Archive · 2 Feb 2026
Budget 2026-27 Sparks Mixed Reactions
The Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman has sparked mixed reactions.
On one hand, the market reacted negatively with a 2% crash, wiping out nearly Rs 10 lakh crore of investor wealth, primarily due to the hike in securities transaction tax on derivatives.
This has led to concerns about investor sentiment and the pullout of foreign portfolio investments.
On the other hand, the government views the budget as a workman-like exercise focusing on long-term growth and process reforms.
The budget includes initiatives like the India Semiconductor Mission 2.0 and a Rs 10,000 crore SME Growth Fund.
However, states like Telangana and Andhra Pradesh have expressed disappointment over inadequate allocations for their development projects.
The budget aims to reduce the fiscal deficit to 4.3% and focuses on strengthening manufacturing and technology sectors.
Overall, while the initial market reaction has been negative, the government is optimistic about the long-term benefits of the budget.
The Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman sparked a 2% market crash, wiping out nearly Rs 10 lakh crore of investor wealth due to a hike in securities transaction tax on derivatives.
Economic Advisor Sanjeev Sanyal downplayed the market reaction, stating that markets go up and down and the initial response is not an indicator of the budget's long-term outcome.
The budget focuses on long-term growth and process reforms, including initiatives like the India Semiconductor Mission 2.0 and a Rs 10,000 crore SME Growth Fund.
States like Telangana and Andhra Pradesh have expressed disappointment over inadequate allocations for their development projects, alleging negligence and unfair treatment.
The budget aims to reduce the fiscal deficit to 4.3% and focuses on strengthening manufacturing and technology sectors, with a public capital expenditure outlay of Rs 12.2 lakh crore.
- Who
- Finance Minister Nirmala Sitharaman, Economic Advisor Sanjeev Sanyal, State Governments of Telangana and Andhra Pradesh, Market Analysts, Opposition Parties
- What
- Presentation and reaction to the Union Budget 2026-27
- When
- February 1, 2026
- Where
- India
- Why
- To outline the government's fiscal plans and economic strategies for the upcoming year, and to address various economic challenges and opportunities
Market Reaction
Government Perspective
Market Crash
Market Reaction
The 2% market crash on Budget Day, wiping out nearly Rs 10 lakh crore of investor wealth, indicates investor disillusionment, particularly due to the hike in securities transaction tax on derivatives.
Government Perspective
Markets go up and down, and the initial reaction is not an indicator of the budget's long-term outcome. The budget focuses on process reforms and long-term growth.
Investor Sentiment
Market Reaction
The lack of significant incentives for foreign portfolio investors and the hike in STT have led to a pullout of approximately $23 billion from Indian equities since the start of 2025.
Government Perspective
The budget aims to strengthen manufacturing and technology, with initiatives like the India Semiconductor Mission 2.0 and a Rs 10,000 crore SME Growth Fund, which should attract long-term investment.
- Market Reaction
- 2% crash on Budget Day, wiping out nearly Rs 10 lakh crore
- Securities Transaction Tax
- Hiked, leading to panic selling in derivatives
- Fiscal Deficit
- Reduced from 4.5% to 4.3%
- Public Capital Expenditure
- Rs 12.2 lakh crore
- SME Growth Fund
- Rs 10,000 crore
- India Semiconductor Mission 2.0
- Initiative to boost domestic chip manufacturing
- Foreign Portfolio Investors
- Pulled out approximately $23 billion since start of 2025
- State-Specific Allocations
- Telangana and Andhra Pradesh allege inadequate funding
Sources
Letters to the editor: Today, reading is framed as a productive pursuit and feels like a chore
"Markets Go Up And Down": PM's Economic Advisor Brushes Off Budget Day Crash
Cautious and prudent yet focusing on the long term journey
Union Budget 2026: Fiscally conservative, with policy push for key sectors
Opinion l The Many Shades Of Nirmala Sitharaman's Union Budget 2026
YSRC Says Union Budget Shortchanges Andhra Pradesh
