India’s Federal Budget 2026, an Overlook

Picture Credit: by Vivekananda International Foundation

Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27 in Parliament, outlining a Yuva Shakti–driven roadmap anchored in growth, capacity building and inclusive development. The first budget prepared in Kartavya Bhawan, it is guided by three “kartavya”: accelerating and sustaining economic growth, fulfilling people’s aspirations by building capacity, and advancing the vision of Sabka Sath, Sabka Vikas.

Emphasising economic momentum amid global uncertainty, the Budget raises public capital expenditure to ₹12.2 lakh crore in FY2026–27, up from ₹11.2 lakh crore in the previous year. Key growth drivers include scaling up manufacturing in strategic sectors, creating “Champion MSMEs” through a ₹10,000 crore SME Growth Fund, and strengthening long-term energy security. To position India as a global biopharma hub, the government announced the ₹10,000 crore Biopharma SHAKTI initiative to boost domestic production of biologics and biosimilars.

Infrastructure development features prominently, with seven high-speed rail corridors proposed as “growth connectors” and new Dedicated Freight Corridors to promote environmentally sustainable logistics. Urban growth will be supported through City Economic Regions, with ₹5,000 crore allocated per region over five years.

Picture Credit: by Civitatis

On the social front, the Budget prioritises education, skills and inclusion. Measures include setting up AVGC content creator labs in 15,000 schools, establishing one girls’ hostel in every district for STEM institutions, launching a National Institute of Hospitality, and upskilling 10,000 tourist guides. The Khelo India Mission aims to transform India’s sports ecosystem over the next decade.

Tax reforms form a major pillar of the Budget. The New Income Tax Act, 2025 will come into effect from April 2026, with simplified rules, reduced litigation, and rationalised penalties. To attract global investment, foreign cloud service providers will receive a tax holiday till 2047, while customs duties are being streamlined to support manufacturing and ease of living.

With fiscal consolidation on track and a focus on inclusive growth, the Budget charts a path towards a Viksit Bharat.