With the Union Budget 2026 approaching, economists have flagged currency volatility amid rising tariff risks as a significant challenge for policymakers. Experts say that while India’s growth trajectory remains robust, the next fiscal plan must address external uncertainties that could undermine economic stability and investor confidence.
Key Highlights
- Experts warn currency volatility and tariff risks pose key challenges ahead of Union Budget 2026.
- Policymakers urged to strengthen economic resilience amid global trade uncertainty and exchange rate fluctuations.
Economists emphasise that strong headline GDP growth needs to translate into broader job creation, higher wages and deeper rural demand, but external shocks such as fluctuating foreign exchange markets, shifting capital flows and changing trade costs pose real risks to this transition. Against this backdrop, managing currency volatility — particularly in light of global tariff tensions — has emerged as a priority for the Budget.
Dr Partha Chatterjee, Dean of Academics at Shiv Nadar University, noted that uncertainty around exchange rates, trade policies and inflation spillovers could increase costs for producers and exporters, especially small and medium enterprises. He urged the Budget to build greater macroeconomic resilience and reduce risk burdens for businesses.
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Analysts also highlighted the importance of attracting long-term, patient capital into sectors such as infrastructure and manufacturing to offset vulnerabilities from external headwinds. Strengthening buffers at both the macro and micro levels, they argue, will be key to sustaining inclusive growth amid a volatile global environment.
