Budget 2026: Despite 'Make in India', the contribution of the manufacturing sector is stuck at 12.13 percent of GVA, whereas the government aims to take it to 25 percent.

These are the 9 major challenges of Finance Minister Nirmala Sitharaman's 9th budget.

Union Budget 2026: Union Finance Minister Nirmala Sitharaman will present the General Budget for the financial year 2026-27 on February 1st. At a time when India has surpassed Japan to become the world's fourth-largest economy and is poised to become the third largest in the next two years, the government faces several serious economic challenges. Let's explore the major challenges the Finance Minister will face during her budget presentation.

1. Pace of GDP growth

According to the Economic Survey, India's GDP growth is expected to be between 6.8 and 7.2 percent in the fiscal year 2026-27. The government has set a target of achieving a developed India by 2047. Achieving this goal will require the country to maintain a consistent growth rate of 8 percent or more.

2. Continuous fall in the rupee

Despite RBI intervention, the Indian rupee remains under pressure. On January 29, 2026, the rupee reached an all-time low of 92 against the dollar. Between April 2, 2025, and January 22, 2026, the rupee has depreciated by approximately 6.5 percent.

3. Layoffs in the IT and software sector

The employment crisis is a major concern among IT and software companies. In the first nine months of fiscal year 2025-26, the top five IT companies hired just 17,000 new employees, compared to 17,764 in the same period last year.

4. Growing trade deficit with China

India's trade deficit with China is steadily increasing. China exports to India approximately ₹8.39 lakh crore, putting pressure on domestic industries.

5. Record prices of gold and silver

Gold and silver prices have reached historic highs. On January 30th, gold reached ₹1.71 lakh per 10 grams and silver ₹3.95 lakh per kg. This is directly impacting the middle class, especially since India hosts approximately 10 million weddings each year.

6. Sanitation and air pollution

According to a CREA report released in January 2026, 44 percent of Indian cities suffer from chronic air pollution. In the national capital, Delhi, the air quality is in the "good" category only 79 out of 365 days a year.

7. America's high tariffs

The US has imposed a 50 percent tariff on Indian products—a 25 percent base tariff and an additional 25 percent tariff—due to the purchase of cheap crude oil from Russia. This has had a major impact on Indian exports.

8. Slowdown in the manufacturing sector

Despite 'Make in India', the contribution of the manufacturing sector is stuck at 12.13 percent of GVA, whereas the government aims to take it to 25 percent.

9. Farmers and agricultural productivity

India's food grain production is projected to reach 3,577.3 lakh metric tons in the 2024–25 agricultural year, an increase of 254.3 LMT from the previous year. However, yields of cereals, maize, soybeans, and pulses remain below the global average. According to experts, a focus on productivity improvements, improved seeds, modern technology, and irrigation is essential to increase farmers' incomes.