Budget 2026: How to sustain foundations of Viksit Bharat - explained

By Arnab Basu, Partner and Chief Industries Officer, PwC India

As India advances towards achieving the government’s vision of Viksit Bharat, Budget 2026 arrives at a poignant moment in the country’s economic journey. Over the past decade, public policy has laid strong structural foundations through reforms, infrastructure expansion and a renewed focus on domestic manufacturing which has collectively reshaped India’s growth trajectory. The task before the upcoming Budget is not to reset direction, but to consolidate gains, deepen execution and ensure that public investment continues to crowd in private capital at scale.

Infrastructure as a catalyst for industrial growth

At the heart of this agenda lies infrastructure. Sustained public CapEx has been one of the most defining features of recent budgets, supporting growth even amid global uncertainty. Investments in roads, railways, ports, airports and digital infrastructure have improved connectivity, reduced logistics costs and strengthened India’s competitiveness across sectors. The Union Budget FY26 has the opportunity to build further on this momentum by continuing a high level of CapEx allocation, while sharpening focus on project execution, asset monetisation and state-level capacity building. The next phase of infrastructure growth must prioritise outcomes related to productivity gains, faster completion cycles, and stronger linkages between physical and digital networks.




Equally important is the role of infrastructure in enabling India’s manufacturing ambitions. The Production Linked Incentive (PLI) schemes, announced over successive Budgets, have begun to yield tangible results across electronics, pharmaceuticals, automotive components and renewable energy equipment. As India seeks to position itself as a trusted manufacturing partner in global value chains, this year’s Budget can focus on refining these schemes—shifting from capacity creation to deeper supply-chain integration, technology adoption and MSME participation. Simplifying compliance, improving access to long-term finance, and strengthening industrial clusters will be critical to sustaining manufacturing competitiveness beyond initial incentives.

Translating policy intent into global manufacturing competitiveness

The manufacturing opportunity in India is both cyclical and structural. While geopolitical realignments and supply-chain diversification are creating near-term openings, domestic demand, urbanisation, and rising incomes provide a long-term anchor. Policy continuity will therefore be key. Measures such as stable customs regimes, faster approvals, and coordinated centre-state frameworks can reinforce investor confidence. Targeted investments in logistics parks, warehousing and multimodal transport can further reduce the cost of manufacturing and exports which has been a long-standing constraint for India’s manufacturing industry.

While infrastructure and manufacturing form the core of Budget expectations, the role of technology (especially AI) cannot be overlooked. AI is increasingly becoming a horizontal enabler, enhancing productivity in design, operations, maintenance and supply chain planning across infrastructure and industrial sectors. Budget 2026 can support this transition through targeted incentives for digital adoption, investments in data infrastructure, and skilling programmes that prepare the workforce for technology-enabled manufacturing. The focus should be on practical application rather than experimentation alone, ensuring that AI investments translate into measurable productivity gains.

Skilling and human capital development remain another critical lever. Large-scale infrastructure and manufacturing expansion will require a workforce equipped with both technical and digital skills. Building on initiatives such as Skill India and recent efforts to align skilling with industry needs, the Budget can further strengthen public-private partnerships in vocational training, apprenticeships, and continuous upskilling. Ensuring that India’s demographic dividend is absorbed into these sectors will be central to achieving inclusive and sustainable development.

From an investor's perspective, policy predictability and fiscal discipline will be crucial. In the past, India has demonstrated that growth-oriented spending can coexist with a credible fiscal consolidation path and the Union Budget FY26 will have to continue this balancing act by maintaining CapEx while managing deficits and debt prudently. According to PwC’s 28th Annual Global CEO Survey: India Perspective, a majority of Indian CEOs remain confident about the country’s economic growth, underpinned by reform stability and sustained public investment. Preserving this confidence will depend on the Budget’s ability to reinforce continuity while addressing emerging execution challenges.

Beyond numbers and allocations, this year’s budget will be read as a signal of intent. For global investors, it will indicate how firmly India is committed to strengthening its role in global manufacturing and infrastructure-led growth. For the domestic industry, it will shape decisions on capacity expansion, technology adoption, and long-term investment, while for the states, it will define the contours of cooperative federalism in delivering large-scale projects.

The Union Budget FY26 represents an opportunity to reinforce the foundations of Viksit Bharat through steady, purposeful policy action. By sustaining infrastructure investment, deepening manufacturing capabilities and enabling technology-led productivity, the Budget can help ensure that India’s growth story remains resilient and inclusive. As the economy navigates an evolving global landscape, it is this consistency of direction and execution that will preserve momentum and translate ambition into enduring economic outcomes.

(Arnab Basu is Partner and Chief Industries Officer, PwC India)