Here’s where Prime Minister Narendra Modi, the nationalist, has a Nehru moment, though in a new package and circumstances.  Sitharaman, presenting her record consecutive ninth budget, reeled off specifics on everything from walnuts to semiconductors in which the government will keep a finger, paw or foot on a number of industries that belie Modi’s early claim of “maximum governance, minimum government.” That reminded one of the Nehruvian age, when the government was accused of micromanaging the economy.

From A Doer To A Driver

However, what has changed is that the government is now more of a driver than a doer, as a lot is expected from the private sector. Investments are expected to pick up from the government cues. The share of state expenditure is intentionally strong, but no longer overwhelming, suggesting a neo-Nehruvian framework.

As a fund manager said on TV, worldwide, it is no longer companies that are competing with each other but states (governments). Why should India be an exception? Also, fields like emerging healthcare industries and AI are beginning to resemble what steel was to the 1950s: a mother hen that breeds little birds that cluster around in a new phase of economic ambition.

Much missed in Sitharaman’s narrative were the old-age paens to rural areas and farmers. There is a lot in the budget that suggests initiatives to industrialise semi-urban areas while nudging farmers towards new high-value frontiers like seeds, herbs and fisheries. It was only 43 minutes into her speech that the minister mentioned farmers’ income and a plan to replenish 500 reservoirs to aid fisheries. That is symbolic of the new set of priorities that smell of urban bias. Given that India’s rural population is estimated at close to 65% of nearly 150 crore people, are we reaching an inflexion point in demographic management, or is that a risky political choice? Only time will tell.

The lucky spot for the Modi government is that this is the third budget in a five-year reign, resembling the middle of a one-day cricket match’s innings, where one can score decently without worrying too much about a distant horizon. What the budget for 2026/27 is doing is to step on the growth accelerator with a capital expenditure (capex) push that should hopefully set the direction for entrepreneurs as well as banks flush with cash to take on big-ticket loans. As of last year, banks flush with deposits of ₹300,000 to ₹400,000 crore were reluctant lenders as they worried about the quality of lending and the general direction of the economy.

Capex Rise

A proposed 9% year-on-year rise in capital expenditure to ₹12.2 lakh crore sets the mood for a higher investment appetite. In doing this, the government has only marginally chipped its long-term goal to reduce the fiscal deficit, to 4.3% in FY2027 from 4.4% of the GDP in the current year. 

That, one the one hand, helps India become a safe haven for investments as well as financial inflows into the stock markets, after an initial thumbs-down after the minister’s speech linked to an increase in securities transaction tax (STT) on futures and options. 

Beyond the haven factor, there are indications of the government craving to make India an industrial heaven in the distant future.

Semiconductor Mission

The launch of a new semiconductor mission and a boost to electronic components with an increased outlay of Rs 40,000 crore, a biopharmaceutical plan that aims to spend ₹10,000 crore over five years and a growth fund of Rs 10,000 crore for medium, small and micro enterprises shows a “state as daddy” model in which the government stitches together ecosystems that create incomes and jobs. Seven high-speed rail corridors and a plan for “city economic regions” with a subsidised push for municipal bonds suggests that the Modi government believes, perhaps rightly, that the next wave of growth is best seen in and around smaller cities – which is a good thing if you see the traffic jams and smell the foul air in India’s choking metropolises.

This is a no-new-taxes budget as well, not counting some tinkering here and there.

An interesting feature in the budgetary vision is a new trend to separate industrial muscle from job creation – which reflects on the one hand a political pressure to spin jobs  and on the other new technologies that might spell national pride in the future but are increasingly capital-intensive and loaded with uncertainties.

Rare Earth Minerals

On the one hand, there are outlays for a rare earth mineral mining mission (to aid an electric vehicle revolution), artificial intelligence, precision components and cargo corridors that smell of high-technology manufacturing. On the other, a slew of initiatives spell a parallel economic push aimed at boosting jobs in an economy in which half the population is below the median age of 29 and 67% of the people are in their work-force years.

Medical tourism, sports goods manufacture, a boost for MSMEs, hotel management and a host of new-age agricultural initiatives that mention everything from cashew to sandalwood are clearly jobs-oriented. 

Still, it is a tightrope walk ahead because old equations are simply no longer valid – be it in technological change or geo-economics.

The elephant in the room is the one you cannot quite see.  Trumpism has frozen India’s trade with its largest trading partner on the tracks, and unless and until the ink dries on the anticipated but much delayed bilateral trade agreement (wounded by high US tariffs), uncertainty will loom over India’s global linkages on which rests everything from manufacturing to embracing new technologies.

As they say, watch this space!

(The writer is a senior journalist covering a diverse range of subjects, including economy, technology, and politics. Views are personal.)