Union Budget 2026-27 Explained: Key Highlights, Tax Changes, Deficit Targets & Sector-Wise Analysis
Union Budget 2026–27 Analysis
Introduction: What Makes Budget 2026-27 Important?
The Union Budget 2026-27 focuses on fiscal consolidation, capital expenditure growth, infrastructure expansion, employment generation, and tax rationalisation, while maintaining a balance between growth and debt reduction.
The government aims to reduce fiscal deficit, boost private investment confidence, and push India closer to its Viksit Bharat 2047 vision.
Budget at a Glance: Key Numbers
| Indicator | 2026-27 Estimate |
|---|---|
| Total Expenditure | ₹53.47 lakh crore |
| Total Receipts (excluding borrowings) | ₹36.52 lakh crore |
| Fiscal Deficit | 4.3% of GDP |
| Revenue Deficit | 1.5% of GDP |
| Nominal GDP Growth | 10% |
| Outstanding Liabilities | 55.6% of GDP |
Expenditure Highlights (2026-27)
Total government spending is ₹53,47,315 crore, an increase of 7.7% over 2025-26 (RE).
Revenue vs Capital Expenditure
| Category | Amount (₹ crore) | Growth |
|---|---|---|
| Revenue Expenditure | 41,25,494 | +6.6% |
| Capital Expenditure | 12,21,821 | +11.5% |
| Total Expenditure | 53,47,315 | +7.7% |
Capital expenditure growth shows focus on asset creation & infrastructure.
Receipts Overview
| Component | ₹ crore | Growth |
|---|---|---|
| Revenue Receipts | 35,33,150 | +5.7% |
| Capital Receipts | 1,18,397 | +84.9% |
| Total (excluding borrowings) | 36,51,547 | +7.2% |
Disinvestment target increased sharply to ₹80,000 crore.
Deficit Targets & Debt Position
| Indicator | % of GDP (2026-27) |
|---|---|
| Fiscal Deficit | 4.3% |
| Revenue Deficit | 1.5% |
| Primary Deficit | 0.7% |
Government aims to reduce outstanding liabilities to ~50% of GDP by 2031.
Major Tax Proposals (Finance Bill 2026)
Direct Taxes
- No change in income tax slabs
- MAT reduced from 15% to 14%
- MAT credit capped at 25% under new tax regime
- MAT credit accumulation discontinued after April 1, 2026
Corporate & Capital Market Taxes
- Share buybacks taxed as capital gains
- Promoters face additional buyback tax
STT increased on:
- Options: 0.1% → 0.15%
- Futures: 0.02% → 0.05%
Investor-Related Changes
-
No interest deduction on dividend/mutual fund income
Reduced TCS to 2% on:
- Education & medical remittances above ₹10 lakh
- Overseas tour packages
Impact: Higher market transaction cost, tighter tax compliance, simplified remittances.
Sector-Wise Policy Highlights
Infrastructure
- Capex increased to ₹12.2 lakh crore
- Dedicated Freight Corridor (Surat–Dankuni)
- 20 new national waterways
- Infrastructure Risk Guarantee Fund
Industry & MSMEs
- ₹10,000 crore SME Growth Fund
- Revival of 200 legacy industrial clusters
- Textile sector integrated programme
Energy & Electronics
- Semiconductor Mission 2.0
- ₹40,000 crore Electronics Component Manufacturing Scheme
- Rare Earth Corridors
- ₹20,000 crore for Carbon Capture
Education & Employment
- Five university townships
- AI impact assessment on jobs
- Viksit Bharat Rozgar Yojana launched
Health & Pharma
- New AIIMS of Ayurveda
- Biopharma SHAKTI scheme (₹10,000 crore)
- Medical tourism hubs
Ministry-Wise Allocation (Top Ministries)
| Ministry | Allocation (₹ crore) |
|---|---|
| Defence | 7,84,678 |
| Road Transport & Highways | 3,09,875 |
| Railways | 2,81,377 |
| Home Affairs | 2,55,234 |
| Education | 1,39,289 |
| Health | 1,06,530 |
Subsidies Overview
| Subsidy | ₹ crore |
|---|---|
| Food | 2,27,629 |
| Fertiliser | 1,70,799 |
| LPG | 12,085 |
| Total Subsidies | 4,54,773 |
🔻 Overall subsidy bill reduced by 3.1%.
Key Schemes Allocation (2026-27)
| Scheme | ₹ crore |
|---|---|
| VB-G RAM G | 95,692 |
| Jal Jeevan Mission | 67,670 |
| PMAY-Rural | 54,917 |
| PMAY-Urban | 22,025 |
| BharatNet | 20,000 |
| RDI Scheme | 20,000 |
Finance Commission (16th FC) Highlights
- States’ share in central taxes: 41%
- New GDP contribution criterion (10%)
- Grants for 2026-31: ₹9.47 lakh crore
Fiscal deficit target:
- Centre: 3.5% of GDP by 2030-31
- States: 3% of GSDP
Conclusion: Overall Assessment
Union Budget 2026-27 is a growth-oriented yet fiscally disciplined budget.
Key strengths include:
- Strong push to capital expenditure
- Gradual debt reduction
- Employment and infrastructure focus
- Rationalised tax structure
However:
- Interest payments remain high
- Disinvestment targets remain ambitious
- GST growth slower than GDP growth
Overall Verdict: A balanced and reform-focused budget aligned with long-term economic sustainability.
Read More............ Union Budget 2026-2027