The Union Budget announced on 1 February 2026 for FY 2026–27 continues this tradition, focusing on sustaining economic momentum, strengthening infrastructure and manufacturing, supporting MSMEs, and enhancing social and human capital, while maintaining fiscal prudence.
Overall Economic Focus
Built around a “three Kartavya” framework sustainable economic growth, capacity building, and Sabka Sath, Sabka Vikas
- Emphasis on strengthening India’s growth momentum amid global uncertainties with fiscal prudence.
- Fiscal deficit projected around 4.3% of GDP for FY 2026-27.
- Public capital expenditure raised to ₹12.2 lakh crore to boost infrastructure.
Infrastructure & Connectivity
Major push for transport and logistics:
- Seven high-speed rail corridors linking major cities (e.g., Mumbai–Pune, Delhi–Varanasi).
- 20 new National Waterways operationalised.
- New Infrastructure Risk Guarantee Fund to underwrite lending risk.
Manufacturing & Strategic Sectors
Continued investment in manufacturing, especially in semiconductors and technology:
- India Semiconductor Mission 2.0 with increased outlay (Rs 40,000 cr).
- Expansion of Electronics Components & Manufacturing schemes.
- Dedicated rare earth corridors for mineral-rich states (Odisha, Kerala, Andhra Pradesh, Tamil Nadu).
MSMEs, SMEs & Jobs
- Rs10,000 crore SME Growth Fund to create future champions and incentivise enterprise.
- Three-pronged MSME support: equity, professional support, and liquidity via TReDS linkage.
Agriculture & Rural Livelihoods
- Integrated programmes to boost productivity, higher farmer incomes, and fisheries value chains.
- Bharat-VISTAAR’—an AI advisory tool for customised farm decision support.
Tax & Regulatory Changes
- New Income-Tax Act, 2025 to come into effect from 1 April 2026 with simplified compliance.
- Rationalisation of direct tax penalties and decriminalisation of certain proceedings.
- Reduced TCS (Tax Collected at Source) to 2% on overseas education, medical and travel remittances.
- Some STT (Securities Transaction Tax) increases announced on derivatives.
Health & Welfare
- Biopharma SHAKTI strategy to make India a global biopharma hub.
- Large allocation for health and family welfare (Rs 1.05 lakh crore) year-on-year.
- Regional medical hubs proposed to boost medical tourism and healthcare capacities.
Skills, Services & Digital
- High-powered Education-to-Employment & Enterprise Committee for services sector growth.
- Expansion of digital tools and frameworks for tourism and cultural sectors.
Other Key Points
- No major change to income-tax slabs for individuals; structural continuity maintained.
- Policy incentives for cooperatives and foreign companies providing cloud services using Indian data centres extended.
- States’ share of central taxes retained at 41% until 2031.
