Key Highlights of Union Budget 2026-27

Key points

• Budget 2026–27 focuses on youth-led and people-centric growth with emphasis on jobs, skills, and affordability.

• Major funding boosts defence, agriculture, green energy, transport, MSMEs, healthcare, and manufacturing.

• Reforms improve ease of living and market stability through tax reliefs, digital processes, and tighter derivatives regulation.

The Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman on 1 February 2026, marks her record ninth consecutive budget presentation and the first budget prepared in the newly renamed Kartavya Bhawan. Guided by the spirit of Kartavya (Duty), this budget reflects a decisive shift towards Yuva Shakti-driven and people-centric development, drawing heavily from ideas emerging from the Viksit Bharat Young Leaders Dialogue 2026.

The Government’s Sankalp remains firmly focused on the poor, underprivileged, and disadvantaged, advancing the vision of Sabka Saath, Sabka Vikas. Alongside strong sector-wise capital allocation, Budget 2026 places equal emphasis on employment generation, affordability, skilling, entrepreneurship, and ease of living. Below is a comprehensive overview of the sector-wise budget allocation and key development priorities.

Defence Sector Allocations

• The Union Budget 2026–27 allocates Rs. 7.85 lakh crore (Rs. 7,84,678 crore) to the Ministry of Defence to strengthen national security.

• An amount of approximately Rs. 2.19 lakh crore is earmarked as capital outlay for defence services, including aircraft, aero engines, and naval fleets.

• The budget provides Rs. 3.65 lakh crore for revenue expenditure and Rs. 1.71 lakh crore for defence pensions, including One Rank One Pension (OROP).

• Basic customs duty is exempted on raw materials imported for manufacturing aircraft parts used in defence MRO requirements to boost domestic maintenance capabilities.

Check out: Best Defence Stocks in India 2026

Agriculture Sector Allocations

• The Bharat-VISTAAR platform is introduced as a multilingual AI tool integrating AgriStack portals with ICAR practices to provide customised advisory support to farmers.

• A Coconut Promotion Scheme is launched to enhance productivity by replacing old and non-productive coconut trees with high-yielding varieties.

• Dedicated programmes for cashew and cocoa aim to make India self-reliant in production and processing and build premium global brands by 2030.

• The PM-Kisan scheme continues with an allocation of Rs. 63,500 crore to supplement the financial needs of land-holding farmers.

• Entrepreneurship in fisheries and animal husbandry is supported through credit-linked subsidies and the development of 500 reservoirs and Amrit Sarovars.

• High-value agriculture is promoted through focused support for sandalwood cultivation and high-density orchards for walnuts, almonds, and pine nuts.

• Tax exemption is provided on dividend income received by notified national cooperative federations for three years, subject to onward distribution to members.

Check out: Best Agriculture Stocks in India 2026

Power Sector Allocations

• The PM Surya Ghar Muft Bijli Yojana receives an allocation of Rs. 22,000 crore to accelerate rooftop solar adoption.

• Budgetary support is provided for adding 6,000 circuit kilometres of transmission infrastructure under the Green Energy Corridor project.

• Basic customs duty exemptions for specified nuclear power projects are extended until 2035 and expanded to cover all nuclear plants.

• An outlay of Rs. 20,000 crore over five years is proposed to adopt Carbon Capture, Utilisation and Storage (CCUS) technologies across major industries.

Airway and Railway Sector Allocations

Airways

• An allocation of Rs. 550 crore is made to the UDAN scheme to revive underserved airstrips and improve regional connectivity.

• Basic customs duty is exempted on components and parts required for the manufacture of civilian and training aircraft.

• A Seaplane VGF Scheme is introduced to support remote connectivity and tourism operations.

Railways

• The railway sector receives a record capital outlay of Rs. 2.77 lakh crore for infrastructure expansion, safety improvements, and rolling stock.

• Seven high-speed rail corridors are planned as growth connectors, including Mumbai–Pune, Delhi–Varanasi, and Hyderabad–Bengaluru.

• New dedicated freight corridors are proposed to connect Dankuni in the East with Surat in the West for sustainable cargo movement.

Finance Sector Allocations

• A High-Level Committee on Banking for Viksit Bharat will be established to align the sector with India’s next phase of growth.

• Public sector NBFCs such as PFC and REC will be restructured to improve scale, efficiency, and financial stability.

• FEMA rules will be comprehensively reviewed to create a contemporary and user-friendly foreign investment framework.

• A market-making framework for corporate bond indices and total return swaps will be introduced to deepen bond markets.

• An incentive of Rs. 100 crore is announced for large municipal bond issuances exceeding Rs. 1,000 crore.

Electronics Manufacturing Sector Allocations

• The Electronics Components Manufacturing Scheme outlay is increased to Rs. 40,000 crore to strengthen domestic supply chains.

• India Semiconductor Mission 2.0 is launched to develop equipment manufacturing, Indian IP, and resilient global linkages.

• PLI support continues for large-scale electronics, IT hardware, and semiconductor and display manufacturing.

• A safe harbour at a 2% profit margin is provided to non-residents for component warehousing in bonded warehouses.

• Customs duty exemption is granted on specified parts used in microwave oven manufacturing to deepen domestic value addition.

MSME Allocations

• A Rs. 10,000 crore SME Growth Fund is proposed to create future MSME champions.

• The Self-Reliant India Fund receives a Rs. 2,000 crore top-up to ensure continued access to risk capital for micro-enterprises.

• TReDS is mandated for MSME purchases by CPSEs to ensure faster and cheaper access to finance.

