Union Budget 2026-27

Union Budget 2026-27

Why in News? 

The Union Budget 2026–27, to be presented by Finance Minister Nirmala Sitharaman on 1 February 2026, focuses on boosting consumption, investment, and inclusive growth. Key expectations include tax relief, higher capital expenditure, agriculture support, tech and MSME incentives, and fiscal consolidation.

Highlights of Union Budget 2026‑27

• Date: The Union Budget 2026‑27 will be officially presented on Sunday, 1 February 2026. This date continues the tradition since 2017 of holding the Budget on 1 February, allowing Parliament sufficient time to clear it ahead of the new financial year beginning 1 April. This presentation will be the first time in recent history that the Budget is tabled on a Sunday, coinciding with a national holiday in parts of India. 

• Time: The Budget will be presented in the Lok Sabha at around 11:00 AM IST. Finance Minister Nirmala Sitharaman will table the Budget documents and deliver the Budget speech outlining the government’s revenue estimates, expenditure priorities, taxation and economic strategy for the fiscal year 2026‑27. 

• Timeline: The Parliamentary Budget Session 2026 begins with several key milestones:

• • 28 January 2026 – Budget Session starts with the President’s Address to a joint sitting of both Houses.
  • 29 January 2026 – Economic Survey is expected to be presented, setting the economic context and performance review before the Budget.
  • 1 February 2026 – Union Budget 2026‑27 presented.
  • 13 February 2026 – First phase of Session ends.
  • 9 March 2026 – Parliament reconvenes for the second phase.
  • 2 April 2026 – Budget Session concludes.

Key Focus Areas in Budget 2026‑27

• Tax Relief & Reform: Anticipated relief measures in income tax structures and possible adjustments in tax slabs to stimulate consumption and help the middle class.
• Capex (Capital Expenditure): The government may raise capex spending by 10‑15 %, intensifying investments in infrastructure, transport networks, and public assets to sustain growth momentum.
• Agriculture & Rural Growth: Continued focus on agriculture support and rural development to enhance farm incomes and rural demand.
• MSMEs & Industry Incentives: Proposed incentives for Micro, Small & Medium Enterprises (MSMEs) and reforms to attract investment and ease business operations.
• Policy Expectations: Expected to balance fiscal discipline with growth imperatives — aiming to manage fiscal deficit targets while driving spending in strategic sectors. Industry bodies like CII have suggested structural reforms.

What is the Union Budget of India?

• About: The Union Budget of India is the annual financial statement of the Government of India that estimates the expected receipts (revenue) and proposed expenditures for a given financial year (1 April to 31 March). It serves as the fiscal roadmap, showing how government funds will be raised and spent on public services, welfare schemes, infrastructure, defence, subsidies and other priorities. 

• Background: The concept of a unified budget in India evolved from the pre‑independence period and was first presented on 26 November 1947 by R. K. Shanmukham Chetty. Earlier, the Railway Budget was separate until 2017, when it was merged with the general budget to improve resource allocation.

• • Constitutional Basis: Although the term “budget” itself is not used in the Constitution, Article 112 mandates that the President of India shall lay before both Houses of Parliament an Annual Financial Statement of estimated receipts and expenditures. Associated provisions like Article 113 (Demands for Grants) and Article 114 (Appropriation Bill) govern spending authorization. 
  • Prepared By: The Union Budget is prepared by the Ministry of Finance, primarily through the Budget Division of the Department of Economic Affairs. The process begins months in advance, with circulars issued to all ministries to submit their spending estimates, which are consolidated with NITI Aayog and various departments. 

• Features: The Union Budget typically emphasizes fiscal discipline, economic growth, and inclusive development. Core components include: Revenue Budget (income and revenue expenditure), Capital Budget (capital receipts and expenditure), tax proposals (direct and indirect taxes), allocation for social sectors (health, education, welfare), infrastructure spending, and fiscal policy statements mandated under the FRBM Act for transparency and sustainability. 

How India’s Union Budget Is Prepared

• Initiation of the Budget Process: The preparation of the Union Budget begins about six months prior to its presentation in Parliament, usually around August–September of the preceding year. 
• Budget Circulars Issued: The first formal step is the issuance of Budget Circulars by the Ministry of Finance to all union ministries, departments, states, Union Territories and autonomous bodies. These circulars include format forms and guidelines to prepare estimates of projected expenditures and revenues for the upcoming financial year.
• Data Collection and Estimates: Each ministry and department prepares its revenue and expenditure estimates for the next fiscal year (April–March) and sends them back to the Finance Ministry. Officials also scrutinize past financial performance and current year projections to ensure accuracy. 
• Inter-Ministerial Consultations: Once estimates are submitted, they are examined by the Finance Ministry along with NITI Aayog and economic advisors to ensure they align with macroeconomic goals and available resources. Detailed inter-ministerial consultations take place to resolve conflicts between ministries and to finalize priority allocations.
• Stakeholder Consultations: The Budget preparation process also includes pre-budget consultations with multiple stakeholders, such as industry representatives, economists, farmer groups, business associations and civil society. These consultations help the government understand real-world needs and fiscal expectations.
• Cabinet and Prime Minister’s Approval: After detailed evaluation of all proposals, the Finance Ministry compiles a draft budget. When there are significant disagreements over allocations, the Prime Minister or the Union Cabinet intervenes and provides final authorizations on key priorities and spending decisions.
• Revenue Forecasting: Alongside expenditure planning, bodies such as the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) estimate the government’s expected revenue for the upcoming year. These revenue projections help calibrate spending plans and tax proposals.
• Budget Finalisation: With all inputs reviewed and approvals obtained, the Finance Ministry finalizes the complete budget document — including: Estimates of receipts (revenue) and expenditures, Tax proposals (direct and indirect taxes), Capital and revenue budgeting and Fiscal policy priorities and projected deficits. These elements form the Annual Financial Statement.
• Halwa Ceremony & Secrecy: A unique tradition known as the “Halwa Ceremony” is held a few days before the Budget presentation. In this ceremony, Finance Ministry officials and the Finance Minister gather to begin the physical printing of budget documents. Officials involved enter a strict confidential lockdown until the Budget is officially presented, to prevent leaks.
• Presentation in Parliament: On Budget Day (typically 1 February), the Finance Minister formally presents the Budget in the Lok Sabha. The presentation includes an explanation of major proposals, changes in taxation, expenditure plans, economic outlook and policy priorities for the upcoming fiscal year. After the presentation, the Budget is laid before both houses of Parliament for debate and approval.
• Parliamentary Approval: Following detailed discussions, Parliament votes on the Demands for Grants and any amendments. Once both the Lok Sabha and Rajya Sabha pass the Budget, it is sent to the President of India for final assent. Only after this approval does the Budget become the legal financial plan for the government.