Union Budget 2026–27 Highlights: Growth, Infrastructure, People-Centric Reforms

January 02, 2026 : Nirmala Sitharaman presented the Union Budget 2026–27 in Parliament, outlining a broad roadmap built around three core kartavyas: accelerating economic growth, strengthening people’s capabilities, and ensuring inclusive development under the vision of Sabka Sath, Sabka Vikas. This is the first Union Budget prepared at Kartavya Bhawan.

Budget at a glance

For 2026–27, total expenditure is estimated at ₹53.5 lakh crore, with non-debt receipts of ₹36.5 lakh crore. Net tax receipts of the Centre are projected at ₹28.7 lakh crore. Capital expenditure stands at about ₹12.2 lakh crore, reinforcing the government’s infrastructure-led growth strategy. The fiscal deficit is estimated at 4.3 percent of GDP, while the debt-to-GDP ratio is expected to decline to 55.6 percent.

First Kartavya: Accelerating and Sustaining Economic Growth

The Budget proposes six major interventions.

Manufacturing push in strategic sectors
A ₹10,000 crore Biopharma SHAKTI initiative aims to position India as a global biopharmaceutical hub, supported by new and upgraded NIPER institutions and over 1,000 clinical trial sites. India Semiconductor Mission 2.0 will focus on equipment, materials, and full-stack domestic IP. Outlays for electronics component manufacturing have been increased to ₹40,000 crore. Dedicated Rare Earth Corridors will be developed in mineral-rich coastal states, while three new chemical parks will be set up through a challenge-based model.

Capital goods and logistics manufacturing
Hi-tech tool rooms, a new construction equipment scheme, and a ₹10,000 crore container manufacturing program are expected to strengthen domestic industrial capacity.

Textiles and traditional industries
An integrated textile program includes a National Fibre Scheme, modernisation of traditional clusters, mega textile parks, and support for khadi, handloom, and handicrafts with better branding and global market access.

Reviving legacy industrial clusters
Two hundred older industrial clusters will be upgraded through targeted infrastructure and technology support.

Support for SMEs and micro enterprises
A ₹10,000 crore SME Growth Fund will nurture future industry champions, while additional support has been provided to the Self-Reliant India Fund. Professional bodies will help train “Corporate Mitras” in Tier-II and Tier-III cities.

Infrastructure and connectivity
Public capital expenditure rises to ₹12.2 lakh crore. New freight corridors, national waterways, coastal cargo incentives, and seaplane connectivity are planned. Seven high-speed rail corridors will connect major growth centres across regions.

Energy security and cities
₹20,000 crore has been earmarked for carbon capture technologies. City Economic Regions will receive ₹5,000 crore each over five years to drive planned urban growth.

Second Kartavya: Building Capacity and Fulfilling Aspirations

A high-powered committee will align education, employment, and enterprise needs, with special focus on services.

Healthcare and allied services will expand through new training institutions and five regional medical hubs, supporting medical tourism. AYUSH education will be strengthened with new Ayurveda institutes. Veterinary education will scale up to support animal husbandry.

The creative economy receives a boost through AVGC labs in schools and colleges. University townships, girls’ hostels in every district, tourism skilling programs, and digital heritage documentation are also part of the plan. Sports development will be driven through a renewed Khelo India Mission.

Third Kartavya: Inclusive Development and Regional Focus

Farmer incomes will be supported through high-value agriculture, reservoir development, and a new AI-based Bharat-VISTAAR platform integrating agri data and advisory services. Divyangjan employment will be promoted through targeted skill programs. Mental health infrastructure will expand with NIMHANS-2 and upgraded regional institutes. Special focus is placed on Purvodaya and North-Eastern states through industrial corridors, tourism development, electric buses, and Buddhist circuit projects.

States will receive ₹1.4 lakh crore as Finance Commission grants for 2026–27.

Part B: Tax Reforms and Ease of Living

The new Income Tax Act, 2025 will come into force from April 2026 with simplified rules and forms. Several measures aim to reduce compliance burden, including rationalised TDS and TCS rates, extended timelines for return revisions, decriminalisation of minor defaults, and a one-time foreign asset disclosure window for small taxpayers.

The IT sector benefits from unified safe harbour rules and faster APA processes. Incentives are announced to attract global cloud, data centre, and manufacturing investments. MAT is proposed to become a final tax at a reduced rate of 14 percent from April 2026.

On the indirect tax front, customs duties are simplified to support exports, energy transition, electronics manufacturing, aviation, and critical minerals. Personal import duties are reduced, rare disease medicines are exempted, and customs processes move towards trust-based, digital clearance systems.