Budget 2026 Must Align With Long-Term Vision To Build Resilience: Raghuram Rajan

New Delhi, Jan 28 (KNN) Former Reserve Bank of India Governor Raghuram Rajan on Wednesday said the upcoming Union Budget should be aligned with a longer-term economic vision to strengthen India’s resilience, self-reliance and growth, warning that the global economy is passing through an ‘extremely dangerous time’.

Budget must align with long-term vision

“I think the Union Budget for 2026–27 should be integrated with a longer-term vision. How do we become more resilient, more independent as an economy, but also fast growing” Rajan said, adding that such an approach would make India a more attractive global partner.

He noted that even during the era of five-year plans, budgets were not always well integrated with broader economic goals, reported PTI.

Global risks amid emerging opportunities

Rajan described the current phase as an ‘extremely dangerous time’ for both the global and Indian economy, despite emerging opportunities from large-scale investments in artificial intelligence.

“There is also a lot of danger of becoming too reliant on entities that can squeeze us and make us vulnerable,” he said, pointing to India’s lack of a nearby wealthy market apart from its domestic economy.

Need for deeper supply chain integration

The former RBI Governor said the upcoming Budget could include tariff rationalisation to improve India’s integration into global supply chains, while acknowledging efforts by states to create investment-friendly policies.

While India is the fastest-growing large economy, Rajan stressed the need to deepen economic ties, including with neighbouring countries such as Bangladesh, Sri Lanka and Nepal.

On escalating trade tensions, particularly with the US, Rajan said India should temporarily shut out external noise and focus inward on reforms to raise its growth potential.

Rajan said policy uncertainty among major global powers has created an opportunity for India to reinsert itself into global supply chains, across manufacturing and services.

India should diversify its trade and supply chain relationships beyond China to Europe, Australia, Canada, the Middle East and East Asia, he said.

Caution against unsustainable growth

While responding to questions on achieving sustained 8–9 percent growth, Rajan cautioned against chasing unsustainable expansion, citing challenges faced by China’s property sector.

He also flagged concerns over infrastructure investments, warning against projects with weak utilisation. “We should not build public infrastructure that people cannot use,” he said.

Rajan emphasised that India must prioritise durable and sustainable growth rather than 'helter-skelter' expansion, including in sectors such as housing and urban infrastructure.

(KNN Bureau)