Chandrajit Banerjee | India’s Growth Roadmap, With Focus On Services

The Union Budget 2026-27, presented in Parliament by finance minister Nirmala Sitharaman on Sunday (marking yet another first), addresses India’s immediate economic priorities while maintaining a firm focus on the country’s long-term development objectives.

In a period of global uncertainty and shifting economic priorities, the Budget balances growth with fiscal discipline while driving productivity and competitiveness focussed reforms and initiatives. Anchored in three core “kartavyas” (duties) — accelerating growth, building capabilities and aspirations and ensuring inclusive development — it signals a youth-centric vision that places people, skills and services at the centre of India’s economic transformation.

A key feature of this year’s Budget is its emphasis on a threefold approach to sustaining growth over the medium and long term. First, it underscores the need to continue structural reforms, reforms that are continuous, adaptive and forward-looking to improve productivity and competitiveness across sectors. Second, it highlights the importance of a strong and resilient financial sector to mobilise savings, allocate capital efficiently and manage risks. Third, the Budget recognises the role of cutting-edge technologies, particularly applications of artificial intelligence, as force multipliers for improving governance, service delivery and decision-making. Together, these elements provide the enabling ecosystem needed to support India’s growth ambitions.

Within this framework, the Budget adopts a balanced strategy to boost demand while strengthening supply and managing inflation. The continued focus is on public capital expenditure driven infrastructure creation across urban and rural areas, driving employment and economic activity. At the same time, measures to improve logistics, supply chains and productivity are expected to ease cost pressures and stabilise prices. This coordinated approach ensures that consumption growth is also supported while maintaining overall macroeconomic stability.

The services sector remains a central pillar of Budget 2026-27. Recognising services as a key driver of growth, jobs and exports, with a vision for 10 per cent global share by 2047, the Budget introduces robust institutional mechanisms designed to more effectively align education and skill development with evolving industry needs. The proposed High-Powered Standing Committee on Education to Employment and Enterprise aims to ensure that skill development remains closely aligned with industry. This reflects a clear intent to strengthen India’s global position in knowledge intensive and experience driven services.

The Budget strengthens industry-academia linkages by developing university townships along major corridors and expanding STEM education, research facilities and student housing. District-level girls’ hostels and improved infrastructure aim to ensure safety, equal opportunity and readiness for future technologies and rapidly evolving job markets.

The Budget also places strong emphasis on strengthening the healthcare sector, with a clear focus on capacity building and service delivery. Expansion and upgradation of institutions for allied health professionals and caregivers will address critical gaps in the healthcare workforce while creating large-scale employment opportunities. The focus on training multi-skilled caregivers, including in wellness and assistive care, reflects a more holistic approach to healthcare delivery.

Closely linked to this is the Budget’s focus on geriatric care, acknowledging the needs of India’s ageing population. Investments in caregiver training, rehabilitation and wellness services aim to build a responsive and sustainable care ecosystem. These initiatives will not only improve quality of life for the elderly but also generate employment in long-term and community-based care services.

The healthcare vision is further strengthened through a targeted push on Medical Value Tourism (MVT). Budget 2026-27 proposes the development of regional medical hubs in partnership with state governments and the private sector. These hubs will integrate hospitals, medical education, diagnostics, research, rehabilitation and AYUSH services. This approach seeks to position India as a preferred destination for affordable, high-quality healthcare while simultaneously strengthening domestic healthcare infrastructure.

Recognising tourism’s strong multiplier effect on growth and employment, the Budget focuses on improving skills, enhancing visitor experiences and promoting sustainability. The proposed National Institute of Hospitality aims to strengthen hospitality education and industry readiness. Initiatives such as training tourist guides at iconic sites, developing sustainable mountain trails, development of select archaeological sites like Sarnath and Dholavira, immersive storytelling techniques and creating a National Destination Digital Knowledge Grid reflect a more structured and technology-enabled approach to tourism development.

These measures are expected to create jobs at the local level, support heritage and cultural tourism and improve India’s global tourism positioning. By linking tourism development with skills, digital tools and sustainability, the Budget strengthens the sector’s role in services exports and regional development.

A forward-looking highlight of Budget 2026-27 is its focus on the “orange economy”, particularly the Animation, Visual Effects, Gaming and Comics (AVGC) sector. Recognising its rapid growth and strong employment potential, the Budget proposes targeted support for talent development and institutional capacity. The establishment of AVGC Content Creator Labs across schools and colleges aims to build a robust pipeline of creative professionals and embed digital and creative skills early in the education system.

Importantly, Budget 2026-27 demonstrates consistent delivery on fiscal commitments without compromising social priorities. The government continues its journey towards globally accepted standards of fiscal management, with a clear medium-term objective of achieving a debt-to-GDP ratio of 50 (±1) per cent by 2030-31. In line with this path, the debt-to-GDP ratio is estimated to decline to 55.6 per cent in BE 2026-27, compared to 56.1 per cent in RE 2025-26, gradually freeing up resources for priority sector spending by reducing interest outgo.

The fiscal deficit remains a key operational tool in this debt consolidation strategy. The government has fulfilled its commitment to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26, with the revised estimate for 2025-26 at 4.4 per cent of GDP. Continuing on this prudent path, the fiscal deficit for 2026-27 is estimated at 4.3 per cent of GDP.

Beyond macro indicators, Budget 2026-27 is designed to be felt on the ground. Investments in tourism circuits, healthcare access, education infrastructure and senior care directly touch households, districts and local economies. By strengthening service delivery where people live and work, the Budget converts national priorities into everyday outcomes — jobs, better facilities and improved quality of life especially in Tier-2 and Tier-3 cities and rural areas.

Overall, Union Budget 2026-27 presents a clear, credible and forward-looking roadmap for India’s next phase of growth and development. By placing services at the centre of its strategy — and by backing the sectoral priorities with structural reforms, access to finance, technology adoption and fiscal discipline, the Budget lays the foundation for inclusive, resilient and sustainable growth. The Budget aligns well with India’s long-term vision of becoming a developed nation by 2047, while responding effectively to the needs of the current times.

The writer is the director-general of the Confederation of Indian Industry