The annual Budget ritual encourages a peculiar national amnesia. A finance minister speaks, television panels discover either paradise or ruin by lunchtime, and Congress announces that every useful measure was conceived during an earlier Congress government. By dinner, the argument has become a competition between headline numbers stripped of context. I prefer the less glamorous question: what kind of state is being built through repeated budgets? On that test, the Modi government’s 2026 programme deserves more credit than the opposition’s reflexive sneering allows.
The official Budget 2026-27 speech places fiscal discipline, public investment, manufacturing capability and reduced strategic dependence within the same framework. That combination is important. India cannot subsidise its way to prosperity, austerity its way to modern infrastructure, or import its way to strategic autonomy. Governing is the awkward work of balancing all three constraints. The budget is not revolutionary, and some schemes will certainly underperform. But it reflects a government trying to compound capacity rather than purchase a single news cycle.
The reform is in the direction, not the adjective
Congress’s preferred critique is that the government has no grand idea beyond rebranding. This is rich coming from a party whose economic imagination increasingly consists of cash promises, caste arithmetic and sepia-toned references to liberalisation. The reforms of 1991 mattered enormously, but thirty-five years later they are not a complete governing programme. Invoking P.V. Narasimha Rao or Manmohan Singh does not answer how India should build semiconductor capacity, secure critical minerals, integrate into changing supply chains, finance urban infrastructure or manage energy dependence.
The current government’s strength is directional consistency. Roads, railways, logistics, digital systems, formalisation, domestic production and targeted welfare are treated as complementary rather than rival projects. Critics can contest individual choices, but they cannot plausibly say there is no model. The model is a more capable state that builds common infrastructure, uses digital rails to deliver benefits and tries to attract private investment into sectors India considers strategically important.
The Economic Survey 2025-26 is especially useful because it frames industrial development as structural transformation and global integration, not autarkic chest-thumping. That distinction is routinely missed in Lutyens commentary, where any mention of self-reliance is caricatured as a return to licence-permit nostalgia. Strategic resilience does not mean manufacturing every screw behind a tariff wall. It means possessing enough domestic capability, supplier depth, infrastructure and negotiating leverage that a geopolitical shock does not close the factory.
I am not sentimental about production-linked incentives or any other instrument. Subsidies can become permanent crutches; companies can assemble imported kits while presenting themselves as industrial pioneers; states can compete through concessions without fixing land, power or municipal governance. The government should publish rigorous outcome data and end support where local value addition remains shallow. Giving the policy direction credit does not require pretending every beneficiary is building a world-class ecosystem.
Public investment is not a consolation prize
A recurring metropolitan complaint is that capital expenditure lacks emotional appeal. A highway does not arrive in a beneficiary’s account with a congratulatory message, and a freight corridor cannot be advertised as personal compassion. Yet infrastructure is distributive policy. A reliable road changes the radius within which a worker can seek employment. Better logistics reduce waste for producers. Rail capacity, urban transport, ports and power networks affect the cost structure of almost everything else government and business attempt.
The UPA years are often remembered through growth rates and landmark welfare laws, sometimes fairly. They should also be remembered for delayed projects, stressed banks, infrastructure bottlenecks and the strange belief that announcing rights was equivalent to building delivery capacity. Congress-era nostalgia edits out the administrative weakness that made citizens queue, leakages ordinary and project completion exceptional. The Modi government did not invent implementation, but it has made visible execution a central political claim. That shift is healthy.
The budget’s emphasis on fiscal credibility also deserves a defence. Opposition politics currently treats borrowing limits as an ideological prejudice imposed by people who dislike the poor. That is childish. Interest costs occupy fiscal space that cannot then fund health, defence, infrastructure or state transfers. Persistent indiscipline eventually produces inflation, currency pressure or abrupt cuts that hurt vulnerable households most. A government can debate the pace of consolidation, especially during shocks, while still recognising that arithmetic is not neoliberal propaganda.
