Budget 2026: FM charts steady course amid global churn

Finance minister Nirmala Sitharaman’s largesse for Bihar and Andhra Pradesh, in the form of major schemes, in the last Budget was seen as a gesture of gratitude towards the two states whose contributions to the NDA tally during the Lok Sabha polls helped the BJP-led alliance reach the majority mark. It was also aimed at ensuring the loyalty of two crucial allies — JDU and TDP.

Modi govt was expected by many observers to follow the same template and announce schemes for poll-bound states of West Bengal, Tamil Nadu, Assam, Kerala and UT of Puducherry. Sitharaman refrained from doing so. Whether she was paying heed to the caution sounded in Economic Survey about the harm freebies cause will be speculated upon, but it’s a welcome move. This, however, does not rule out the possibility of the state units announcing freebies later in their manifestoes.




The Budget is, however, not bereft of positive signals towards the states headed for polls. The dedicated rare-earth corridors scheme covers Tamil Nadu and Kerala which will also be among the big beneficiaries of the coconut promotion scheme. The high-speed rail corridors will span Chennai and Siliguri, northern Bengal, where BJP has emerged as a force.

The Centre would also expect that measures announced for the promotion of textiles and leather goods as well as for ayurveda and a strong ‘care ecosystem’ appeal to the electorate in Tamil Nadu and Kerala.

Taken with the finance commission’s recommendations, these can help blunt the charge of the BJP dispensation’s alleged discrimination against the South — a plank that Tamil Nadu (DMK), Karnataka (Congress) and Kerala (LDF) have aggressively deployed to prevent the saffron party from building on the beachhead it has established in the once-staunchly hostile territory across the Vindhyas.

Tamil Nadu’s share has dropped marginally but that of Congress-governed Karnataka has gone up. This will restrict the room available to the party and its ally, DMK, for accusing BJP of an anti-South bias. It will also be seen in the light of the finance commission trimming the allocations for NDA-governed states of Madhya Pradesh, Bihar, Chhattisgarh and others.

Last year, Sitharaman had addressed the grudge of small taxpayers and the neo-middle class, in PM Modi’s parlance, by slashing the tax rates for them. This time, she has addressed the grievance of the upwardly mobile among the middle class by giving them immunity from penalties for under-reporting, an amnesty of sorts for delay in disclosing income or assets, by simplifying the procedure for filings. This may appear to be a small gesture for those not directly touched but is expected to go a long way in assuaging the feelings of a section that has a megaphone that’s disproportionately louder than its numerical strength.

The Budget is aligned with the PM’s message of an India ready to take a seat at the table among developed nations, a confident country which is aware of the challenges thrown up by turbulent geopolitics but not overawed by them. By prioritising calmness over nervousness, despite the chaos engineered by Donald Trump’s tariffs, the Budget seeks to reassure people about Modi being very much in command. This message will only get amplified if there is a resolution of the trade dispute with the volatile US president.