Union Budget 2026: At a Glance

The Finance Minister said India’s economic trajectory over the past 12 years has been defined by stability, fiscal discipline, sustained growth, and moderate inflation. She emphasised that the government has consistently prioritised reforms over rhetoric, even during periods of global disruption. Atmanirbhar Bharat remains the “north star,” helping India achieve a growth rate of around 7%, while remaining integrated with global markets to boost exports and attract long-term capital.

Fiscal Position and Macro Outlook-

Particulars (In Cr)	2025-2026 Budget Estimates	2025-2026 Revised Estimates	2026-2027 Budget Estimates
Revenue Receipts
Tax Revenue
Gross Tax Revenue	4270233	4077772	4404086
Centre’s Net Tax Revenue	2837409	2674661	2866922
Non-Tax Revenue	583000	667662	666228
Total- Revenue Receipts	3420409	3342323	3533150
Capital Receipts
Non-debt Receipts	76000	64027	118397
Debt Receipts	1566452	1512770	1663066
Total Capital Receipts	1642452	1576797	1781463
Draw-Down of Cash Balance	2484	45722	32702
Total Receipts	5065345	4964842	5347315

 

Particulars (In Cr)	2025-2026 Budget Estimates	2025-2026 Revised Estimates	2026-2027 Budget Estimates
Total Expenditure	5065345	4964842	5347315
Effective Capital Expenditure	1548282	1403906	1714523
Revenue Deficit	523846	526764	592344
Effective Revenue Deficit	96654	218613	99642
Fiscal Deficit	1568936	1558492	1695768
Primary Deficit	292598	284154	291796
Capital Expenditure	1121090	1095755	1221821

Expenditure of Major Items-

Particulars (In Cr)	2025-2026 Budget Estimates	2025-2026 Revised Estimates	2026-2027 Budget Estimates
Defence	491732	567855	594585
Fertiliser	167887	186460	170781
Agriculture and Allied Activities	158838	151853	162671
Energy	80174	86471	109029
Health	98311	94625	104599
Interest	1276338	1274338	1403972
IT and Telecom	86898	53946	74560
Rural Development	265817	212750	273108
Transport	548649	547563	598520
Urban Development	96777	57204	85522

 

Particulars	2025-2026 Budget Estimates		2025-2026 Revised Estimates	2026-2027 Budget Estimates
Debt-to-GDP Ratio		56.10%			55.60%
Market Borrowings (G-sec)	1153834	1040439			1173210
Fiscal Deficit (% of GDP)	4.4	4.4			4.3
Primary Deficit (% of GDP)	0.8	0.8			0.7
Effective Revenue Deficit (% of GDP)	0.3	0.6			0.3
Revenue Deficit (% of GDP)	1.5	1.5			1.5

Growth, Manufacturing and Infrastructure Push-

The Budget focused strongly on scaling up manufacturing in strategic and frontier sectors, creating champion MSMEs, and developing strategic economic regions. Key announcements included:

• Launch of an Infra Risk Guarantee Fund
• Asset monetisation through dedicated REITs for CPSEs
• Operationalisation of 20 new National Waterways over five years
• Development of 7 high-speed rail corridors including Mumbai–Pune, Hyderabad–Bengaluru, and Delhi–Varanasi
• Revival of 200 legacy industry clusters
• A ₹10,000 crore SME Growth Fund and ₹2,000 crore top-up for the Self-Reliant India Fund

Sectoral Highlights-

• Manufacturing & Textiles: National Fibre Scheme, container manufacturing scheme (₹10,000 crore), chemical parks, and Samarth 2.0 for textile skilling
• Semiconductors: India Semiconductor Mission 2.0 with outlay increased to ₹40,000 crore
• Bio-pharma: ‘Biopharma Shakti’ with ₹10,000 crore outlay over five years
• Green Tech: ₹20,000 crore allocation over five years for Carbon Capture, Utilisation and Storage (CCUS)
• Tourism: National Institute of Hospitality, guide training schemes, trekking destinations, turtle trails, and 15 archaeological sites
• Education & Employment: University townships, girls’ hostels in every district, education-to-employment standing committee
• Healthcare: Regional medical hubs, allied health professional institutions, and medical value tourism hubs
• Special support for mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to boost mining, value addition, and supply-chain security. The focus is on critical and strategic minerals to support manufacturing, clean energy, and reduce import dependence.
• Focused on small farmers, irrigation through 500 new reservoirs, and strengthening fisheries and animal husbandry via credit-linked support. It also promoted high-value crops such as coconut, cashew, sandalwood, walnuts, and cocoa to boost farm income and exports.

Banking, Capital Markets and Investments-

A high-level committee on banking for Viksit Bharat will comprehensively review the sector. The government also proposed:

• A market-making framework for the corporate bond market
• Review of FEMA regulations
• Permission for Persons Resident Outside India (PROI) to invest in listed equities, with limits raised from 5% to 10%

Taxation Measures-

• STT on futures increased to 0.05% and options premium to 0.15%
• Introduced significant changes to the taxation of share buybacks to curb misuse of tax arbitrage. The government proposed that buybacks will now be taxed as capital gains for all categories of shareholders, replacing the earlier structure where tax incidence varied by investor type.
• To discourage misuse, promoters participating in buybacks will face an additional tax, with the effective tax rate rising to 22% for corporate promoters and 30% for non-corporate promoters. This move aims to align buyback taxation with dividend and capital gains frameworks, ensuring equitable treatment across shareholders.
• Relief for IT sector with higher safe harbour limits and tax holiday till 2047 for foreign cloud service providers setting up data centres in India
• Reduction in TCS on overseas tour packages to 2%
• Introduced changes to income tax filing timelines, allowing individuals using ITR-1 and ITR-2 to file returns till 31 July, while non-audit business cases and trusts can file till 31 August, providing taxpayers greater flexibility and ease of compliance.

Customs Duty-

• Duty-free import limit for specified inputs used in seafood processing for exports increased to 3% from 1% of FOB value.
• Duty-free imports permitted for specified inputs used in leather exports.
• Basic customs duty exemption extended on capital goods used in manufacturing Battery Energy Storage Systems (BESS).
• Customs duty exemption granted on sodium antimonate used in solar glass manufacturing.
• Customs duty exemption on imports for nuclear power projects extended till 2035.

Market Reaction-

Indian equity markets reacted negatively, hitting multi-month lows post Budget. Key concerns included the hike in STT on F&O, lower-than-expected FY27 capex, lack of major defence announcements, PSU bank sell-off, weak rupee, and global trade uncertainties.

Overall Assessment-

Union Budget 2026 positions itself as a Yuva Shakti-driven, reform-oriented Budget focused on long-term capacity building, fiscal prudence, and structural transformation. While markets reacted cautiously in the near term, the government reiterated its commitment to sustainable growth, competitiveness, and economic stability.

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