Of course, aggregate discipline must not become an excuse for underfunding state capacity. India needs better courts, regulators, municipal staff, teachers, public-health systems and technical expertise. Capital expenditure wins applause because it creates visible assets, but maintenance and personnel determine whether those assets work. I would like future budgets to be more candid about this less photogenic side of government. A new hospital building without specialists is not reform. A digital portal layered over an understaffed office is not ease of doing business.
The jobs question cannot be evaded
The strongest criticism of the government is employment. Growth, formalisation and infrastructure do not automatically produce enough stable, productive work at the required speed. India’s demographic scale makes this an unforgiving test. The opposition is right to insist on it, although its own answer—more government vacancies, broader guarantees and periodic cash transfers—cannot carry the entire labour market. Public employment matters, but no budget can turn the state payroll into the principal destination for millions of young Indians.
Manufacturing policy must therefore be judged by employment depth as well as investment announcements. Electronics assembly that gradually creates component suppliers, tooling capabilities, repair networks and engineering work is valuable. Assembly that remains dependent on imported high-value inputs and footloose incentives is much less so. Textiles, food processing, tourism, construction, logistics and small manufacturing require the same policy attention as glamorous frontier sectors because they can absorb workers with varied education levels.
Skills policy also needs fewer ceremonies. Employers complain that graduates are not job-ready; graduates discover that many entry-level jobs pay too little to justify relocation; training providers collect targets; and everybody attends a conference. The government should tie funding to independently measured employment and wage outcomes. Apprenticeships need simpler adoption by smaller firms, while cities need affordable rental housing and transport so workers can actually reach new jobs. Labour-market policy is partly urban policy, a connection budgets still treat too weakly.
I would also prefer greater tax predictability. India has improved significantly from the age when retrospective taxation became an international warning label, but businesses and individuals still experience compliance as a maze interpreted differently by different offices. Digitisation has reduced some discretion while creating automated frustrations elsewhere. The government should measure success not by the number of forms moved online but by the time a compliant taxpayer spends resolving an ordinary issue.
Congress must offer more than a moralised spreadsheet
The INDIA alliance’s economic rhetoric assumes virtue can repeal trade-offs. Promise a transfer, call it justice, and ask anybody discussing cost to explain why they hate the recipient. This is politically neat and economically evasive. Welfare has an essential place in a country with unequal opportunity and insecure incomes. The Modi government itself runs large welfare programmes and wins votes partly because delivery has improved. The real argument concerns design, targeting, fiscal durability and whether transfers complement or crowd out capacity-building.
Congress could make a serious contribution by defending decentralisation, proposing credible urban finance, explaining how it would improve competition, and identifying specific regulations that impede small firms. Instead, it too often offers an auction: a higher entitlement here, a revived scheme there, and a claim that the golden UPA template merely needs restoration. India in 2026 faces a different global economy, different technology, different geopolitics and a far larger aspiration for competent public services. Restoration is not a strategy.
The government should not become complacent. Industrial policy invites lobbying, public investment can conceal poor project selection, protection can punish consumers, and headline fiscal ratios can hide liabilities. Parliament deserves clearer evaluations of major schemes, including failures. Ministers should be willing to close programmes that do not work rather than rename them. Pro-government commentary becomes propaganda when it refuses to distinguish a sound direction from an accomplished result.
Still, my overall judgment is favourable. Budget 2026 continues a recognisable attempt to pair stability with state capacity, welfare with infrastructure and global integration with strategic resilience. That is harder than announcing a revolution and more useful than reenacting an old one. The opposition may call it incremental. I call compounding competence a perfectly respectable ambition for a vast, argumentative democracy.
Budgets should be read across years, not consumed like opening-weekend cinema. The Modi government’s record contains missteps, but it has shifted the political reward toward delivery, infrastructure and national capability. Congress can dispute the method; it has not yet supplied a better, contemporary model. Until it does, nostalgia will remain its most generously funded programme.
