Why you shouldn't make investment decisions based on tax incentives

Subscribe to enjoy similar stories. At the Mint Money Festival in Mumbai on 14 February, an audience poll revealed that people are more concerned with the Union Budget creating jobs and improving the government’s fiscal health than delivering tax breaks. 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.

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.