What to Expect from Budget 2026? EV Incentives, PSU Merger Buzz, IDBI Stake Sale, Digital Health Push, More

What to Expect From Budget 2026: The Union Budget 2026, scheduled to be presented on Sunday, February 1, is expected to prioritise infrastructure spending and structural reforms to support economic growth. However, significant direct tax rationalisation appears unlikely, given the government's policy stance and announcements made in the previous year.

There can be great focus on incentives related to electric vehicles (EV), another round of consolidation of PSU banks, announcements linked to IDBI stake sale, policy support for lending, higher budget allocation to sectors like defence, railways, energy, etc, according to a PL Capital report.

With less than a week left for the Budget 2026 presentation, here are the key things that are expected.

EV Push With Higher Incentives, Tax Subsidies, etc

There are chances of higher subsidies for EVs and hybrid vehicles "to keep the gap over ICE post GST2.0 rate cuts," noted PL Capital in its report released last week.

Additionally, there are chances of increase in funds allocated under PM e-drive subsidies for buses with clean fuels, charging infra, EV recycling, etc. There are also chances of the removal of the inverted duty structure by reducing taxes on EV components.

PSU Merger

The government may also make announcements linked to a fresh round of consolidation of PSU banks in the Budget 2026. As per the PL Capital report, a possible merger could focus on Indian Overseas Banks, Bank of Maharashtra, Bank of India (BoI), Central Bank, UCO, etc.

IDBI Stake Sale

There can be some updates related to the IDBI stake sale. There may be a focus on IDBI stake sale "as a key driver of non-tax capital inflows". The government is confident of pulling off the IDBI Bank stake sale in FY26 itself, Department of Financial Services Secretary M Nagaraju said in October 2025.

Capital Goods, Defence, Railways, and Renewable Power Expected To Receive High Budget Allocation

There can be a high budget allocation in sectors like infrastructure and energy, defence, railways, etc.

Digital Health Push

There can be schemes and policies to support telemedicine, electronic health records, and digital diagnostics, etc. There could be incentives for Medical Technology & R&D, as per PL Capital report. There are also expectations of reduced import duties on medical equipment, PLI extensions for med-tech, and R&D incentives.

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