Union Budget 2026–27 Key Priorities and Major Announcements

Union Budget 2026–27 Key Priorities and Major Announcements

General Studies Paper II: Parliament, Government Policies & Interventions

Why in News?

Recently, the Union Budget 2026–27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on 1 February 2026, outlining the Government of India’s fiscal policy and priorities for the upcoming financial year.

What is the Union Budget?

About: The Union Budget is the annual financial statement of the Government of India, presented by the Finance Minister in the Parliament under Article 112 of the Constitution.
- It lays down the estimated receipts and expenditures of the government for the upcoming financial year (April 1 to March 31).
- The Budget serves as a policy instrument to achieve macroeconomic stability, fiscal prudence, and social welfare objectives.
The Union Budget has two main components:

Revenue Budget: Covers revenue receipts (tax and non-tax) and revenue expenditure (for day-to-day operations like salaries, subsidies, and interest payments).
Capital Budget: Includes capital receipts (loans, recoveries, and borrowings) and capital expenditure (infrastructure, investments, loans to states, and asset creation).

The Union Budget process involves several stages:
1. Budget Formulation: Prepared by the Department of Economic Affairs, Ministry of Finance, based on inputs from all ministries.
2. Cabinet Approval: The draft is approved by the Union Cabinet.
3. Parliamentary Presentation: Presented in the Lok Sabha by the Finance Minister, usually on 1st February each year.
4. Discussion and Voting: Examined by Parliamentary Committees, followed by approval through the Finance Bill and Appropriation Bill.
The Union Budget has multiple objectives:

To ensure fiscal discipline and reduce budget deficit.
To promote economic growth by strategic allocation to sectors like agriculture, infrastructure, and industry.
To achieve social justice through welfare schemes for marginalized groups.
To maintain macroeconomic stability by balancing inflation, public debt, and employment.

HIGHLIGHTS OF UNION BUDGET 2026-27

PART-A: Budget Overview

The Union Budget 2026-27, first prepared in Kartavya Bhawan, is guided by three Kartavyas — accelerating economic growth, fulfilling aspirations of people, and ensuring inclusive access to opportunities across communities, regions and sectors.

Budget Estimates (BE 2026-27)

Non-Debt Receipts: ₹36.5 lakh crore
Total Expenditure: ₹53.5 lakh crore
Net Tax Receipts: ₹28.7 lakh crore
Gross Market Borrowings: ₹17.2 lakh crore
Net Market Borrowings: ₹11.7 lakh crore
Fiscal Deficit: Estimated at 4.3 % of GDP in BE 2026-27
Debt-to-GDP Ratio: Estimated at 55.6 % of GDP (lower than 56.1 % in RE 2025-26)

FIRST KARTAVYA: Accelerating & Sustaining Economic Growth

1. Strategic Manufacturing Expansion

Biopharma SHAKTI: ₹10,000 crore over 5 years to make India a global biopharma manufacturing hub.
Biopharma Network: Creation of 3 new NIPERs and upgrading 7 existing ones.
1,000+ Accredited Clinical Trial Sites.
India Semiconductor Mission (ISM) 2.0: To deepen the semiconductor ecosystem with full-stack design and supply-chain capability.
Electronics Components Scheme: Outlay increased to ₹40,000 crore.
Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh & Tamil Nadu for minerals-to-manufacturing linkages.
Three Chemical Parks support scheme for clustered plug-and-play industrial infrastructure.
Capital Goods and Container Manufacturing: Hi-Tech Tool Rooms, CIE scheme, and a ₹10,000 crore container manufacturing plan.

2. Textile Sector Growth

National Fibre Scheme for self-reliance across fibres (silk, wool, jute, man-made and new-age fibres).
Textile Expansion & Employment Scheme including Mega Textile Parks and cluster modernisation.
Mahatma Gandhi Gram Swaraj Initiative for khadi, handloom and handicrafts.

3. Champion SMEs & Enterprise Enablement

₹10,000 crore SME Growth Fund to nurture future champion enterprises.
Self-Reliant India Fund: Additional ₹2,000 crore for micro enterprise capital access.
Skill Development: Modular courses via ICAI, ICSI, ICMAI to create “Corporate Mitras” in Tier-II/III towns.

4. Infrastructure & Connectivity Push

Public Capital Expenditure: Increased to ₹12.2 lakh crore in FY 2026-27.
Infrastructure Risk Guarantee Fund to strengthen developer confidence.
Dedicated Freight Corridor: East-West (Dankuni-Surat) and 20 new National Waterways over 5 years, starting with NW-5 in Odisha.
Coastal Cargo Promotion Scheme: Incentivising modal shift to waterways.
Seaplane VGF Scheme: For enhanced connectivity & tourism.

