Construction of embankments on soft clay remains a major geotechnical challenge owing to the low shear strength, high compressibility, and excessive long-term settlement of these soils. Among the available ground improvement methods, geogrid reinforcement and stone columns have gained significant attention because of their effectiveness in improving stability and reducing deformation. This study presents a comparative numerical evaluation of these two techniques to identify an efficient and economical reinforcement strategy for embankments constructed on soft clay. Finite element analyses were carried out using PLAXIS 2D to investigate the behaviour of reinforced embankments under varying reinforcement configurations. Geogrids with tensile strengths of 50, 100, and 150 kN/m were analysed at vertical spacings of 0.3, 0.6, and 0.9 m, while stone columns with diameters of 0.8, 1.0, and 1.2 m were evaluated at spacings of 3D, 4D, and 5D. The reinforcement systems were assessed using a proposed Settlement Reduction Factor (SRF), supplemented by failure mechanism interpretation and a comparative cost–benefit analysis based on prevailing construction costs in India. Both reinforcement techniques substantially reduced embankment settlement compared with untreated soft clay. Stone columns exhibited stable performance across all configurations, with the 1.2 m diameter at 3D spacing achieving an SRF of approximately 19.8 and the highest cost efficiency. Geogrid reinforcement demonstrated optimum performance with a tensile strength of 150 kN/m at 0.3 m spacing, achieving an SRF of approximately 21.0, although its effectiveness decreased significantly with increasing layer spacing. Cost analysis revealed that stone columns provide lower cost per unit settlement reduction, whereas geogrids are advantageous for shallow embankments and projects requiring rapid construction. The proposed SRF-based evaluation framework, combined with cost–benefit analysis, enables an objective comparison of reinforcement alternatives and facilitates the selection of technically effective and economically sustainable ground improvement solutions for embankments on soft clay.