Efficient organizations of KISS live in engineering circles – Keep it simple, stupid. Ironically, simplicity is the hardest thing to achieve. In the past, budgets typically meant higher taxes or cumbersome compliance regulations that gave tax authorities more power and confused citizens. For a generation raised on “fiscal terror”, Budget 2026 marks a decisive break with that legacy. It’s about no longer killing growth, but KISSING it. With Youth power In essence, simplification is not optional, but mandatory.
Continuous expansion of infrastructure and logistics
While capital expenditure has not risen sharply this year, this is due to a multi-year expansion in public investment, which now stands at over ₹12.2 lakh crore for the financial year 2026-27. This sustainable approach is more important than a one-time increase because it gives private developers and investors assurance that the infrastructure pipeline is durable.
The direction of these expenses is equally important. The emphasis on connectivity – connecting manufacturing hubs to ports, strengthening coastal infrastructure and improving multimodal logistics – directly addresses India’s logistics cost disadvantages. The focus on river and coastal transport, as well as supporting indigenous capabilities in shipping and connectivity, is expected to improve competitiveness over time and expand the effective market for Indian manufacturers. For the industry, it is not just about more cost-effective transport of goods, but also about more reliable access to national and international markets.
MSMEs, Rural India and Emerging Sectors
The MSME focus in this budget is both financial and structural. On the financial side, the announcement of an SME growth fund with an allocation of around ₹10,000 crore as well as a further increase in standalone and sector-focused funds signals support beyond traditional debt. If implemented effectively, such equity-oriented mechanisms can help MSMEs strengthen their balance sheets and invest in technology, capacity and expansion.
On the structural side, the Budget identifies sectors where India has natural strengths and long-term relevance. Biopharma is one such area. The Biopharma SHAKTI initiative, with its multi-year effort aimed at building an end-to-end biologics and biosimilars ecosystem, including improved NIPERs and a nationwide clinical trial network, reflects a clear intent to expand life sciences capabilities. Furthermore, India’s scale in food production and processing, supported by policy focus on value addition and exports, enables the country to meet domestic needs while serving global markets. This combination has the potential to benefit rural India and the MSMEs involved in these value chains.
NBFCs and the cost of capital
From the financial sector perspective, two aspects stand out. First, the explicit recognition of NBFCs as critical to last-mile credit delivery is timely. The Budget places NBFCs in the broader framework of Viksit Bharat with a focus on efficient and technology-enabled credit access for underserved segments.
Secondly, when it comes to the cost of capital, the sector continues to operate in an environment of gradual transmission. Savings growth has been modest, banks’ liability spreads are under pressure and lending rates are unlikely to adjust much in the near future. As a result, NBFCs may not see any immediate benefit from policy rate cuts, but the sector remains capable of navigating the current environment.
Deepening the corporate bond market
The corporate bond market proposals are one of the more forward-looking elements of this Budget. By introducing a market-making framework and measures to improve liquidity and price discovery, long-standing constraints in the bond market will be directly addressed.
Over time, a deeper and more efficient bond market can provide Indian industrial and infrastructure developers with a more reliable source of financing beyond bank loans. For NBFCs and large corporates, this means greater diversification of funding and greater access to longer-dated capital, which will be important for funding long-term growth.
Banking reforms and financial architecture
Finally, the proposal to establish a high-level panel on banking reforms suggests a willingness to examine the financial system more holistically. The stated aim of reviewing competition, governance, technology and capital adequacy reflects the understanding that India’s financial architecture must evolve in parallel with the economy.
For NBFCs, MSMEs and infrastructure developers, a resilient and well-functioning banking system is a necessary complement to capital markets and specialized funds. Overall, the budget reflects ongoing efforts to improve credit, access to finance and the resilience of the financial system.
The author is Executive Vice Chairman of Shriram Finance
Published on February 1, 2026