By- Prof. Manish Kumar, Assistant Professor and Head, Department of Economics, and Nilesh A , student of Economics at SRM University AP.
Finance Minister Nirmala Sitharaman’s presentation of the Union Budget 2026–27 on February 1 marked her ninth consecutive budget and set the tone for India’s next phase of economic expansion. Framed as a “Yuva Shakti-driven Budget,” the fiscal plan places India’s youthful demographic at the heart of its development strategy, while reaffirming the government’s commitment to inclusive growth under the vision of Sabka Sath, Sabka Vikas. Through a mix of structural reforms and targeted investments, the Budget seeks to translate growth ambitions into employment-driven outcomes.
A defining feature of the Budget is its continued reliance on infrastructure and construction as primary engines of economic momentum. Public capital expenditure has been increased to ₹12.2 lakh crore, representing a 9 per cent rise over the previous year. This sustained allocation underscores the government’s belief that infrastructure spending not only strengthens physical connectivity and urban development but also generates significant employment across construction, engineering, and allied sectors.
To reinforce this investment push, the Budget introduces a Scheme for Enhancement of Construction and Infrastructure Equipment aimed at boosting domestic manufacturing of advanced machinery. This is complemented by the establishment of an Infrastructure Risk Guarantee Fund, designed to mitigate execution-phase risks for private developers. Together, these measures are expected to improve project viability, attract private capital, and expand job opportunities across the construction value chain.
Micro, Small, and Medium Enterprises (MSMEs) are positioned as critical enablers of employment generation and supply-chain resilience. The Budget adopts a three-pronged approach, anchored by a ₹10,000 crore SME Growth Fund to support the emergence of “Champion MSMEs” through equity financing. Liquidity support is enhanced through an expanded Trade Receivables Discounting System, while targeted incentives aim to help MSMEs scale operations in strategic sectors. These interventions seek to integrate small enterprises more closely into infrastructure-led growth, strengthening regional employment outcomes.
Human capital development remains central to the Budget’s employment narrative. Significant allocations are made to health, education, research, and innovation, recognising their role in building a productive workforce. In healthcare, a ₹10,000 crore outlay over five years under the Biopharma Shakti initiative aims to position India as a global hub for biologics and biosimilars. Proposals for regional medical hubs, expanded emergency and trauma care facilities, and upgrades to mental health institutions reflect a comprehensive approach to healthcare access and workforce capacity building.
Educational initiatives are closely aligned with labour market needs. The formation of a High-Powered Standing Committee on Education to Employment and Enterprise seeks to bridge gaps between academic outcomes and industry demand. Additional measures such as university townships, girls’ hostels in every district, and the establishment of a new National Institute of Design in eastern India aim to promote inclusive skill development and innovation, particularly among youth and women.
Research and development receive renewed emphasis as drivers of long-term employment and technological self-reliance. The Budget strengthens India’s innovation ecosystem through initiatives including the Nuclear Energy Mission for Small Modular Reactors, Semiconductor Mission 2.0, enhanced electronics component manufacturing, dedicated rare earth corridors, and upgrades to astronomical research facilities. These interventions are expected to generate high-skilled employment while advancing India’s position in frontier technologies.
Labour market reforms underpin the broader employment strategy. Over 350 reforms including GST simplification and the notification of consolidated Labour Codes which are highlighted as foundational to improving ease of doing business and workforce flexibility. By simplifying compliance and strengthening worker protections, these reforms aim to create a more dynamic labour market capable of supporting sustained job creation.
Infrastructure-led employment gains are further reinforced through the announcement of new Dedicated Freight Corridors connecting industrial hubs, ports, and mineral-rich regions. These corridors are expected to reduce logistics costs and congestion while generating large-scale construction employment and long-term operational roles in freight and rail services.
Urban development is addressed through the introduction of City Economic Regions, a model that groups cities based on economic geography rather than administrative boundaries. With an allocation of ₹5,000 crore per region over five years, this initiative aims to promote integrated urban infrastructure, housing, utilities, and transport connectivity, directly supporting employment in construction, municipal services, and urban planning.
Labour-intensive sectors also receive focused attention. A comprehensive textile employment package comprising the National Fibre Scheme, Textile Expansion and Employment Scheme, Tex-Eco Initiative, Samarth 2.0 for skill upgradation, and Mega Textile Parks—seeks to modernise textile clusters while generating large-scale employment, particularly for women and rural workers.
Finally, the Budget places renewed emphasis on multi-modal logistics integration, connecting rail, road, ports, and waterways. This coordinated approach is expected to strengthen warehousing, freight handling, and transport services, creating employment opportunities across the logistics ecosystem.
Overall, the Union Budget 2026–27 presents a cohesive growth framework that links infrastructure investment, labour reforms, skill development, and industrial expansion. By aligning physical development with human capital formation, the Budget positions employment generation as a central pillar of India’s economic transformation.
Manish Kumar is Assistant Professor and Head, Department of Economics, SRM University AP. Nilesh A is a fourth-year undergraduate student of Economics at SRM University AP.
