In the kaleidoscopic narrative of India's economic landscape, the release of Budget 2026 by Finance Minister Nirmala Sitharaman marked a day likely to resonate for years to come. Yet, as with any great story, we begin with the shadows before embracing the light.
The Bad News
On Budget Day, the scene was set with palpable tension in the financial corridors. The benchmark stock indices crumbled like sandcastles before an advancing tide. With the S&P BSE Sensex plummeting by 1,546.84 points and the NSE Nifty50 shedding 495.20, the mood was decidedly grim. Such a seismic shift underscored a pervasive anxiety among investors who had hoped for more robust measures to buoy confidence -- yet were met with disillusionment.
Market participants delved into the reasons behind this sharp juxtaposition.
The proposed hike in the securities transaction tax on derivatives triggered panic selling, particularly among those stocks tied to high-frequency trading. Observers noted that this change was not wholly unexpected but delivered a psychological blow to investor sentiment. The anticipated increase in costs associated with futures and options trading highlighted the fragility of an already volatile market environment.
Moreover, the lack of significant incentives aimed at foreign portfolio investors loomed large.
Purveyors of liquidity pulled out approximately $23 billion from Indian equities since the start of 2025. With this backdrop, the Budget's projected nominal GDP growth of 10 per cent felt more like a cruel jest than an achievable target.
Analysts pointed out that while there remains a glimmer of optimism regarding domestic demand, the market's scepticism remained deeply entrenched, barely dented by frameworks heralding long-term growth in sectors like semiconductors and biopharma.
"Hiking STT at this crucial juncture, when the world's political and financial ecosystem is so conflict-ridden, volatile with trade wars, and wars in the Middle East and Europe, is ridiculous. At one level, India is signing FTAs, one after another; at another level, the budget puts impediments and obstacles on the path of investors, traders and others," said Sandeep Mishra, CEO of Shanfari Group of Companies based in Muscat, Oman, who closely follows the Indian Economy.
Niraj Kumar, former Head of Allied Business with Reliance Nippon Life (now called IndusInd Nippon) strongly disagrees.
"Markets are tanking since the STT has been hiked in the Futures and Options. There is a lot of speculative trading in the Futures and Options. Most people lose money. Such speculation adversely impacts the middle-class investors who do not understand derivative trading. Hiking STT is a good move. In the short run, market is behaving negatively, but will recover in the long run."
As trading culminated in one of the worst performances on a Budget day in recent years, a dense fog of volatility cast its shadow on the financial horizon, foreboding a continued tumultuous journey for investors navigating external challenges and geopolitical tensions.
The Good News
Towards dusk, the silver linings of Budget 2026 began to emerge, penned with bold strokes of ambition and reform. Sitharaman's address, the first delivered on a Sunday, was not merely a collection of fiscal numbers but rather a clarion call resonating through the corridors of power - a reaffirmation that India's "reform express" was on a steady track and accelerating.
At the heart of this blueprint were transformative strategies aimed squarely at strengthening manufacturing and technology while cultivating a youth-driven vision for the future. Sitharaman emphasised the government's commitment to modernising India's regulatory and manufacturing ecosystem, referencing the steps taken since August 15 that heralded a new age of development.
The proposed Rs 12.2 lakh-crore public capital expenditure outlay was a deliberate signal - a robust engine revving to propel economic growth. By crowding in private sector participation and energizing infrastructure sectors, the government aimed to weave a narrative of resilience amid global uncertainty.
Further affirmations of this ambitious direction included the establishment of a Rs 10,000 crore SME Growth Fund, underscoring the government's intent to nurture high-potential enterprises into national champions. In a world riven by supply chain fragility, the announcement of dedicated rare-earth corridors across multiple states cemented India's commitment to securing its technological future.
The Budget also unveiled India Semiconductor Mission 2.0, a transformative initiative designed to develop what could be the backbone of future technological landscapes. With investments in training and industry-led research, this mission sought not only to boost domestic capabilities in chip manufacturing but also to position India in the global technology arena.
Framed as a roadmap driven by a 'Yuva Shakti' agenda, the Budget urged India to remain engaged with the complexities of global markets, even as geopolitical winds shifted. The promise of poverty alleviation, coupled with an emphasis on household purchasing power, hinted at a balancing act between ambition and inclusion.
In articulating a vision that interconnected the aspirations of a burgeoning workforce with the country's economic narrative, Sitharaman painted a picture of hope, resilience, and long-term strategic investment.
Conclusion
As we sift through the contrasts of the day, it is clear that Budget 2026 is a story of dualities-of shadows and light. While the initial market reaction speaks to the challenges ahead, the broader vision emphasised by Sitharaman resonates as a hopeful clarion. The journey may be fraught with uncertainty, but if history teaches us anything, it is that the true essence of reform lies in perseverance, innovation, and a steadfast faith in the future. In the narrative of India's economy, each chapter unfolds a new possibility, making the next uncertain step all the more significant.
(The author is Editor, Research of NDTV. The views are personal)
