In a Sunday First, Nirmala Sitharaman’s Budget Prepares India to Face Global Headwinds and Push Growth

Finance Minister Nirmala Sitharaman today presented the Union Budget 2026-27 in the Lok Sabha, marking her record ninth consecutive budget (including one interim).

Delivered on a Sunday—a first in India's post-independence history—the budget addresses global uncertainties, such as potential U.S. tariffs under President Trump, while reinforcing India's position as a fast-growing economy targeting sustained high growth toward Viksit Bharat (Developed India) by 2047.

In an 87-minute speech, Sitharaman framed the budget around a three-pronged "Kartavya" (Duty) framework:

1. Accelerating economic growth through competitiveness.

2. Fulfilling public aspirations by building capacity.

3. Ensuring Sabka Saath, Sabka Vikas (inclusive development) so every family, community, and region can participate in opportunities.

She highlighted 12 years of stability under PM Narendra Modi, moderate inflation, and India's ascent to the world's fourth-largest economy.

Key Fiscal Parameters

• Public Capital Expenditure (Capex): Hiked to ₹12.2 lakh crore for FY27 (up ~9% from ₹11.2 lakh crore in BE 2025-26), continuing the heavy infrastructure push to drive growth and job creation.

• Fiscal Deficit: Targeted at 4.3% of GDP for 2026-27. This fulfills the commitment to bring it below 4.5% this year and shifts focus to reducing the debt-to-GDP ratio (estimated at 55.6% in BE 2026-27).

• Total Budget Expenditure: Projected at ₹53.5 lakh crore.

• Net Tax Receipts: Estimated at ₹28.7 lakh crore.

• Non-Debt Receipts: Around ₹36.5 lakh crore.

Major Sectoral and Policy Highlights

Defence and Security

• Significant jump in allocation, up approximately 21.8% to ₹2.19 lakh crore specifically for modernisation.

Manufacturing and Exports

• Strategic Sectors: Focus on scaling up in 7 strategic/frontier sectors.

• MSMEs: A new ₹10,000 crore MSME growth fund to create "Champion MSMEs."

• Semiconductors: Semiconductor Mission 2.0 launched with an enhanced outlay (₹40,000 crore for electronics components).

• Resources: Rare earth corridors to be established in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu; chemical parks via plug-and-play clusters.

Infrastructure Push

• Risk Fund: Introduction of an Infrastructure Risk Guarantee Fund for credit support.

• Real Estate: Dedicated REITs for Central Public Sector Enterprise (CPSE) real estate recycling.

• Urban Development: Development of City Economic Regions with ₹5,000 crore allocated per region over 5 years.

• Logistics: Coastal Cargo Promotion Scheme to double inland waterways/coastal shipping share to 12% by 2047; seven environmentally sustainable passenger rail corridors and an east-west freight corridor.
  

  

Energy and Sustainability

• Carbon Capture: ₹20,000 crore allocated over five years for Carbon Capture, Utilization, and Storage (CCUS).

• Energy Security: Implementation of long-term energy security measures.

Agriculture and Rural

• High-Value Crops: Dedicated programmes for coconut, cashew, sandalwood, cocoa, almonds, walnuts, and pine nuts.

• Regional Support: Region-specific support and a dedicated coconut promotion scheme.

Innovation and Technology

• Data Centres: Tax holidays for data centres, including foreign cloud companies, until 2047.

• New Sectors: Boosts for the "Orange Economy" (creative industries) and biopharma.

Tax Reforms

• Income Tax Structure: No changes to income tax slabs or rates. The new regime continues to offer zero tax up to ₹12 lakh via rebate.

• New Legislation: A new Income Tax Act will be effective April 1, 2026, replacing the old one.

• Customs Duties:

  • Cuts/exemptions on 17 imported drugs (including cancer treatments), solar glass, and aircraft parts.

  • Reduced tariff on personal imports from 20% to 10% (a response to global tariffs).

• TDS/TCS: Higher thresholds for TDS/TCS; relief on TCS for education loans and foreign remittances.

• Capital Markets:

  • Buyback taxation will now be treated as capital gains.

  • Securities Transaction Tax (STT) hiked on commodity futures.

  • Minimum Alternate Tax (MAT) set as a final tax at a reduced 14%.

• Compliance: Staggered Income Tax Return (ITR) filing dates (Non-audit/business moved to July 31 and August 31).

• Foreign Investment: PIO equity investment limit raised to 10% (from 5%), and overall PROI limit raised to 24% (from 10%).

Conclusion

The budget prioritizes reforms, private investment, and job creation (via manufacturing, MSMEs, and skilling) while maintaining fiscal prudence amid global headwinds.

Initial market reactions were negative, with the Sensex and Nifty trading in the red during and after the presentation. Experts offered mixed views, praising the continuity in capex and reforms but noting concerns over the lack of direct tax relief to boost middle-class consumption.

Overall, Union Budget 2026-27 positions India for resilient, competitive growth through infrastructure, strategic sectors, and inclusive policies, aligning with the vision of a developed nation by 2047.