. The allocation aims to sustain the momentum in infrastructure development and support economic growth, marking a rise from the Rs 11.21 lakh crore allocated in the previous financial year.
Industry Lauds 'Progressive' Budget
Reacting to the announcements, Confederation of Indian Industry (CII) President Rajiv Memani told ANI that the industry body views the Budget positively. He also noted that the fiscal roadmap fulfils the demands of various industries, including micro, small, and medium enterprises (MSMEs). "Our reaction to the Budget is positive as it fulfils the demands of the industries, including those of the MSMEs. There is also a focus on the services. The government has also heard concerns about tax simplification. Capex has also increased by 10-12% this time," Memani said.
IMC Chamber of Commerce and Industry Deputy Director General Sheetal Kalro said the Budget puts the economy in a progressive mode. "I have a very positive approach to today's budget. There are already many schemes that were launched last year, from Mudra Yojana to Beti Bachao, Beti Padhao. I see a growth in that area. I also see a strong focus on the youth and their skilling... All this put together, we will have the economy in a very progressive mode," she said.
Focus on Continued Capital Expenditure
Presenting the Budget in Parliament, the Finance Minister said the higher capital expenditure allocation is aimed at continuing the momentum in infrastructure development and supporting economic growth. The capital expenditure has been increased to Rs 11.21 lakh crore, up from the Rs 11.21 lakh crore allocated in the last Union Budget for FY25-26. For FY26, the government had set a capex allocation of Rs 11.21 lakh crore.
In her budget speech, Sitharaman highlighted the sharp rise in public capital spending over the past decade. "Public capital expenditure has increased manifold from 2 lakh crore in 2014-15 to an allocation of 11.2 lakh crore in 2025-26. In this coming year, that is, financial year 2026-27, I propose to increase it to 12.2 lakh crores to continue the momentum," she said.
Major Push for MSMEs
In her budget speech, Nirmala Sitharaman, also proposed introducing a dedicated Rs 10,000-crore SME growth fund to create future jobs and incentivise enterprises based on select criteria. She stated that the government recognises MSMEs as a vital engine of growth, and proposes a three-pronged approach to help them grow as champions.
For equity support, "I propose to introduce a dedicated Rs 10,000 crores SME growth fund to create future champions, incentivising enterprises based on select criteria. I also propose to top up the self-reliant India fund set up in 2021 with Rs 2,000 crore to continue support to micro-enterprises and maintain their access to risk capital," she said.
More than Rs 7 lakh crore has been made available to MSMEs through liquidity support.
Four-Point Plan to Leverage MSME Potential
"To leverage its full potential, I propose four measures. One: mandate TREDS as the transaction settlement platform for all purchases from MSMEs by CPSEs. Survey as a benchmark for other corporates. Two: introduce a credit guarantee support mechanism through CGT-MSC for invoice discounting on the TREDS platform. Three: link GEN with TREDS for sharing information with financiers about government purchases from SMEs, encouraging cheaper and quicker financing. Four: Introduce TREDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions," the Minister said. (ANI)
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