Union Budget Raises Capital Expenditure to ₹12.2 Lakh Crore, Government Defends Growth Push But Opposition Flags Gaps
India's Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026–27 in the Lok Sabha, outlining higher public capital expenditure, a modest further reduction in the fiscal deficit, and a package of sectoral measures spanning infrastructure, manufacturing, healthcare, skilling and exports, even as opposition leaders criticised the speech as lacking detail and some markets sold off on proposals to raise transaction taxes.
 |
| The President extended her best wishes to the Union Finance Minister and her team for the presentation of Budget. |
The Budget Estimates peg non-debt receipts at Rs 36.5 lakh crore and total expenditure at Rs 53.5 lakh crore, with net tax receipts estimated at Rs 28.7 lakh crore.
Gross market borrowings are estimated at Rs 17.2 lakh crore and net market borrowings from dated securities at Rs 11.7 lakh crore. The debt-to-GDP ratio was estimated to decline to 55.6% in 2026–27 from 56.1% in 2025–26, according to figures cited in the post-speech briefing.
Prime Minister Narendra Modi called the Budget “historic” and said it reflected the aspirations of “140 crore Indians,” adding that it strengthened the reform journey and set a roadmap for “Viksit Bharat,” while also noting that Sitharaman had presented her ninth consecutive Budget. Union minister Kiren Rijiju defended the Budget as “people-centric,” accusing the opposition of politicising it, and the Finance Ministry said the Budget, prepared in Kartavya Bhawan, was inspired by three “kartavyas” focused on sustaining growth, fulfilling aspirations and ensuring inclusive progress.
On the fiscal and tax side, Sitharaman announced that the Income Tax Act, 2025 would come into effect from April 1, 2026, with simplified rules and redesigned return forms to be notified.
The Section 87A rebate limit under the new tax regime was described as unchanged: resident individuals with taxable income up to Rs 12 lakh can claim a maximum rebate of Rs 60,000, while the benefit is not available to HUFs, NRIs, companies and super senior citizens, based on the information cited in the inputs.
She also proposed that buyback proceeds for shareholders be taxed as capital gains, raised Securities Transaction Tax on commodity futures to 0.05% from 0.02%, and said Minimum Alternate Tax would be treated as a final tax with the rate reduced to 14% from 15%.
Equity markets were weak in mid-session trade, with the BSE Sensex down 911.30 points, or 1.11%, at 81,358.48 and the NSE Nifty down 282.85 points, or 1.12%, at 25,037.80, according to the figures cited.
Brokerage-related stocks fell sharply after the proposal to hike STT on commodity futures, with the Multi Commodity Exchange of India dropping 18.08% to Rs 2,068.40 and other listed brokerages also posting steep declines, as per the reported market moves in the provided material.
A major infrastructure push included a proposal to develop City Economic Regions in Tier II and Tier III cities and temple towns, with an allocation of Rs 5,000 crore per region over five years to be disbursed through a “challenge mode” backed by a reform-and-results-based financing mechanism.
The Budget also outlined seven high-speed rail corridors—Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–Siliguri—and proposed operationalising 20 national waterways over five years, alongside new dedicated freight corridors connecting Dankuni in the east to Surat in the west and a ship-repair ecosystem for inland waterways at Varanasi and Patna, according to the announcements cited.
The government also proposed an outlay of Rs 20,000 crore over five years for carbon capture, utilisation and storage technologies.
On manufacturing and industrial policy, the Budget proposed support for mineral-rich states—Odisha, Kerala, Andhra Pradesh and Tamil Nadu—to establish dedicated rare earth corridors for mining, processing, research and manufacturing. It also proposed to launch India Semiconductor Mission 2.0 focused on equipment and materials and full-stack IP design, while increasing the Electronics Components Manufacturing Scheme outlay to Rs 40,000 crore from Rs 22,999 crore.
A scheme to support states in establishing three dedicated chemical parks via a cluster-based plug-and-play model was also cited among the proposals. In a one-time measure linked to global trade disruptions, Sitharaman said eligible manufacturing units in special economic zones would be facilitated to sell to the domestic tariff area at concessional rates of duty, capped to a prescribed proportion of their exports, with regulatory changes to ensure a level playing field for units outside SEZs.
In healthcare and pharmaceuticals, Sitharaman announced Biopharma Shakti, an initiative with an outlay of Rs 10,000 crore over five years to boost research, manufacturing and innovation, and said a network of more than 1,000 accredited clinical trial sites would be set up. She proposed exempting basic customs duty on 17 drugs or medicines to provide relief to cancer patients and adding seven rare diseases for import-duty exemptions on personal imports of drugs, medicines and specified foods used in treatment.
The Budget also announced training of one lakh allied health professionals over five years across 10 disciplines, and said 1.5 lakh multi-skilled caregivers would be trained in the coming year. On traditional medicine, Sitharaman proposed three new All India Institutes of Ayurveda and upgrades to AYUSH pharmacies and drug-testing laboratories, alongside an upgrade of the WHO Global Traditional Medicine Centre in Jamnagar, based on the speech excerpts and summaries provided.
The defence allocation for 2026–27 was put at about Rs 7.8 lakh crore, with Rs 2.19 lakh crore for modernisation under capital outlay, according to the figures cited. The Budget also proposed exempting basic customs duty on raw materials imported for manufacturing aircraft parts used for maintenance, repair or overhaul by units in the defence sector.
Political reactions were initially divided. Congress leader and Lok Sabha MP K. C. Venugopal called the Budget a “total disappointment” for Kerala and alleged the Budget favoured large corporates. Congress leader Jairam Ramesh described the Budget as “woefully short of the hype” and “lacklustre,” while Saugata Roy of the All India Trinamool Congress said the Budget repeated earlier schemes and did not deliver for states such as West Bengal, as reflected in the quotes provided.
More reactions are awaited.