Major changes in income tax rates are not expected in this budget, though the government may announce a marginal revision in the income tax exemption limit. At the same time, states heading into elections could receive special concessions.

The upcoming budget is expected to focus on manufacturing, infrastructure development and job creation. After achieving its fiscal consolidation target by keeping the fiscal deficit below 4.5% in the 2026 financial year, market participants will closely watch the government’s roadmap for reducing the debt-to-GDP ratio in the 2027 financial year.

There is also an expectation that the government may announce a fiscal deficit target of around 4% for the next financial year. For the current financial year, the government has set capital expenditure (capex) at ₹11.2 lakh crore.

The government is expected to continue prioritising capital expenditure in the forthcoming budget and may increase capex by 10–15% from current levels, as private sector investment remains cautious.

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