Union Budget 2026 Draws Mixed Reactions: MSMEs Seek Real Relief, Karnataka Leaders Cry Federal Injustice
Bengaluru: The Union Budget 2026–27 has triggered sharp and contrasting reactions from industry leaders and political voices in Karnataka, with micro, small and medium enterprises (MSMEs) welcoming the intent to boost manufacturing, but strongly condemning the lack of clear, accessible relief mechanisms. Political leaders, meanwhile, have criticised the Budget for sidelining states’ interests, farmers’ concerns and the principles of cooperative federalism.
MSMEs Say Growth Talk Lacks Ground Support
Shiva Kumar R, former president of the Peenya Industries Association, said the Budget once again failed to address the core pain points of MSMEs, despite repeated assurances of growth and employment generation.
“Union Budget 2026 falls short of MSME expectations. While growth is emphasized, micro and small enterprises continue to face high power tariffs, rising input costs, delayed payments, and expensive working capital,” he said. Kumar stressed that MSMEs urgently needed interest subvention, faster GST refunds and strict enforcement of delayed payment rules. “Strengthening MSMEs is essential for employment generation and sustainable economic growth,” he added.
Echoing these concerns, business leader Taher Sharief, associated with Muslim Industrialists Association questioned the accessibility of the newly announced ₹10,000 crore SME Growth Fund, which aims to improve credit access, modernise industrial clusters and support stressed small businesses.
“The vision of Sabka Sath, Sabka Vikas sounds promising, but accessibility remains a big question mark,” Sharief said. He pointed out that routing the fund through banks could make it inaccessible to genuine entrepreneurs. “How will a small entrepreneur access this fund when banks themselves are opaque? Unless the government sets up dedicated kiosks in every public sector bank or MSME centre for single-window clearance, this will remain on paper,” he warned.
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Industry Sees Opportunity, But Warns on Implementation
Offering a more balanced assessment, M G Balakrishna, former president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), said the Budget reflects long-standing demands of the MSME sector by placing manufacturing at the centre of economic growth.
“The allocation of ₹10,000 crore for small and medium-scale industries is a key highlight,” Balakrishna said, noting that there has always been a strong demand for sustained MSME support. However, he cautioned that outcomes would depend on execution. “The manufacturing sector needs this support at this point. The real question is how much of this allocation will translate into actual growth on the ground,” he observed.
Balakrishna also welcomed the Budget’s focus on pharmaceuticals, biogas and allied manufacturing sectors, calling it an attempt to balance traditional industries with emerging needs. At the same time, he underlined the need for policy clarity. “Simplified procedures and faster approvals are essential if small and micro industries are to benefit without delays,” he said.
Congress Leader Condemns Budget as Anti-State, Anti-Farmer
Strong condemnation came from Congress leader CM Faiz Mohammed, who described the Union Budget as “high on slogans but empty on delivery.” He accused the Centre of denying Karnataka fiscal fairness while shifting financial burdens onto states.
“Karnataka has been denied irrigation priorities, farmers have been left without relief, and states are being forced to bear rising costs while the Centre controls revenues,” Faiz said. “This weakens cooperative federalism and shifts responsibility without accountability.”
He also criticised sharp cuts in Centrally Sponsored Schemes, calling them evidence of “promises without performance.” Highlighting strategic neglect, Faiz pointed out that Karnataka was ignored in Rare Earth Corridor planning despite known deposits in districts such as Chamarajanagar. “Strategic initiatives must be based on resource reality, not political convenience,” he said.
On agriculture, Faiz termed the Budget deeply disappointing. “There is no concrete relief for sugarcane farmers, toor dal growers or pulse producers. There is no accountability for past announcements, no effective response to crop diseases, and no assurance of timely compensation,” he said, adding that the rural economy continues to be overlooked.
A Budget Under Scrutiny
While the Union Budget 2026 signals intent to strengthen manufacturing and MSMEs, voices from industry and politics agree on one point: without transparent implementation, federal fairness and targeted relief for farmers and small businesses, the promises risk remaining rhetoric rather than real reform.
KEY QUOTES
On Farmers and Rural Distress
“There is nothing in this Budget for sugarcane farmers, toor dal growers or food grain producers. Silence on farmers is not policy, it is abandonment.”
— CM Faiz Mohammed, Congress Leader
“Without crop compensation, disease control and fair price discovery, rural distress will only deepen.”
On MSME Neglect and Ground Reality
“Budgets speak of growth, but MSMEs are still struggling with high power tariffs, delayed payments and costly credit. Without real relief, growth remains a slogan, not a solution.”
— Shiva Kumar R, Former President, Peenya Industries Association
“Micro and small enterprises do not need sympathy, they need fair policies, timely payments and affordable working capital. Ignoring this is ignoring employment itself.”
On SME Growth Fund and Accessibility
“Announcing a ₹10,000 crore SME fund means nothing if entrepreneurs cannot reach it. Banks are not facilitators today, they are barriers.”
— Taher Sharief, Business Leader, Muslim Industrialists Association
“If the government is serious about Sabka Vikas, it must create single-window kiosks in banks and MSME centres. Otherwise, this fund will remain locked behind paperwork.”
On Manufacturing Push and Implementation
“The intent to place manufacturing at the centre of growth is welcome, but intent alone does not create jobs. Implementation will decide whether this Budget delivers or disappoints.”
— M G Balakrishna, Former President, FKCCI
“Small and micro industries can benefit only if approvals are faster and policies are simpler. Delay is the biggest enemy of growth.”
On Federal Injustice and State Neglect
“This Budget talks of vision, but denies states fiscal justice. Karnataka is asked to bear the burden while the Centre retains control.”
— CM Faiz Mohammed, Congress Leader
“Cooperative federalism cannot survive on slogans when states are denied resources and responsibility is pushed without accountability.”
