Budget 2026 will be evaluated not by the number of new schemes it introduces, but by its commitment to completing the foundational reforms already in motion. Over the past two years, economic policymaking has prioritised simplification — from streamlined tax filing to the creation of strong digital public infrastructure — laying the groundwork for a more formal, inclusive economy.
The challenge now is to convert this simplicity into long-term economic resilience. That requires addressing the silent erosion caused by inflation, strengthening household balance sheets and ensuring that India’s credit-led growth remains affordable and sustainable.
One of the most pressing gaps lies in affordable housing. The current price cap of ₹45 lakh was set nearly a decade ago and no longer reflects urban property prices or rising construction costs. Recalibrating the threshold to ₹60 lakh would simply adjust for inflation, not dilute policy intent. Such a move could reduce GST burden for homebuyers by at least ₹2.4 lakh, lower EMIs, revive demand and generate employment across housing-linked industries.
Taxation also needs structural correction. While raising the 30 per cent tax slab threshold to ₹24 lakh was a landmark reform, inflation-driven “bracket creep” continues to push taxpayers into higher slabs without real income gains. Automatically indexing upper tax slabs to the Cost Inflation Index would institutionalise fairness, protect purchasing power and release additional disposable income into the economy through consumption and savings.
The new tax regime, while successful in simplifying compliance, has inadvertently weakened incentives for long-term financial protection. The absence of deductions has reduced household savings and widened the insurance gap. Budget 2026 can address this by introducing a single, consolidated social security deduction covering term life insurance, health insurance and pension contributions — preserving simplicity while restoring financial resilience.
Digital infrastructure is another critical lever. A proposed ₹1 lakh crore allocation for Digital India 2.0 could significantly strengthen the retail credit ecosystem. Platforms such as DigiLocker and the Account Aggregator framework have evolved into core enablers of trust, speed and transparency. The policy focus must now shift from access to efficiency, ensuring cost savings for lenders translate into better pricing for consumers.
Strengthening the credit ecosystem also requires investing in human capital. Extending ESOP tax parity to all Udyam-registered MSMEs would help small businesses attract talent, improve governance and stabilise cash flows — making them more creditworthy on merit rather than subsidy.
Ultimately, Budget 2026 does not need a raft of fresh announcements. It needs alignment — tax policies that account for inflation, housing definitions that match market realities and incentives that reinforce household financial health. The next chapter of India’s economic growth will be built on coherence, not concessions.
