In a bold move to supercharge infrastructure, the Indian government may ramp up capital spending by 10% in the 2026-27 Union Budget, pushing it beyond Rs 12 lakh crore mark, according to an SBI analysis unveiled Wednesday. This escalation promises to invigorate key areas and propel economic momentum.

Highways will see expanded networks, railways modernized tracks, ports deepened capacities, and power grids fortified—all beneficiaries of this capex infusion. The ripple effects? Faster growth rates and a surge in job creation, particularly in labor-intensive sectors, helping sustain India’s demographic dividend.

This budget arrives against a backdrop of global economic turbulence, where fragmentation and debt woes loom large. Yet, India’s commitment to fiscal prudence stands firm, drawing lessons from its stellar post-pandemic recovery that eclipsed the global financial crisis era.

SBI forecasts slight upticks in tax revenues, stable non-tax inflows, and nominal GDP growth of 10.5-11%. Commodity price pressures could nudge wholesale inflation higher, keeping fiscal deficit at 4.2% of GDP—potentially adjustable with new GDP data.

Borrowing dynamics show optimism: Centre’s net needs at Rs 11.7 lakh crore against Rs 4.87 lakh crore repayments; states at Rs 12.6 lakh crore borrowing with Rs 4.2 lakh crore outflows. RBI’s increased OMOs will likely ensure market stability.

To enhance savings, SBI recommends tax parity for bank deposit interest with capital gains, 3-year lock-ins for FDs akin to ELSS, and higher TDS limits. Indirect tax tweaks include ISD redefinition to curb disputes, no GST-TDS on bank services, and reforms in insurance-pension to broaden access.

States, carrying hefty debt loads, need transparent medium-term debt plans aligned with GSDP growth, not just deficit goals. The Union Budget should spotlight this for cohesive fiscal strategy.

Overall, SBI’s blueprint envisions a budget that not only invests in tomorrow’s India but also fortifies its financial architecture for enduring prosperity.