Last Updated on February 1, 2026 3:16 pm by BIZNAMA NEWS
Manufacturing, Infra Get Top Priority as Govt Targets Jobs and Growth
Bibhudatta Pradhan / New Delhi
India has proposed higher spending on infrastructure and manufacturing in its annual budget to sustain economic growth, support demand and create jobs amid a volatile global environment.
Finance Minister Nirmala Sitharaman said in her ninth consecutive budget speech that the fiscal year starting in April will prioritise manufacturing growth, financial-sector strengthening and investment in advanced technologies, including artificial intelligence.
To scale up manufacturing in strategic and frontier sectors, she proposed a series of new initiatives. These include schemes to develop India as a global biopharmaceutical manufacturing hub, advance the semiconductor mission, increase the outlay for electronic component manufacturing and establish dedicated rare-earth corridors to promote mining. The budget also proposed three chemical parks, a container manufacturing scheme and a programme to revive 200 legacy industrial clusters.
To boost infrastructure, the government proposed its highest-ever capital spending of ₹12.2 lakh crore in 2026–27, an increase of 8.8% from the current fiscal year. The budget earmarked ₹5,000 crore for per-city economic regions over five years, along with a coastal cargo promotion scheme, 20 new national waterways, a dedicated freight corridor and seven high-speed rail corridors connecting major cities.
Despite the higher spending, Sitharaman said the government would limit the fiscal deficit to 4.3% of gross domestic product.
“Our first kartavya is to accelerate and sustain economic growth by enhancing productivity and competitiveness, and by building resilience to volatile global dynamics,” she told Parliament.
These measures matter for an economy expected to grow to 7.2% next fiscal year, slightly slower than this year’s 7.4%. The government has been pushing to lift manufacturing’s share of GDP from under 20% to 25%, aiming to generate more jobs. At the same time, simmering trade frictions with the United States and wider geopolitical tensions have clouded the outlook.
The government of Prime Minister Narendra Modi has overhauled labour laws and simplified the goods and services tax to boost demand. It is also working to diversify trade ties and reduce dependence on traditional partners such as the United States and China. Higher spending on manufacturing and infrastructure is expected to provide fresh momentum and help sustain growth.
However, in a disappointment for taxpayers, the government has offered no relief on personal income tax. There has been no cut in tax rates and no change in income tax slabs.
On the relief side, the government has announced policy support and tax restructuring to bring down prices of sports equipment, leather goods, cancer medicines and seafood.
Finance Minister has identified data centres as India’s next big growth driver, announcing incentives to position the country as a global hub for cloud and AI-powered infrastructure.
