Union Budget 2026-27

Union Budget 2026-27
Theme: Yuva Shakti-driven Budget.
Vision: Accelerating and sustaining economic growth through the "Three Kartavyas" (Duties).
1. Macro-Fiscal Framework & Strategy
The budget follows a path of fiscal consolidation while maintaining high capital expenditure to drive the multiplier effect.
● Fiscal Deficit: Targeted at 4.3% of GDP for 2026-27 (down from 4.4% in 2025-26).
● Total Expenditure: Estimated at ₹53,47,315 crore (a 7.7% increase).
● Capital Expenditure (Capex): Increased to ₹12.2 lakh crore (approx. 4.4% of GDP).
● Nominal GDP Growth: Projected at 10% to 10.5%.
● Debt-to-GDP Ratio: Estimated at 55.6%, with a target to reach 50% by 2031.
Component
2025-26 (RE)
2026-27 (BE)
% Change
Total Receipts (Non-Debt)
₹34.0 Lakh Cr
₹36.5 Lakh Cr
+7.2%
Total Expenditure
₹49.6 Lakh Cr
₹53.5 Lakh Cr
+7.7%
Fiscal Deficit
4.4%
4.3%
-0.1%
2. The Three Kartavyas
The budget is structured around three fundamental duties:
1. Accelerate Economic Growth: Enhancing productivity and building resilience.
2. Fulfill Aspirations: Building capacity in people to make them partners in prosperity.
3. Sabka Saath, Sabka Vikas: Inclusive access to resources for every region and community.
3. Industrial & Manufacturing Push
A significant shift from "incentive-only" to "ecosystem-building" for strategic sectors:
● Biopharma SHAKTI: Outlay of ₹10,000 crore to develop India as a global hub for biologics. Includes 3 new NIPERs and 1,000+ clinical trial sites.
● Semiconductor Mission 2.0: Focus on equipment manufacturing, Indian IP design, and industry-led research.
● Textile Sector (Integrated Programme):
○ National Fibre Scheme: Self-reliance in silk, wool, and jute.
○ Textile Expansion & Employment Scheme: Modernizing traditional clusters.
○ Samarth 2.0: Focus on technical textiles and value addition.
● Rare Earth Corridors: Dedicated zones in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for mining and processing.
● Chemical Parks: A ₹600 crore challenge-based scheme to establish 3 plug-and-play chemical parks.
4. MSME & Entrepreneurship: "Champion SMEs"
● SME Growth Fund: A dedicated ₹10,000 crore fund to incentivize high-performing MSMEs to become "Champions."
● Self-Reliant India Fund: Additional top-up of ₹2,000 crore.
● Corporate Mitras: Cadre of professionals (ICAI/ICSI) to assist MSMEs in Tier-II and Tier-III towns.
5. Infrastructure & Connectivity
● Growth Connectors: Development of 7 High-Speed Rail Corridors (including Mumbai-Pune).
● Logistics: * Container Manufacturing Scheme: ₹10,000 crore outlay to reduce import dependency.
○ New Freight Corridor: Connecting Surat to Dankuni.
○ Waterways: 20 new national waterways to be operationalized; ship repair hubs at Varanasi and Patna.
● City Economic Regions (CER): Mapping and developing CERs with ₹5,000 crore per region via a challenge mode.
6. Agriculture & Rural Development
● Bharat-VISTAAR: A multilingual AI tool integrating AgriStack to provide customized advisory to farmers.
● Coconut Promotion Scheme: To increase production and exports.
● Mahatma Gandhi Gram Swaraj: Strengthening khadi, handloom, and handicrafts for global market linkage.
● Fisheries: Allocation hike of 27% with 500 reservoir developments for inland fish farming.
7. Direct Tax Reforms
The most significant announcement is the New Income Tax Act, 2025, effective from April 1, 2026.
● Income Tax Slabs: No change in existing rates for the general public, but progressive slabs for Senior Citizens up to ₹24 lakh.
● TCS Rationalization: * Overseas tour packages: Reduced to 2% (from 5-20%).
○ Education/Medical remittances (LRS): Reduced from 5% to 2%.
● Tax Holidays: Extended until 2047 for foreign cloud service providers using Indian data centers.
● MAT (Minimum Alternate Tax): Rate reduced from 15% to 14%.
● Litigation Reduction: Pre-payment for appeals reduced from 20% to 10% of core tax demand.
8. Indirect Tax & Customs
● Customs Duty Reductions: 17 Cancer drugs and medicines for rare diseases are now fully exempt.
○ Aircraft parts/MRO: Zero basic customs duty to support the aviation sector.
○ Capital Goods: Exemptions for Lithium-ion cell manufacturing and critical mineral processing.
● Personal Use Imports: Tariff rate reduced from 20% to 10%.
9. Social Sector: Health, Education & Youth
● AVGC Content Creator Labs: To be set up in 15,000 secondary schools and 500 colleges by IICT Mumbai.
● Allied Health Institutions: New public-private institutions in radiology, anesthesia, and behavioral health.
● Purvodaya Tourism: Development of 5 major destinations in Eastern India with 4,000 e-buses.
● Girls' Hostels: One dedicated hostel in every district for higher education.
10. Energy & Sustainability
● Carbon Capture (CCUS): ₹20,000 crore allocated over 5 years.
● Biogas: Entire value of biogas excluded from excise duty for CNG blending.
● Nuclear Power: Duty exemptions for nuclear projects extended until 2035.