Finance Minister Nirmala Sitharaman on Saturday said that there is no reduction in the public spending on capital expenditure. She also said that the Bill to introduce the New Income Tax law will be referred to the Standing Committee post-introduction in Parliament next week.
She was addressing a press conference after presenting the Union Budget.
Budget document shows the Budget estimates of capital expenditure at ₹11.21 lakh crore in FY26. However, the revised estimates (RE) for FY25 for the current fiscal have been lowered to ₹10.81 lakh crore as against budget estimates of ₹11.11 lakh crore. At the same time, with relief under income tax, experts feel that now the growth would be led by consumption rather than capex.
However, Sitharaman did not agree with this narrative. “We continue to place emphasis on the multiplier effect that capital expenditure done by government has shown has sustained us. We continue on that, and with all this, our fiscal prudence has been maintained,” she said.
Sitharaman’s comments come amid industry disappointment over the lack of significant increases in infrastructure spending. The Budget allocated ₹2,55,445 crore to the Ministry of Railways for FY26, a negligible rise from ₹2,55,393 crore in FY25. Similarly, the Budget for roads and highways saw only a modest 3 per cent increase to ₹2,87,333 crore from ₹2,78,000 crore in the previous fiscal. The absence of any mention of rail and road infrastructure in Sitharaman’s Budget speech further fuelled concerns.
However, the Finance Minister emphasised a strategic shift in focus — from direct government spending to reviving public-private partnerships (PPPs) and accelerating asset monetisation. Also, there will be more engines for growth. “The budget talks about our path towards ‘Viksit Bharat’. It has invested in agriculture. It has certainly looked at rural prosperity, focuses on urban development, particularly looking at urban workers, and continues to lay emphasis on reforms,” she said.
New Income Tax Act
Talking about the new IT Act, Sitharaman hoped that there will be smooth sailing of the Bill, which is to be introduced next week. “I hope it (the Bill) will get passed without much of a difficulty,” she said. The New Income Tax Bill will go to the Standing Committee of Parliament, she added. The new Bill will replace over the six-decade-old law.
Sitharaman had, in July last year, announced a comprehensive review of the Income Tax Act, 1961, to be completed within 6 months. In her Budget speech on Saturday, she said that the new I-T Bill will carry forward the spirit of ‘Nyaya’ (justice) based on the concept of ‘trust first, scrutinise later.’
“The new Bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation,” Sitharaman said.
The FM indicated that phasing out old income tax regime is not yet on card. Meanwhile, Finance Secretary, Tuhin Kanta Pandey said, “Seventy five per cent taxpayers have moved to the New Income Tax regime. We expect all taxpayers to move to the New Tax Regime.”
Insurance Bill
The FM said that a new Bill for reforms in the insurance sector will be introduced. Raising the FDI limit Is just one part of that.
Earlier, in the day, she had announced raising limit to 100 per cent from 74 per cent. The draft Bill also talks about a framework for composite licences, allowing insurers to offer multiple categories of insurance — life, health and general — under a single licence. This move is expected to enhance operational flexibility, streamline regulatory processes, and foster innovation. Insurers will be better positioned to cater to diverse customer needs, improving their competitive edge in the market.
