Union Budget 2026: Aligning Public Finance, CSR, Climate and Technology for India’s Next Development Leap

This Budget Special brings together perspectives from corporate leaders, development practitioners and policy experts to examine how Union Budget 2026 can better align public spending with CSR, ESG, climate and technology priorities. Drawing on insights from recent budgets and outcome frameworks, the story explores how private capital can complement government action to deliver more collaborative, outcome-driven and resilient development outcomes.

As India prepares for Union Budget 2026, expectations from the corporate, development and social impact ecosystem are running high. The conversation around corporate social responsibility (CSR) and environmental, social and governance (ESG) commitments has matured significantly over the last decade. CSR is no longer seen merely as a compliance requirement but as a potential catalyst for development at scale.

Yet, as annual CSR spending crosses ₹34,000 crore, the key question confronting policymakers, corporates and civil society alike is no longer about scale alone. It is about alignment: alignment with national priorities, public spending, climate realities, technology systems, and the real needs of communities on the ground.

The Union Budget as a Strategic Signal

Across sectors, there is broad consensus that the Union Budget plays a powerful signalling role in shaping corporate behaviour.

“Yes, the budget priorities like those signaled in the Union Budget 2026 shape corporate ESG and CSR strategies,” says A Vikram Joshe, Founder of WAE Ltd. “Governments can steer private sustainability efforts by allocating funds, setting incentives, and embedding ESG criteria into fiscal policy.”

This signalling effect has become more pronounced in recent years as the government itself has moved toward outcome-oriented budgeting. The Union Outcome Budget 2024–25 explicitly tracks outputs and outcomes across 159 major Central and Centrally Sponsored Schemes, reflecting a clear policy shift from outlays to results. For CSR leaders, this creates a strong case for aligning private capital with government outcome frameworks rather than operating in silos.

Recent Union Budgets have consistently positioned sustainability, green growth and technology-led development as core pillars, reinforcing why budget priorities increasingly shape corporate ESG and CSR strategies.

Ankeet Dave, Founder and Director at Accesslife, echoes this sentiment. “Yes, Union Budget priorities significantly influence corporate ESG and CSR strategies, both directly and indirectly,” he says. When budgets prioritise climate resilience, healthcare, skilling or digital public infrastructure, corporates tend to align their ESG roadmaps and CSR investments accordingly, often committing multi-year funding once uncertainty reduces.

For Deepak Garg, Founder of ARE Infra Heights, the Budget sets both direction and urgency. “Yes, Budget priorities do influence corporate ESG and CSR strategies, especially in setting direction and urgency,” he notes. Even organisations that are intrinsically committed to sustainability benefit from budget signals that enable partnerships and long-term planning.

From an industry leadership perspective, Deepak Pahwa, Chairman of Pahwa Group and Managing Director of Bry Air, points out that sustainability has decisively moved into the strategic domain. “With the environment deteriorating rapidly, sustainability has outgrown being an optional expense. It has become a strategic investment that builds resilience, mitigates risks in the long run and reinforces trust among the stakeholders.”

CSR in India: Growing Scale, Persistent Gaps

India’s CSR ecosystem has expanded rapidly since the mandate under the Companies Act came into force in 2014. Cumulative CSR spending has crossed ₹1.5 lakh crore, with a significant acceleration over the last five years. However, stakeholders increasingly point to structural gaps in how this money is deployed.

Mr Joshe highlights a key imbalance. “India Inc spends approximately ₹29,000–30,000 crore annually on CSR, yet over 60 percent flows to education and health, while critical needs like climate resilience, water security, sanitation systems, skilling for green jobs, and urban waste management remain underfunded,” he says. He adds that CSR often remains short-term and compliance-driven, with limited outcome measurement or convergence with government programmes.

