The Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, outlines a strategic roadmap for India's sustained growth trajectory toward Viksit Bharat 2047.
Total expenditure reaches ₹53.5 lakh crore, with a record ₹12.2 lakh crore capital outlay (9% YoY increase from FY26), balancing fiscal discipline at 4.3% deficit with transformative investments in infrastructure, skilling, and green energy.
This approach leverages public spending to multiply private investments by 2.5-3 times, fostering job creation and global competitiveness.
Macroeconomic Framework
India's robust post-pandemic recovery continues, with the budget projecting 7-7.5% real GDP growth and 10.2% nominal expansion amid moderating global inflation and supply chain stabilization.
Fiscal Targets
- Deficit Control: 4.3% of GDP for FY27 (vs. 4.4% FY26 RE), achieving sub-4.5% glide path early; debt-to-GDP improves to 55.6%.
- Borrowings & Revenues: Gross market borrowings at ₹14.8 lakh crore; net tax receipts ₹28.7 lakh crore (+11.5% growth); ₹1.4 lakh crore Finance Commission grants to states.
- Inflation Outlook: CPI targeted at 4.5%, with the GDP deflator at 2.8-3.2%, supported by RBI's monetary policy and an agri-output surge.
Capex emphasis at 3.1% of GDP (the highest in a decade) prioritizes asset creation, expected to generate 1.5-2 crore direct jobs via multiplier effects in the construction and ancillary sectors.
Taxation Reforms
Tax policy shifts toward simplification and taxpayer trust, minimizing disruptions for long-term planning.
Direct Taxes
The New Income Tax Act 2025 (effective April 1, 2026) consolidates legacy laws, cutting 200+ ambiguous provisions and enabling 90% of assessments to be conducted facelessly, with refunds issued within 10 days.
Key enhancements:
- TCS reduced to 2% on LRS for education, medical treatment, and overseas tours (from 5-20%).
- TDS on workforce/contract services capped at 1-2%; automated lower/nil certificates for incomes below ₹5 lakh annually.
- ITR revisions extended to March 31 (nominal fee); one-time foreign asset disclosure amnesty up to ₹10 lakh for non-residents; complete immunity for smaller declarations.
- Accident/marine insurance claims are fully exempt; higher NPS contribution limits for salaried (employer to 14%).
Indirect Taxes & Customs
GST framework stabilized with e-invoicing threshold at ₹10 crore turnover, real-time matching, and AI audits, slashing compliance costs by ₹20,000-25,000 crore yearly.
- Exemptions expanded for lithium-ion batteries, solar glass/modules, and critical minerals to accelerate EV/renewable adoption.
- Higher duties on luxury goods, non-essential imports to shield domestic industries; anti-dumping measures strengthened.
Infrastructure Investments
₹12.2 lakh crore in capex (22% of total spend) aims to reduce logistics costs from 13-14% of GDP to under 9% by 2030, enhancing the export edge.
Core Projects
| Sector | Allocation (₹ lakh crore) | Key Initiatives | Expected Impact |
|---|---|---|---|
| Roads & Highways | 2.8 | 15,000 km new NH; 5 economic corridors (e.g., Amritsar-Jamnagar) | 20% logistics cost cut; 50 lakh jobs |
| Railways | 2.65 | 7 high-speed corridors (Delhi-Varanasi 320 kmph, Mumbai-Pune); Dankuni-Surat DFC | 2x freight speed; ₹1 lakh crore savings |
| Waterways/Ports | 0.45 (integrated) | 20 National Waterways; Coastal Cargo Scheme for 12% freight share by 2047 | Reduce road congestion by 15% |
| Urban Infra | Via NMP 2.0 | 100 AMRs/smart cities; seaplane hubs; ₹1.1 lakh crore asset monetization | Tier-2/3 city growth accelerator |
₹10,000 crore Infrastructure Risk Guarantee Fund de-risks PPPs; urban air mobility via seaplanes is incentivized.
Agriculture & Rural Economy
₹1.63 lakh crore allocation (5% YoY rise) targets doubling farmer incomes through tech and value addition, addressing climate vulnerabilities.
Productivity Boosters
- High-Value Crops: ₹350 crore missions for coconut (replace 10 crore trees), cashew/cocoa self-reliance, sandalwood revival.
- Fisheries & Allied: 500 Amrit Sarovars/reservoirs; NABARD ₹2 lakh crore refinance for animal husbandry entrepreneurship.
