Union Budget 2026: A Blueprint for Consolidation and ‘Viksit Bharat’
Finance Minister Nirmala Sitharaman presented a record ninth consecutive Union Budget on Sunday, February 1, 2026. Anchored by the theme of "Three Kartavyas"(Duties), the budget prioritises long-term structural reforms and fiscal discipline over short-term populist measures. While income tax slabs remain unchanged, the government has delivered significant boosts to infrastructure, manufacturing, and specific social sectors.
Key Economic Indicators (FY 2026-27)
Fiscal Deficit Target: Lowered to 4.3% of GDP.
Capital Expenditure (Capex): Increased by 9% to ₹12.2 lakh crore.
Nominal GDP Growth: Projected at 10%.
Debt-to-GDP Ratio: Targeted to fall to 55.6% from 56.1%.
Total Budget Size: Pegged at ₹53.5 lakh crore.
Major Sectoral Announcements
1. Taxation and Personal Finance
Income Tax Slabs: No changes to rates or slabs in either the old or new regimes.
New Income Tax Act: The Income Tax Act 2025 will take effect from April 1, 2026, aiming to simplify legal language and reduce litigation.
TCS Relief: Tax Collected at Source on overseas tour packages, education, and medical remittances reduced to 2% (down from 5% and 20%).
Capital Markets: Securities Transaction Tax (STT) on Futures increased to 0.05% and on Options to 0.15%. Share buybacks will now be taxed as capital gains for all shareholders.
2. Infrastructure and Connectivity
High-Speed Rail: Seven new corridors announced, including Mumbai–Pune, Hyderabad–Bengaluru, and Varanasi–Siliguri.
Waterways: Plan to operationalise 20 new national waterways over five years and develop a green cargo freight corridor from Dankuni to Surat.
City Economic Regions (CERs): ₹5,000 crore allocated to develop Tier-2 and Tier-3 cities as growth hubs.
3. Technology and Manufacturing
Semiconductor Mission 2.0: Launched with an increased outlay of ₹40,000 crore.
Data Centres: A tax holiday until 2047 for foreign cloud companies using Indian data centres to serve global customers.
Rare Earth Corridors: Dedicated corridors to be established in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to boost critical mineral self-reliance.
4. Healthcare and Social Welfare
Biopharma Shakti: A ₹10,000 crore scheme over five years to position India as a biologics manufacturing hub.
Ayurveda & Mental Health: Three new All India Institutes of Ayurveda and a NIMHANS 2.0 in North India.
Cancer Care: Customs duty exempted for 17 essential cancer drugs.
Women Empowerment: Expansion of the Lakhpati Didi program and establishment of one girls' hostel in every district.
Market Reaction
The Indian stock markets, which remained open for a special Sunday session, reacted sharply to the budget. The Sensex plunged over 1,000 points and the Nifty fell below 25,000, primarily due to the hike in STT and the new taxation on share buybacks. However, healthcare and pharma stocks saw gains following the Biopharma Shakti and medical tourism announcements.