On February 1, 2026, Union Finance Minister Nirmala Sitharaman made history by presenting her ninth consecutive Union Budget on a Sunday. The Budget 2026-27 outlines a roadmap for "Viksit Bharat" (Developed India) by 2047, balancing aggressive infrastructure spending with disciplined fiscal management.
1. Macroeconomic Framework and Fiscal Targets
The government has pegged the fiscal deficit at 4.3% of GDP for FY 2026-27, a reduction from the 4.4% targeted in the previous year. To drive growth, Public Capital Expenditure (Capex) has been hiked to ā¹12.2 lakh crore, representing a significant increase aimed at bolstering the construction and manufacturing sectors. The total expenditure for the fiscal year is estimated at ā¹53.5 trillion.
2. Key Tax Reforms and Reliefs
The Income Tax Act, 2025 is set to come into effect from April 1, 2026. While there were no major changes to personal income tax slabs, several strategic exemptions were announced:
- Health: Basic customs duty has been removed on 17 life-saving cancer drugs and medicines for high-risk diseases.
- Market Regulation: The Securities Transaction Tax (STT) on futures has been raised to 0.05% to discourage excessive speculation by retail investors.
- NRIs and Remittances: TCS (Tax Collected at Source) rates have been reduced for education and medical purposes abroad. A six-month foreign asset disclosure scheme was also proposed for small taxpayers to regularize past non-disclosures.
3. New Schemes and Strategic Missions
- Mahatma Gandhi Gram Swaraj: A new scheme focused on strengthening the khadi, handloom, and handicraft sectors. This follows the recent repeal of MGNREGA, which was replaced by the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB-G RAM G).
- Semiconductor Mission 2.0: To boost domestic electronics, the outlay for component manufacturing has been increased to ā¹40,000 crore.
- Rare Earth Corridors: Proposed in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to reduce dependency on China for critical minerals.
- City Economic Regions (CERs): An allocation of ā¹5,000 crore over five years to transform Tier-2 and Tier-3 cities into growth hubs.
4. Sectoral Allocations and Infrastructure
The Ministry of Education received ā¹1.39 lakh crore (an 8.27% increase), with plans to establish girls' hostels in every state. The Ministry of Home Affairs was allocated ā¹2.55 lakh crore, focusing on internal security and border infrastructure. In the transport sector, the FM proposed 7 high-speed rail corridors and the operationalization of 20 new national waterways.
5. Other Significant National Events
- Census 2027: The government allocated ā¹6,000 crore for the decadal census, which is scheduled to begin on April 1, 2027, and will include caste enumeration.
- Maharashtra Politics: Sunetra Pawar was sworn in as the first woman Deputy Chief Minister of Maharashtra on January 31, following the tragic demise of Ajit Pawar.
- International Relations: During the 2nd India-Arab Foreign Ministers' Meeting, India reiterated its support for a sovereign, two-state solution for Palestine and condemned cross-border terrorism.