Union Budget 2026-27 Unveils Strategic Focus on Infrastructure and Fiscal Discipline
Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2026-27 on Sunday, marking her ninth consecutive budget presentation. The budget emphasizes robust infrastructure development, manufacturing boosts, fiscal prudence, and tax simplifications, leveraging India's strong economic momentum.
Key Fiscal and Economic Targets
The government has set an ambitious capital expenditure target of ₹12.2 lakh crore for FY27, a significant increase from ₹11.2 lakh crore in the current year. This substantial allocation aims to drive infrastructure projects and attract private investment. Concurrently, the fiscal deficit has been narrowed to 4.3% of GDP, with the debt-to-GDP ratio standing at 55.6%. A long-term goal has been established to reduce this ratio to 50±1% by 2030.
The total size of the Union Budget is pegged at ₹53.5 lakh crore, with net tax receipts estimated at ₹28.7 lakh crore. Of this, ₹1.4 lakh crore will be devolved to states, ensuring balanced regional development.
Tax Reforms and Simplifications
A major highlight is the New Income Tax Act, 2025, which will come into effect from April 2026. The government plans to notify simplified income tax rules and forms shortly, addressing the demands of salaried and middle-class taxpayers for more relief under the new tax regime.
Additionally, basic customs duty exemptions have been announced for 17 drugs or medicines, capital goods used in manufacturing lithium-ion cells for batteries, and capital goods required for processing critical minerals. These measures aim to reduce costs and boost domestic production.
Boosting Manufacturing and Innovation
The budget introduces several schemes to enhance India's manufacturing capabilities and global competitiveness:
- Biopharma Shakti Scheme: With an outlay of ₹10,000 crore over five years, this initiative aims to develop India as a global biopharma manufacturing hub. It will create a network of 1,000 accredited trial sites to bolster the biopharma industry.
- India Semiconductor Mission 2.0: Focused on industry-led R&D and training centres for chips, the outlay has been increased to ₹40,000 crore.
- Rare-Earth Corridors: The Centre will support mineral-rich states like Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated corridors for mining, processing, research, and manufacturing of rare earths.
- Chemical Parks: Three dedicated chemical parks will be established in every state using a cluster-based plug-and-play model to enhance domestic chemical production.
Support for MSMEs and Infrastructure Development
To empower small and medium enterprises, the government has proposed a ₹10,000-crore SME growth fund and a Self-Reliant India fund with ₹2,000 crore to support micro enterprises. A cadre of 'Corporate Mitras' will be developed in Tier-II and Tier-III towns to assist MSMEs.
Infrastructure projects include:
- Seven high-speed rail corridors connecting major cities like Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri.
- New dedicated freight corridors connecting Dankuni in the East to Surat.
- Operationalisation of 20 new waterways over the next five years, starting with Odisha.
- A ship-repair ecosystem in Varanasi and Patna.
Promoting Tourism, Healthcare, and Education
The budget outlines initiatives to boost tourism, healthcare, and education sectors:
- Creation of 5 tourism destinations in 5 Purvodaya States and provision of e-buses to Buddhist sites in the North Eastern region.
- Development of 15 sites like Sarnath and Hastinapur as vibrant cultural hubs for archaeological revival.
- A scheme to upskill 10,000 guides in 20 tourist sites through a standardized 12-week training course in collaboration with an IIM.
- Proposals for Allied Health Practitioners and training for caregivers, along with a scheme to establish five regional medical hubs to promote India as a hub for medical-value tourism.
- Establishment of three new All India Institutes for Ayurveda, upgrades to AYUSH pharmacies, and the WHO traditional medical center in Jamnagar.
- Creation of five university townships and academic zones to host multiple colleges and skill centres.
- Setting up of one girls' hostel in every district and a new National Institute of Design in east India.
Focus on Technology and Sustainability
Technological advancements and sustainability are key priorities:
- Bharat-vistaar: A multilingual AI tool to integrate Agristack portals and ICAR agricultural practices with AI systems, enhancing farm productivity and decision-making.
- Indian Institute of Creative Technologies, Mumbai: To set up Animation, Visual Effects, Gaming, and Comics (AVGC) content creator labs in 15,000 secondary schools and 500 colleges, boosting India's Orange Economy.
- An outlay of ₹20,000 crore over five years for Carbon Capture Utilization and Storage.
- Launch of a Khelo India mission focusing on long-term development of training centres and coaches over the next decade.
The Union Budget 2026-27 presents a comprehensive roadmap for economic growth, combining strategic investments with fiscal responsibility to propel India towards its development goals.