- Digital Agri: Bharat-VISTAAR AI platform links AgriStack for 12 crore farmers, provides custom advisories on seeds, MSP, and weather, and offers drone-as-a-service for 20,000 villages.
- Rural Infra: 100 agri-clusters; cold chains/packaging to slash 20-25% post-harvest losses; FPOs funded at a scale of ₹10,000 crore.
Manufacturing & MSMEs
Make in India 2.0 aims to raise the manufacturing GDP share to 25% through PLI expansions and cluster revival.
MSME Support Package:
- ₹10,000 crore Champion SME Growth Fund; TReDS liquidity to ₹7 lakh crore; ₹5 lakh crore credit guarantees.
- 200 legacy industrial clusters revived (textiles, leather); ₹10,000 crore PLI for container manufacturing.
- Strategic sectors: Biopharma SHAKTI (₹10,000 crore/5 yrs); ISM 2.0 semiconductors; defense corridors for exports.
Commerce & Industry: ₹70,296 crore; targets $2 trillion exports by 2030.
Human Capital Development
Healthcare (₹1.06 lakh crore, +10% YoY)
Expands access: NIMHANS-2 super-specialty mental health hub; 50% more trauma centers in district hospitals; 1.5 lakh caregivers trained via new centers.
- 5 Regional Medical Hubs for med-tourism; ₹980 crore for 1 lakh allied health professionals (nurses, technicians).
- Tele-ICU in 500 districts; AI diagnostics in PHCs to cut mortality 15%.
Education & Skills (₹1.39 lakh crore)
NEP implementation: Girls' STEM hostels in every district institute; 5 University Townships; research grants double PhDs to 1 lakh/year.
- Skill India 3.0: 2 crore youth trained; Kaushal Yojana for Divyangjan in IT/AVGC/gaming jobs.
Social Welfare & Inclusion
Equity Programs:
- Women & Youth: SHE-Marts for 1 crore SHG women; 50% workforce reservation incentives.
- Regional Balance: Purvodaya for Bihar/Odisha via East Coast Corridor; 10,000 Atmanirbhar Arenas under Khelo India.
- Housing & Food: PMAY-Urban 2.0 (2 crore units); NFSA extended to 81 crore beneficiaries with fortified rations.
Energy & Sustainability
₹1.09 lakh crore outlay accelerates net-zero: Green hydrogen to 5 MMT by 2030; PM Surya Ghar for 1 crore rooftop solar (₹75,000 crore).
- ₹20,000 crore CCUS incentives for steel/power; small modular reactors (SMRs); 100 GW non-fossil addition.
- Green bonds ₹1 lakh crore; ESG norms for infra projects.
Financial Markets & FDI
Regulatory ease: 100% FDI in insurance/space; T+0 settlements nationwide; SEZ reforms unlock investments of ₹1-1.5 lakh crore. SME IPO platforms boosted for liquidity.
Economic Impacts
Stakeholder Benefits
Individuals see a 5-8% disposable income uplift from TDS/TCS cuts, NPS enhancements, and insurance exemptions, ideal for middle-class savings.
Businesses leverage a 1:3 capex multiplier for expansion; MSME funds and infrastructure create 2-2.5 crore jobs; PLIs drive $1 trillion in manufacturing output.
Macro Outlook locks 7-8% growth, rupee stability, top-3 global economy status by 2030 with 8.5% investment-to-GDP ratio.
FAQs
Q1. What is the fiscal deficit target for FY27?
The target is 4.3% of GDP, down from 4.4% in FY26 revised estimates, supporting fiscal consolidation ahead of schedule.
Q2. How much is allocated for capital expenditure?
₹12.2 lakh crore (3.1% of GDP), a 9% increase from FY26, focusing on infrastructure multipliers for private investment.
Q3. Are there changes to income tax slabs?
No major slab revisions; emphasis on stability with TCS cuts to 2% on LRS, TDS caps, and ITR simplification under the new Tax Act 2025.
Q4. What key infrastructure projects were announced?
Includes 7 high-speed rail corridors (e.g., Delhi-Varanasi), 15,000 km highways, and the Coastal Cargo Scheme for 12% waterways freight by 2047.
Q5. How does the budget support agriculture and MSMEs?
Agriculture gets ₹1.63 lakh crore with AI tools like Bharat-VISTAAR; MSMEs receive ₹10,000 crore Champion Fund and TReDS liquidity boost to ₹7 lakh crore.
