Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026–27, outlining an ambitious growth strategy anchored in manufacturing expansion, infrastructure investment and sweeping tax reforms, while maintaining a tight fiscal framework amid global economic uncertainty.
The Budget, the first to be prepared at Kartavya Bhawan, is built around three stated kartavyas—accelerating economic growth, building people’s capabilities, and ensuring inclusive access to opportunities under the vision of Sabka Sath, Sabka Vikas.
For 2026–27, the government pegged total expenditure at ₹53.5 lakh crore and non-debt receipts at ₹36.5 lakh crore, with net tax receipts estimated at ₹28.7 lakh crore. The fiscal deficit is projected at 4.3% of GDP, marginally lower than 4.4% in 2025–26, while the debt-to-GDP ratio is expected to ease to 55.6%.
Manufacturing, Infrastructure Take Centre Stage
A major thrust has been placed on scaling up manufacturing across seven strategic and frontier sectors, including biopharma, semiconductors, electronics, textiles, chemicals, capital goods and critical minerals.
The government announced a ₹10,000 crore Biopharma SHAKTI programme, expanded the Electronics Components Manufacturing Scheme to ₹40,000 crore, and unveiled India Semiconductor Mission 2.0 to strengthen domestic design, equipment and materials capacity.
To reduce dependence on imports of critical inputs, dedicated rare earth corridors will be developed in Odisha, Kerala, Andhra Pradesh and Tamil Nadu, covering mining, processing, research and manufacturing.
Public capital expenditure will rise to ₹12.2 lakh crore, alongside the creation of an Infrastructure Risk Guarantee Fund to crowd in private investment. Seven high-speed rail corridors have been proposed as growth connectors, while 20 national waterways will be operationalised over the next five years to promote greener logistics.
Support For SMEs, Textiles And Cities
The Budget proposed a ₹10,000 crore SME Growth Fund to nurture “Champion SMEs”, additional funding for the Self-Reliant India Fund, and schemes to modernise 200 legacy industrial clusters.
An integrated textile programme—including national fibre initiatives, mega textile parks and cluster modernisation—aims to boost exports and employment, particularly in traditional hubs.
Urban development will be driven through City Economic Regions, with ₹5,000 crore per region over five years, and incentives to encourage large municipal bond issuances.
On human capital, the government announced steps to bridge education and employment gaps, expand allied health institutions, establish regional medical hubs for medical tourism, and support creative industries under the “orange economy”.
Tourism and heritage also feature prominently, with 15 archaeological sites, including Adichanallur and Lothal, to be developed as experiential cultural destinations.
Major Tax Reforms Announced
A key highlight is the rollout of a new Income Tax Act from April 2026, aimed at simplifying compliance through redesigned rules and forms.
Personal tax relief measures include tax exemption on interest awarded by Motor Accident Claims Tribunals, rationalisation of TCS on overseas travel and remittances, and automated systems for lower or nil TDS certificates for small taxpayers.
The government also announced a major overhaul of penalties and prosecutions to reduce litigation, along with reforms to advance pricing agreements and safe harbour rules to support India’s IT services sector.
On capital markets, the Budget raised Securities Transaction Tax on futures and options, a move that triggered sharp market volatility on Budget Day.
On the indirect tax front, the Budget focused on tariff simplification, easing customs duties for critical minerals, clean energy inputs, electronics, aviation and nuclear power projects. Customs processes are set to move towards trust-based, technology-driven clearances, with AI-enabled risk assessment and a single digital window by FY26-end.
Fiscal Balance Maintained
Despite the scale of announcements, the Finance Minister reiterated the government’s commitment to fiscal discipline, with borrowing and deficit numbers signalling a calibrated approach to growth spending.
Overall, Budget 2026–27 signals a decisive push towards manufacturing-led growth, infrastructure expansion and tax simplification, while attempting to balance long-term structural reforms with macroeconomic stability.
