Union Budget 2026–27: Middle-Class Relief, Growth Engines, and People-Centric Reforms
A Budget Anchored in Kartavya
Presented by Union Finance Minister Smt. Nirmala Sitharaman, the Union Budget 2026–27 marks a symbolic milestone as the first budget prepared in Kartavya Bhawan. The budget is guided by three foundational Kartavyas—duties that collectively aim to accelerate growth, empower citizens, and ensure equitable development in alignment with the vision of Sabka Sath, Sabka Vikas.
At the macro level, the government has demonstrated fiscal discipline while maintaining a strong growth orientation. With total expenditure estimated at ₹53.5 lakh crore, capital expenditure touching ₹12.2 lakh crore, and the fiscal deficit projected at 4.3% of GDP, the budget balances ambition with prudence.
Kartavya One: Accelerating and Sustaining Economic Growth
Building New Engines of Manufacturing Growth
The government has identified seven strategic and frontier sectors to drive the next manufacturing leap. A flagship initiative, Biopharma SHAKTI, has been launched with a five-year outlay of ₹10,000 crore to position India as a global biopharmaceutical manufacturing hub. This is complemented by new and upgraded NIPER institutions and a nationwide clinical trials network.
The India Semiconductor Mission 2.0 expands the ambition beyond fabrication into equipment, materials, and full-stack IP development, supported by industry-led research and skill centres. Electronics manufacturing also receives a boost with a significantly expanded components manufacturing scheme.
Recognizing the importance of raw materials, Rare Earth Corridors will be developed across mineral-rich coastal states, while new chemical parks and hi-tech tool rooms aim to strengthen industrial infrastructure.
Textiles, Capital Goods and Traditional Strengths
An integrated textile programme seeks to modernize India’s vast textile ecosystem—from natural and new-age fibres to mega textile parks focused on technical textiles. Traditional sectors such as khadi, handloom, and handicrafts are being revitalized under the Mahatma Gandhi Gram Swaraj Initiative, supported by branding, skilling, and global market access.
Legacy industrial clusters—often the backbone of regional economies—will be rejuvenated through targeted infrastructure and technology upgrades.
Championing SMEs and Micro Enterprises
To nurture globally competitive enterprises, a ₹10,000 crore SME Growth Fund will identify and support high-potential firms. Micro enterprises will continue to receive risk capital through an expanded Self-Reliant India Fund. Additionally, professional bodies will help create a new cadre of ‘Corporate Mitras’, particularly in Tier-II and Tier-III cities.
Infrastructure as the Growth Multiplier
Public investment remains a cornerstone of growth strategy. An Infrastructure Risk Guarantee Fund is proposed to crowd in private investment, while CPSE assets will be monetized through REITs.
Transport infrastructure sees a strong sustainability push: new Dedicated Freight Corridors, expanded National Waterways, coastal shipping incentives, and indigenous seaplane manufacturing aim to reduce logistics costs and emissions. Seven High-Speed Rail Corridors will act as urban growth connectors across major economic regions.
Energy Security and City Economic Regions
The government has earmarked ₹20,000 crore over five years for Carbon Capture, Utilization and Storage (CCUS) technologies. Meanwhile, City Economic Regions (CERs) will receive performance-linked funding to emerge as new growth hubs.
Key structural reforms are also proposed in banking, power finance, foreign investment regulations, and municipal bond markets to strengthen long-term financial resilience.
Kartavya Two: Fulfilling Aspirations and Building Human Capacity
Education, Health and Skills for the Future
A new Education to Employment and Enterprise Standing Committee will focus on strengthening the services sector. In healthcare, India plans to add 100,000 allied health professionals, establish five regional medical hubs for medical tourism, and expand AYUSH institutions.
Veterinary education and infrastructure will be scaled up to support animal husbandry and rural livelihoods.
Creative Economy, Tourism and Sports
The budget recognizes the rising potential of the Orange Economy, with AVGC content labs planned across schools and colleges. Tourism receives focused attention through hospitality upskilling, digital documentation of destinations, and development of iconic heritage sites.
Sports development takes centre stage with the launch of the Khelo India Mission, aimed at transforming India’s sporting ecosystem over the next decade.
Kartavya Three: Ensuring Inclusive and Balanced Development
Boosting Farmer Incomes
Agriculture reforms focus on water management, high-value crops, and technology integration. The Bharat-VISTAAR AI platform will provide farmers multilingual, data-driven access to agricultural best practices, while targeted schemes promote crops like coconut, cocoa, and cashew.
Empowering Divyangjan and Strengthening Mental Health
The Divyangjan Kaushal Yojana will enable inclusive employment across IT, AVGC, hospitality, and service sectors. Mental healthcare is strengthened with the establishment of NIMHANS-2 and the upgradation of regional mental health institutions.
Purvodaya and the North-East Focus
An integrated East Coast Industrial Corridor, Buddhist tourism circuits, new tourism destinations, and deployment of e-buses underline the government’s commitment to accelerating development in eastern and north-eastern states.
Part B: A New Era of Taxation and Ease of Living
Direct Tax Reforms
The New Income Tax Act, 2025, effective from April 2026, promises simplified compliance through redesigned rules and forms. Relief measures include exemptions on motor accident compensation interest, rationalized TCS rates, automated lower TDS certificates, extended timelines for revised returns, and simplified processes for NRIs and small taxpayers.
Penalties and prosecution are being rationalized to reduce litigation and encourage voluntary compliance, while cooperatives receive targeted tax incentives.
Supporting IT, Global Business and Investments
India positions itself as a global digital and data hub with tax holidays for cloud services using Indian data centres, expanded safe harbour rules for IT services, faster APAs, and incentives for non-resident experts and manufacturers.
Indirect Taxes and Trade Facilitation
Customs reforms focus on tariff simplification, energy transition, critical minerals, aviation, electronics, and nuclear power. A strong push toward trust-based customs systems, AI-enabled risk assessment, and single-window clearances aims to drastically reduce transaction costs.
Export facilitation measures—including removal of courier export value caps—open new opportunities for MSMEs and artisans.
Conclusion: A Forward-Looking Growth Compact
The Union Budget 2026–27 is not merely an annual financial statement—it is a strategic growth compact. By combining manufacturing strength, infrastructure expansion, human capital development, digital governance, and inclusive reforms, the budget charts a credible path toward a resilient, competitive, and inclusive Viksit Bharat.