This concern mirrors trends in public spending. While overall Union expenditure has risen steadily, social sector spending as a share of total expenditure has largely stagnated around 20 percent over the last decade, dipping to roughly 17 percent in 2024–25. This makes the effective deployment of CSR and ESG capital even more critical for filling last-mile gaps and enabling innovation.

These patterns also reflect long-standing budgetary and scheme structures, where education and health have clearer funding and reporting frameworks compared to areas such as climate adaptation or urban resilience.

From the education sector, Renisha Bharvani, Head of Research and Legal at Rangeet, reinforces this concern. “While CSR spending has grown, a strategic gap remains between spending and systemic impact,” she says. “Funds often prioritise hardware over pedagogy, short-term activities over sustainable solutions, and neglect fostering vital skills like climate agency, societal awareness, and empathy in children.”

Healthcare faces similar challenges. According to Ankeet Dave, CSR tends to favour visible infrastructure over long-term support systems. Nutrition, psychosocial care, technology enablement and institutional capacity building often receive limited funding. High-need areas such as rare diseases, paediatric healthcare and climate-induced health vulnerabilities remain under-supported.

Geographical concentration further complicates the picture. Dr Smita Mazumdar, Professor of Finance and Accounting and Program Director at Great Lakes Institute of Management, Gurgaon, points out that CSR spending is heavily skewed toward states where corporate headquarters are located, while regions such as the North East continue to receive a disproportionately small share despite deeper development deficits.

Climate and Resilience: Beyond Mitigation Targets

While recent budgets have strongly emphasised renewable energy and emissions reduction, practitioners now argue that climate adaptation and livelihood resilience need equal policy and funding attention.

As climate risks intensify, development experts argue that Budget 2026 must shift focus from mitigation alone to adaptation and resilience.

“Smallholder farmers cultivate less than two hectares of land but carry a disproportionate share of climate and market risk,” says Crispino Lobo, Co-founder and Managing Trustee of WOTR. Limited access to credit, rising climate extremes and post-harvest losses continue to undermine rural livelihoods. He believes Budget 2026 must prioritise climate-adaptive agriculture, water security, precision farming technologies and weather-based advisory systems. “Empowering smallholders is not welfare; it is a strategic investment in food security and resilient ecosystems.”

At the grassroots, practitioners echo the need for long-term programmatic approaches. Lt Cdr Deokant Payasi (retd), Co-founder and CEO of SayTrees Environmental Trust, stresses that climate funding often fails due to its project-based nature. “Budgets and CSR allocations must support multi-year programmes focused on watersheds and rural livelihoods, with funds clearly earmarked for maintenance,” he says. He adds that nature-based solutions offer high returns for water and carbon resilience but remain under-incentivised, particularly in aspirational districts.

From the energy transition perspective, Baroruchi Mishra, Group CEO of Nauvata Energy Transition Enterprise, highlights the importance of addressing hard-to-abate sectors. While renewables remain central, she notes that reducing carbon intensity in transition fuels could offer interim climate gains if supported by robust policy frameworks and credible measurement standards.

Technology as the Enabler of Scale

If climate defines what India must respond to, technology increasingly defines how scale can be achieved.

Recent Economic Surveys have repeatedly highlighted the role of digital public infrastructure (DPI) in improving productivity, service delivery and inclusion. Platforms such as Aadhaar, UPI, and digital registries are now seen as foundational layers that CSR, ESG and development programmes can build upon rather than replicate.

MSMEs sit at the heart of this challenge. Neha Juneja, Founding Member of IndiaP2P and EquiRize, points out that MSMEs face a credit gap exceeding ₹20 lakh crore, severely limiting their ability to adopt green technologies. “Targeted credit access and compliance rationalisation could unlock investments in renewables, green mobility and clean cooking — sectors with over $50 billion in annual investment potential,” she says.