• Corporate Mitras will be developed to provide affordable professional and compliance support to MSMEs.

• PM Vishwakarma receives an allocation of Rs. 3,861 crore to strengthen artisan and craft-based livelihoods.

• Rs. 1,500 crore is allocated to the RAMP scheme to improve MSME access to markets, finance, and technology.

Healthcare and Medicine Sector Allocations

• Biopharma SHAKTI is launched with an outlay of Rs. 10,000 crore over five years to build a domestic biologics ecosystem.

• Five regional medical hubs will be established in partnership with the private sector to promote medical value tourism.

• Allied Health Professional institutions will be expanded to add one lakh trained professionals over five years.

• NSQF-aligned programmes will train 1.5 lakh caregivers for geriatric and allied healthcare services.

• NIMHANS-2 and emergency trauma care centres will be established to strengthen mental health infrastructure.

Tourism-Driven Employment

• Fifteen archaeological sites will be developed into vibrant, experiential cultural destinations.

• A National Destination Digital Knowledge Grid will be created to document India’s cultural, spiritual, and heritage sites.

• Eco-tourism will be promoted through mountain trails, turtle trails, and bird-watching trails.

• A pilot programme will upskill 10,000 tourist guides across 20 iconic destinations.

• A National Institute of Hospitality will be established to bridge academia, industry, and government.

• Five Medical Value Tourism hubs will be supported in partnership with the private sector.

Sports & Talent Development

• The Khelo India Mission will be strengthened through an integrated and systematic talent development pathway.

• Sports coaching will be upgraded with the integration of sports science and advanced technologies.

• Sports infrastructure will be expanded and modernised across the country.

• A dedicated initiative will support domestic manufacturing of affordable sports goods and generate MSME employment.

Ease of Living & Affordability Measures

• TCS under LRS is reduced to 2% for education, medical purposes, and overseas tour packages.

• Basic customs duty is removed on 17 life-saving drugs, particularly those used in cancer treatment.

• Interest awarded by Motor Accident Claim Tribunals is exempted from income tax.

• Timelines for filing and revising income tax returns are simplified and extended.

• Automated, rule-based processes are introduced for lower or nil TDS certificates.

• Minor compliance defaults are decriminalised to reduce litigation and regulatory burden.

• A single digital window is introduced for faster and simpler cargo clearances.

Women-Led Entrepreneurship

• Self-Help Entrepreneur (SHE) Marts will be established as community-owned retail outlets.

• Women SHG entrepreneurs will receive improved market access and income opportunities.

• Cluster-level federations will be strengthened to support women-led enterprises.

• Sustainable and scalable women-driven livelihoods will be actively promoted.

Empowerment of Divyangjan

• The Divyangjan Kaushal Yojana will provide customised, industry-relevant skill training.

• The Divyang Sahara Yojana will ensure timely access to quality assistive devices.

• ALIMCO will be supported to scale production, R&D, and AI-enabled assistive technologies.

• PM Divyasha Kendras will be strengthened as modern retail-style service centres.

Capital Markets & Securities Transaction Tax (STT)

• The Union Budget 2026–27 increases the Securities Transaction Tax (STT) on futures contracts from 0.02% to 0.05%.

• The STT on options trading is raised to 0.15% on both the options premium and the exercise value.

• The revision in STT rates aims to curb excessive speculative activity in derivatives markets.

• The government seeks to improve market stability and ensure more balanced participation between long-term investors and active traders through these changes.

• The tax treatment of share buybacks is rationalised by taxing buyback proceeds in the hands of shareholders as capital gains instead of the earlier buyback tax structure.

• Promoters will be subject to an additional tax on buyback transactions to discourage misuse of buybacks for tax arbitrage.

• The revised framework aims to align buyback taxation with dividend and capital gains taxation, bringing greater transparency and consistency in capital market taxation.

Also Read: Sector Wise Budget Allocation 2026

Conclusion

The Union Budget 2026–27 reflects a clear shift towards inclusive, people-centric growth while sustaining momentum in infrastructure, manufacturing, energy, and services. By combining record public investment with reforms in affordability, skilling, healthcare, entrepreneurship, and ease of living, the budget lays a strong foundation for Viksit Bharat. It ensures that economic growth translates into meaningful opportunities for youth, women, farmers, and vulnerable communities, in line with the vision of Sabka Saath, Sabka Vikas.

FAQs:

1. What is the Rare Earth Metal Corridor?
   The government will support Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated corridors for mining, processing, and manufacturing rare earth elements to reduce import dependence on China.

2. What are the 7 new High-Speed Rail routes?
   The budget proposes seven high-speed corridors: Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi, and Varanasi–Siliguri.

3. What is Bharat-VISTAAR in Agriculture?
   It is a multilingual AI tool (Virtually Integrated System to Access Agricultural Resources) that integrates digital land records (AgriStack) with ICAR research to provide farmers with real-time, customized advisory support.

4. What is the new East-West Dedicated Freight Corridor?
   A new freight-only railway line is proposed to connect Dankuni (West Bengal) to Surat (Gujarat) to ensure faster and more sustainable movement of industrial cargo.

5. What are the changes in Securities Transaction Tax (STT)?
   STT on Futures has increased from 0.02% to 0.05%, and on Options, it has increased to 0.15% to curb excessive speculative trading.

6. How has the taxation on share buybacks changed?
   Buyback proceeds will now be taxed as capital gains in the hands of shareholders, replacing the previous system where the company paid a buyback tax.