Budget: India Inc favours stability

Even as India remains the fastest-growing major economy, with growth set to top 7%, global risks persist. Against this backdrop, corporate India wants a “boring and predictable” budget, one that will focus on simplification and long-term reforms over headline-grabbing measures. As finance minister Nirmala Sitharaman puts finishing touches on the February 1 budget, business leaders and economists said this isn’t the time to splurge at an ET-PwC pre-budget roundtable on Friday in Mumbai .With global uncertainty, tighter liquidity and rising trade tensions, India Inc wants the budget to maintain stability, build on recent gains and improve competitiveness, said the participants, who included Habil Khorakiwala, chairman of Wockhardt Group; Anish Shah, group CEO and MD of Mahindra Group; Neelkanth Mishra, chief economist at Axis Bank, and a member of the Prime Minister’s Economic Advisory Council; Vivek Prasad, chief commercial officer at PwC; Sudhanshu Vats, MD of Pidilite Industries; and Anubhuti Sahay, head of India economics research at Standard Chartered Bank. They were in conversation with ET. CHANGING GLOBAL CONTEXTIndia’s macro position is materially stronger now than during past global downturns, according to Anubhuti Sahay of Standard Chartered Bank, comparing the tailwinds of recent years with the constraints ahead.“India stood all the tariff-related uncertainty pretty well, and we are likely to see a growth of above 7%,” she said. “This was primarily on the back of massive countercyclical measures rolled out by the government as well as the RBI in a very short span of time.”Those conditions, however, are unlikely to repeat.Also Read: Can Union Budget 2026 finally make indirect taxes work for growth?“Geopolitical uncertainties are high, monetary easing is at an end, and in India the space to fiscally support demand or investment is very limited,” she said. As a result, this budget should focus more on structural reforms rather than countercyclical measures.India must define its global leverage more clearly, similar to the US, which has substantial domestic demand, and China, the manufacturing hub of the world. "We need to sharpen our domestic demand leverage for the world to recognise India’s potential,” she said.UNCERTAIN WORLDWockhardt Group chairman Habil Khorakiwala took a long-term view and expects trade and geopolitical volatility to remain high for the next few years, given the current US political cycle. “We are living in an uncertain world geopolitically,” Khorakiwala said. “We have only seen one year of the US President so far. There are another three years to go. Uncertainty is going to be the order of the day.”Also Read: India Inc seeks GST-style simplification in customs duty structureAs a result, for India to insulate itself, the focus must be on deep, foundational reforms, with research and innovation being critical levers. Also, funding for R&D has increased, but the framework for allocation remains flawed.“The question is not the desire to spend on innovation or the availability of funding,” he said. “The question is how do you direct this funding so that it fundamentally changes the DNA of India to be more innovative and more research-oriented.”There is also a call for a rethink of governance itself, and with technologies such as AI now available, it should be used to reduce the operational cost of government.Mahindra Group CEO Anish Shah said India is on track for strong and sustained growth despite global uncertainty, and is bullish about the country's long-term prospects.Also Read: A duty twist may decide if India builds phones or keep assembling them“We are sitting in a very good place,” Shah said. “India today is poised to add $5 trillion of GDP in this decade. Only two countries in the history of the world—the US and China—have done that.” For him, India’s greatest strategic asset is its domestic economy. “Our rare earth is the Indian economy, the demand generated in India, and being a manufacturing hub of the world,” he said. “Not necessarily replacing China, but along with China.”To realise that potential, Shah outlined an agenda of continuing to build infrastructure, policies that make it easier to do business, driving down the cost of doing business like logistics, and at the same time maintaining fiscal prudence.CONSUMPTION SUPPORTFrom the perspective of consumer-facing businesses, Sudhanshu Vats, MD of Pidilite Industries, said recent reforms are already helping demand recovery.“The last budget and the GST 2.0 reforms have started providing impetus, particularly in discretionary items,” said Vats, adding that he supports maintaining stability in indirect taxes, noting that “the 5% GST rate for most household staples is a good rate.”However, demand cannot rely on tax tweaks alone, and non-tariff barriers and statelevel ease of doing business are equally important. “We need to look at tariff rationalisation with a tooth comb,” he said.Also Read: Provide incentive in Budget for R&D, create specialised fin institution for long-term fund: MPC member Nagesh KumarAs global trade becomes more fragmented, he argued that India must also become more proactive externally. “Bilateral treaties are going to become more important,” Vats said. “Why doesn’t the government appoint sectoral ambassadors to translate these deals into outcomes?”THE CASE FOR A PREDICTABLE BUDGETEconomists urge restraint while industry is keen on continuity. Neelkanth Mishra, chief economist at Axis Bank and a member of the Economic Advisory Council to the Prime Minister, says the government’s biggest contribution now is stability.