Monika Halan, founder of Dhan Chakra Financial Education, decoded Budget 2026 for households to explain what really matters for jobs, taxes, investments and long-term financial security.
The audience prioritised job growth and fiscal discipline over tax relief. How do you decode the Budget from that lens?
It’s encouraging to see job growth and fiscal discipline rank above tax relief. Interestingly, both are closely related.
On income tax, we saw significant relief last year. I wouldn’t expect any more meaningful income tax cuts for the next four to five years, at least not until more jobs are formalised and a larger base of people begin paying taxes.
Fiscal discipline is fundamentally about how the government manages its borrowing. We usually track two numbers: the fiscal deficit and the revenue deficit. Fiscal deficit is the excess of government expenditure over revenue.
But more important is what the government is borrowing for. It’s similar to what we borrow for – to build a house or to go on a vacation. Similarly, if the government is borrowing to build roads, ports and capital assets, it is productive and the capital expenditure has a multiplier of around five to six. Whereas if the borrowing is done to fund subsidies or loan waivers, that comes out of the revenue expenditure and doesn’t generate long-term growth.
The ideal scenario is a fiscal deficit of around 3%, which is the FRBM (fiscal responsibility and budget management) target, with zero revenue deficit, meaning borrowing only for asset creation. That creates a positive growth loop, which ultimately supports job creation.
If the government borrows excessively, it crowds out private investment. And without private investment, job growth remains muted. That’s why fiscal prudence and employment are interconnected.
What does fiscal discipline mean for job security and household financial stability?
Job creation will largely come from private enterprises, not government jobs.
Beyond the Budget, reforms like Jan Vishwas aim to decriminalise outdated, colonial-era business laws. Many procedural violations still carry jail terms – for example, minor factory compliance issues. These create rent-seeking opportunities for bureaucracy.
Cleaning up these laws unshackles entrepreneurs. If India achieved this much growth despite heavy regulation, imagine the potential when businesses operate more freely. That’s where sustainable jobs will come from.
What about healthcare and retirement planning from a household perspective?
Healthcare implementation is state-driven. The Centre allocates funds, but citizens must hold their state governments accountable for delivery of hospital infrastructure, doctor attendance, and medicine availability.
Schemes like Ayushman Bharat are designed for the poorest households. Beyond that, households must take responsibility for their own retirement planning through instruments like NPS and mutual funds. Retirement planning is ultimately an individual responsibility.
Households typically expect tax cuts from the Budget. Is that the right approach?
Lower taxes are desirable, but in the near term, I wouldn’t expect major tax cuts.
Instead, households should ask what is being done to widen the tax base and catch evasion? I had done a rough calculation to arrive at a number of ₹2 trillion that is going unpaid as taxes. Now, if the government is able to include people who are escaping paying taxes and improve compliance, overall rates can eventually fall.
Currently, salaried taxpayers shoulder a heavy burden, with the top marginal rate touching 39%. Sustainable relief will come only when compliance improves.
The government has retrospectively changed taxation on sovereign gold bonds (SGBs) in the Budget. How should investors look at this change?
I believe the SGB taxation issue arose because of unusual secondary market activity where investors were just harvesting tax breaks on them. Of course no one likes retrospective decisions, but I think the government spotted that because of gold’s extraordinary price cycle.
But remember that gold’s 30-year compound annual growth rate is about 9%. Cycles revert.
When you are looking at the Budget for your investments, look at long-term capital gains tax and more broadly, watch global trends carefully. Some countries like the Netherlands are discussing or implementing taxes on unrealised gains. That’s dangerous territory. Taxing unrealised appreciation is fundamentally unfair. When following the Budget, watch out for whether we are going in this direction.
Could mutual fund taxation change in the future bring it at par with portfolio management services (PMS) or alternative investment funds (AIFs)?
Capital-gains taxation is under review from first principles—how and when it should be applied. Some inconsistencies exist today, such as Ulips that invest in bonds but are actually taxed as equity. I believe it’s a work in progress and the answer will have to wait until future Budgets.
But the key question for investors is: are your returns from mutual funds beating inflation? If so, mutual funds continue to be worth investing in.
What is the future of real estate digitisation and blockchain in India?
Real estate reform is complicated because it remains deeply intertwined with black money and political funding.
Blockchain technology could help bring transparency in land records. But significant reform is unlikely until corruption in the sector is addressed. It will probably be one of the last major structural reforms.
If you had to give households three action points from this Budget, what would they be?
Ignore it. Ignore it. Ignore it.
Don’t make investment decisions based on tax incentives. Governments can reverse tax benefits, like with SGBs. Invest in products that work fundamentally for you, and if a tax benefit comes, treat it as a bonus.
Instead of reacting to media hype, watch macro indicators such as the fiscal deficit, interest payments, subsidy levels and pension liabilities. If those numbers are prudent, the economy is on stable footing.
For the next five years, don’t expect dramatic tax changes. Focus on asset allocation, discipline and long-term wealth creation.
