The Union Budget FY26 shifts focus from government-led CAPEX to boosting private consumption, with tax rationalization aimed at raising disposable income. While these measures could support consumption, their effectiveness is likely to be limited due to the small taxpayer base. Fiscal space for tax cuts is created through slower expenditure growth and optimistic tax assumptions. The budget also targets private investment and job creation, focusing on MSMEs, the rural sector, and exports but misses out on big reforms. The fiscal deficit for FY26 is set at 4.4% of GDP, down from the revised 4.8% in FY25. With a consumption boost from the budget, the RBI is expected to complement these measures with a 25-bps rate cut and liquidity steps in the upcoming meeting.