“What the economy is benefiting from is improved predictability and reduced cost of capital,” Mishra said. “For that, the government needs to stay on the path of fiscal consolidation.”With future liabilities such as the next pay commission looming, Mishra argues that this is an opportunity to lock in credibility. “They have already said debt-toGDP will be 50% by FY31,” he said. “It’s important to clear the path on how exactly that will be achieved.”On policy changes, Mishra said the budget should be boring and predictable--“The fewer the changes, the better.”FOCUS ON FUNDAMENTALSVivek Prasad, chief commercial officer at PwC, echoed that sentiment. “There’s never been a better time to be in India than now,” he said, pointing to global uncertainty as a comparative advantage for the country.For him, the agenda is simple. India should not get distracted by the noise that’s all around. “Focus on the basics. Ease of doing business, taking away friction, setting up infrastructure that makes us competitive,” Prasad said.Also Read: Government should consider simplifying, rationalising tax laws in Budget to boost FDI: ExpertsHe highlighted uneven consumption trends. “Consumption at the top of the pyramid is moving well. At the lower end, it’s relatively stable,” he said. “The challenge is in the middle.”Targeted interventions—rather than a broad stimulus—could help, Prasad argued, particularly in sectors with high multiplier effects. He also emphasised MSMEs. “Large companies are leading private capex, but MSMEs need confidence and enablement to come back strongly,” he said.One of the key questions ahead of the budget is when private investment will take over from public capex as the main growth driver. Shah said a shift is already underway in pockets.Across industries, utilisation rates are approaching levels that historically trigger new investment. “Private capex will come back strongly, supplementing the government push,” Shah said.Also Read: Union Budget 2026: Prudence, not populism, will be underlying theme to build BharatKhorakiwala sees a similar trend in healthcare.“Hospitals are highly capital-intensive, and there is a huge gap between what the country needs and what is available,” he said. In pharmaceuticals, the issue is different. “The cost of goods is a fraction of total costs. What matters is innovation and accessibility.”REFORM AT EVERY LEVELMishra stressed that many reforms do not need budget announcements. “There are tens of thousands of compliances businesses are burdened with, many embedded in subordinate regulations rather than laws,” he said.Progress is already visible. In the first 11 months of 2025, 16 states approved 38 omnibus regulations on ease of doing business. Decriminalisation of minor offences, Mishra said, could materially improve productivity and confidence.While GST and tax measures have boosted consumption, longevity is uncertain.“Tax multipliers don’t last more than a year And, in this environment, there may be less than one,” said Sahay, pointing to weak wage growth. Per capita nominal wage growth between 2018 and 2024 was just 6%. Adjusted for inflation, it’s less than 1%.Also, sustained consumption requires better-paying jobs and higher private investment. “Countercyclical measures help at the margin, but they don’t change the fundamental story of consumer behavior,” Sahay said.SUPPLY CHAIN DEPENDENCIESGlobal disruptions have forced Indian companies to reconsider supply chains and firms now map critical dependencies far deeper than before.“We didn’t realise how rare earths flowed into permanent magnets and motors,” Shah said. “Now we are identifying these dependencies and building alternatives.”Vats added that infrastructure-led urbanisation will reshape consumption patterns. “Urbanisation leads to more houses, nuclear households, and consumption across sectors,” he said. “Accelerating this journey is critical.”Where fiscal policy can help is credit delivery. “With `17,000-18,000 crore, the credit guarantee scheme unlocked six to seven lakh crore of credit,” said Mishra, adding that expanding such schemes for MSMEs could extend the upcycle.WHAT TO AVOID, WHAT TO DOSo what should the FM avoid?Sahay said the budget should steer away from any massive fiscal stimulus, while Prasad suggested it stick closely to fiscal consolidation. “Focus on simplicity and ease," Prasad said.Vats agreed, warning against any deviation from fiscal prudence. Mishra also cautioned against expanding income tax exemptions. These are already too high, he said, arguing that widening the tax base is essential.Shah prioritised infrastructure investment, while Khorakiwala offered a broader warning that the approach of the government should not become more controlled. “What we need is simplification.”