Union Budget 2026: Economists urge tax incentives, data centre push and export diversification at PM Modi’s pre-Budget meet

Union Budget: Leading economists and experts made a case for tax incentives to boost household savings and targeted policy support for data centres, artificial intelligence and robotics at a pre-budget consultation chaired by Prime Minister Narendra Modi on Tuesday, according to people familiar with the discussions.

They stressed the need to accelerate the diversification of India’s services exports, arguing that higher-value digital, financial, and knowledge-based services could help cushion the economy against global trade volatility. They called upon the government to use existing free trade agreements more effectively to expand market access and boost exports.

Concerns were voiced about the weaponisation of access to critical minerals by some countries. It was suggested that India develop a coordinated strategy to secure mineral resources essential for energy transition, electronics and advanced manufacturing.Focus on priority sectors
Some economists suggested the government resume fiscal consolidation efforts after years of heavy public capital expenditure, calling for calibrated tapering as private investment gains traction, while maintaining room for priority sectors and ongoing infrastructure projects, said one of the persons.

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The fiscal deficit for the current financial year is budgeted at 4.4% of GDP. The budget for FY25 had shifted the fiscal consolidation benchmark to debt. It proposed “to keep the fiscal deficit each year such that the central government debt will be on a declining path as a percentage of GDP.”
The new tax income tax regime does not offer any incentives for financial savings, which has led to some concern that without this the savings rate may fall.Mis-selling of financial products was also flagged at the meeting, another person said.

The Prime Minister noted that the vision of a developed India by 2047 has transcended government policy to become a genuine mass aspiration, the Niti Aayog said in a statement issued after the meeting.

“This shift is evident in the evolving patterns of education, consumption, and global mobility, necessitating enhanced institutional capacity and proactive infrastructure planning to meet the needs of an increasingly aspirational society,” he said.

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He stressed the need for mission-mode reforms across diverse sectors to build capability and attain global integration. The PM stated that India’s policymaking and budgeting must remain anchored with a vision for 2047 and emphasised the need for ensuring that the nation remains a vital hub for the global workforce and international markets.

The participants noted the unprecedented flurry of cross-sectoral reforms in 2025 and their further consolidation in the coming year to ensure that India continues to chart its path as one of the fastest-growing global economies by strengthening its foundations and unlocking newer opportunities, the statement said.

As per the Niti Aayog, the interaction centred on strategic insights on enhancing productivity and competitiveness across the manufacturing and services sectors.