In the energy sector, Manan Thakkar, Co-founder and Managing Director of Prozeal Green Energy Limited, highlights the need for grid-ready renewable solutions. As power demand rises, wind-solar hybrid systems integrated with storage will be essential for stability. He expects Budget 2026 to improve bankability for round-the-clock renewable power through storage-linked procurement, streamlined open-access norms and affordable domestic capital.

Technology also plays a growing role in India’s bioeconomy transition. Dr Sangeeta Srivastava, Executive Director at Godavari Biorefineries Ltd, notes that India has already achieved E20 ethanol blending ahead of schedule, creating surplus capacity. “Budget 2026 should focus on E100-ready infrastructure and Sustainable Aviation Fuel mandates to absorb this capacity,” she says, adding that ethanol-to-chemicals and bio-based derivatives could position India as a competitive player in the sustainable chemicals economy.

Humanitarian Lessons and the Case for Preparedness

From the humanitarian sector, Manu Gupta, Co-founder of SEEDS, outlines three critical gaps in current CSR approaches. “First, timing. CSR funding often flows after a disaster, when vulnerable households have already lost homes, livelihoods and productive assets,” he explains. “Second, localisation. CSR funds frequently bypass local institutions and frontline government systems closest to risk. Third, measurability and outcomes. Many CSR programmes remain activity-led rather than outcome-driven.”

What is missing, he argues, is long-term institutional investment in preparedness systems, early warning mechanisms and resilient livelihood pathways that reduce disaster impacts over time; areas where CSR can complement public spending that may not be designed for rapid or anticipatory deployment.

From Cheque-Writing to Collaboration

There is growing agreement that CSR must move from fragmented interventions to collaborative, outcome-driven models.

Mr Joshe advocates thematic pooling of funds, alignment with district and state development plans, multi-year commitments, independent impact measurement and stronger platforms for industry–NGO–government collaboration; approaches that mirror the government’s own outcome budgeting logic.

Ankeet Dave supports ecosystem-based partnerships with shared outcomes and standardised metrics, while also highlighting the need to fund NGO core operations and human capital.

Rinesh Dalal, Director at JD Institute of Fashion Technology, believes educational institutions can play a key role. “CSR can become more effective if companies work closely with educational institutions, NGOs and local communities,” he says, helping CSR transition from charity to sustainable development.

From the manufacturing sector, Kashiish A Nenwani, Director at Shivtek Spechemi Industries Ltd, adds that consortium-based CSR initiatives and standardised impact measurement frameworks can significantly improve outcomes.

CSR as Catalytic Capital After the Budget

Stakeholders widely agree that CSR should complement, not duplicate, public spending; especially in a fiscal environment where efficiency and outcomes are under scrutiny. Recent budgets have focused on fiscal consolidation, with the fiscal deficit steadily declining, reinforcing the need for CSR and ESG capital to be deployed strategically rather than spread thin.

“CSR can plug last-mile gaps, co-fund pilots where government spending is risk-averse, and scale proven public programmes through pooled funds,” says Mr Joshe.

Dhananjay Ganjoo, Chief Resource Mobilisation and Communication Officer at The Akshaya Patra Foundation, explains the balance: “Public spending provides scale while CSR offers flexibility and innovation.” In sectors such as nutrition and education, CSR can strengthen delivery, technology integration and operational efficiency.

Manu Gupta adds that CSR can co-finance areas public budgets cannot absorb quickly, such as school retrofitting, early warning systems and resilient livelihoods, while also supporting capacity building for local governments.

Looking Ahead to Union Budget 2026

Expectations from Budget 2026 are clear and convergent. Stakeholders are looking for stronger support for green MSMEs, incentives for climate resilience and adaptation, simplified compliance, clearer ESG governance signals, and policies that encourage collaborative, outcome-based CSR models.

As India advances toward its long-term development goals, Union Budget 2026 represents a critical opportunity. If policy signals encourage collaboration, equity and outcomes, CSR and ESG can evolve from fragmented compliance mechanisms into powerful forces for inclusive, resilient and technology-enabled growth.