5. Energy Security & Future Technologies

₹20,000 crore for Carbon Capture Utilisation & Storage (CCUS) technologies over 5 years.
City Economic Regions (CER): ₹5,000 crore per city region for reform-linked financing.
Seven High-Speed Rail Corridors: Including Mumbai-Pune, Hyderabad-Bengaluru, Delhi-Varanasi and others.

6. Financial Sector Reforms

High-Level Committee on Banking for Viksit Bharat to align the financial sector with growth objectives.
Restructuring of PFC & REC for enhanced scale and efficiency.
Foreign Exchange Management Review for investor-friendly framework.
Municipal Bonds Incentive: ₹100 crore for bond issuance > ₹1,000 crore.

SECOND KARTAVYA: Fulfil Aspirations & Build Capacity

1. Human Capital & Healthcare

High-Powered ‘Education to Employment and Enterprise’ Standing Committee to enhance services sector outcomes.
100,000 Allied Health Professionals to be trained over 5 years.
Five Regional Medical Hubs to promote medical tourism.
Three All-India Ayurveda Institutes.

2. Education & Skills

AVGC Content Creator Labs: 15,000 secondary schools & 500 colleges.
University Townships: Five near industrial/logistic corridors.
Girls’ Hostel: One in every district through VGF/capital support.

3. Tourism & Culture

National Institute of Hospitality: Upgrading hotel management institutions.
Guide Upskilling Pilot Scheme: 10,000 guides across 20 sites with IIM collaboration.
National Destination Digital Knowledge Grid: Digital documentation of cultural & heritage sites.
15 Archaeological Sites Development for heritage tourism.

4. Sports

Khelo India Mission: Decade-long transformation of India’s sports ecosystem.

THIRD KARTAVYA: Sabka Sath, Sabka Vikas

1. Agriculture & Rural Prosperity

Integrated Development of 500 Reservoirs & Amrit Sarovars.
Support for high-value crops: coconut, sandalwood, cocoa & cashew in coastal areas.
Bharat-VISTAAR: Multilingual AI tool to integrate AgriStack with ICAR practices.

2. Social Inclusion & Empowerment

Divyangjan Kaushal Yojana: Skills for IT, AVGC, hospitality and F&B sectors for Divyangjan.
Mental Health & Trauma Care: NIMHANS-2 in North India; upgradation of Ranchi & Tezpur institutions.

3. Regional Development

East Coast Industrial Corridor & Tourism Schemes for Purvodaya States.
4,000 e-buses and Buddhist circuit development across Northeast states.

4. 16th Finance Commission Grants

₹1.4 lakh crore provided to States for FY 2026-27 as recommended by the Commission.

PART-B: Tax & Customs Proposals

Direct Taxes

New Income Tax Act, 2025 effective from 1 April 2026 with simplified rules and forms.
TCS Rationalisation: Reduced rates (e.g., overseas tour, education & medical remittances).
Penalty & Prosecution Rationalisation to ease compliance burden.
IT Services Safe Harbour: Unified category & enhanced threshold to ₹2,000 crore.
Tax Holiday till 2047 for foreign cloud service providers from India.
MAT as Final Tax: Reduced to 14 %; continuity of MAT credit.

Indirect Taxes & Trade Facilitation

Tariff Simplification: Export-linked concessions for leather & seafood inputs.
Energy Transition: Customs duty exemptions for Lithium-Ion cell machinery & solar glass inputs.
Nuclear Projects: Duty exemptions extended till 2035.
Aircraft Components: Duty exemptions to boost civil & defence aviation manufacturing.
Customs Process Reforms: Digital CIS rollout, risk-based interventions, single-window clearances.

Ease of Doing Business

Tariff Rate Reduction: All dutiable goods for personal use cut from 20 % to 10 %.
Courier Exports: Removal of ₹10 lakh value cap to boost MSME e-commerce exports.

UPSC Previous Year Questions (PYQ)

Question (2020): Along with the Budget, the Finance Minister also places other documents before the Parliament which include ‘The Macro Economic Framework Statement’. The aforesaid document is presented because this is mandated by

(a) Long standing parliamentary convention

(b) Article 112 and Article 110(1) of the Constitution of India

(d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003

Ans: (d)

Also Read: Union Budget of India

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