Nirmala Sitharaman presented the Budget for 2026–27 on Sunday, framing it against what she called a global backdrop where “trade and multilateralism are imperilled” and supply chains face disruption, while new technologies change production and raise demand for resources.
She said the Budget will “take confident steps towards Viksit Bharat” and keep India “deeply integrated with global markets, exporting more and attracting stable long-term investment.” She also said the proposals draw from ideas surfaced during the “Viksit Bharat Young Leaders Dialogue 2026”, which she described as a “Yuva Shakti-driven Budget”.
The minister organised the agenda around three stated duties, or “kartavya”. She said the first is to “accelerate and sustain economic growth”, the second is to “fulfil aspirations” and build capacity, and the third is to ensure broad access to resources and opportunities across families, communities, regions and sectors.
In the 2025 speech, she organised the Budget around “four powerful engines” of agriculture, MSMEs, investment and exports, supported by reforms. In 2026, she replaces that structure with the three-kartavya framing and places fiscal consolidation alongside manufacturing, services and infrastructure measures.
Debt Path
The 2026 speech puts debt-to-GDP ahead of other fiscal metrics. Sitharaman recalled that she had indicated in Budget 2025–26 that the Centre would target a debt-to-GDP ratio of 50±1% by 2030–31. She then reported that debt-to-GDP is estimated at 55.6% of GDP in BE 2026–27, compared with 56.1% in RE 2025–26.
She linked the debt path to spending capacity. She said a declining debt-to-GDP ratio will “free up resources” for priority expenditure by reducing interest outgo. The speech treats this as the reason to keep the deficit on a consolidating trajectory
The 2025 speech section on fiscal policy sets out deficit estimates and an FRBM roadmap, but it does not state a debt-to-GDP ratio in the text provided here. The 2026 speech therefore marks a shift in what the minister chooses to headline in the speech itself.
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Deficit Plan
Sitharaman said she met her earlier commitment to reduce the deficit below 4.5% of GDP by 2025–26. She reported RE 2025–26 fiscal deficit at 4.4% of GDP, matching the budget estimate set earlier, and she placed BE 2026–27 fiscal deficit at 4.3% of GDP.
The 2025 speech set the deficit for BE 2025–26 at 4.4% of GDP and put RE 2024–25 at 4.8% of GDP. Read together, the two speeches show a fall from 4.8% (RE 2024–25) to 4.4% (BE and RE 2025–26) and then to 4.3% (BE 2026–27).
The 2026 speech also updates the financing picture. It estimates net market borrowing from dated securities at Rs 11.7 lakh crore and gross market borrowing at Rs 17.2 lakh crore for 2026–27. In the 2025 speech, the minister had estimated net borrowing at Rs 11.54 lakh crore and gross borrowing at Rs 14.82 lakh crore for 2025–26.
Capex Push
The 2026 speech keeps public investment at the centre of the growth plan. Sitharaman said public capex rose from Rs 2 lakh crore in FY2014–15 to an allocation of Rs 11.2 lakh crore in BE 2025–26. She then proposed to increase it to Rs 12.2 lakh crore in FY2026–27.
She also provided a revised estimate for the current year in the speech. For RE 2025–26, she put total expenditure at Rs 49.6 lakh crore, with capital expenditure “about Rs 11 lakh crore”. For BE 2026–27, she estimated total expenditure at Rs 53.5 lakh crore and non-debt receipts at Rs 36.5 lakh crore.
The 2025 speech provided the prior-year baseline for capex and state support. It put RE 2024–25 capital expenditure at about Rs 10.18 lakh crore, and it proposed Rs 1.5 lakh crore of 50-year interest-free loans to states for capital expenditure and reforms. The 2026 speech, in the text provided here, does not restate that state-loans headline, but it does raise the Centre's capex allocation and adds instruments such as a risk guarantee fund.
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Manufacturing Drive
The 2026 speech turns the first “kartavya” into a manufacturing and infrastructure plan, with six intervention areas and a detailed list of schemes. Sitharaman said she will scale up manufacturing in “7 strategic and frontier sectors” and also rejuvenate legacy industrial sectors, create “Champion MSMEs”, push infrastructure, secure long-term energy stability, and develop city economic regions.
She attached multi-year outlays to some production-linked interventions. She proposed Biopharma SHAKTI with an outlay of Rs 10,000 crore over five years and said it will support new NIPER institutes, upgrades, clinical trials sites, and strengthened drug regulation capacity.
She also proposed expansions and new production schemes. She said the Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs 22,919 crore, has investment commitments at double the target, and she proposed to increase the outlay to Rs 40,000 crore. She said the government will launch ISM 2.0 to expand the semiconductor agenda into equipment, materials, IP and supply chains.
The 2025 speech presented a broader “National Manufacturing Mission” and listed clean-tech manufacturing priorities, including solar PV cells, EV batteries, wind turbines and grid-scale batteries. The 2026 speech keeps that direction but moves into named schemes and corridor-led execution across sectors such as rare earths, chemicals and capital goods.
MSME Finance
Sitharaman described MSMEs as a core growth engine and proposed a three-part support package: equity, liquidity and professional support. Under equity support, she proposed a Rs 10,000 crore SME Growth Fund and a Rs 2,000 crore top-up to the Self-Reliant India Fund created in 2021.
On liquidity support, she cited the Trade Receivables Discounting System (TReDS) and said it has enabled more than Rs 7 lakh crore for MSMEs. She proposed to mandate TReDS as the settlement platform for CPSE purchases from MSMEs, add a credit guarantee mechanism for invoice discounting, link GeM with TReDS for finance signals, and create a route to treat TReDS receivables as asset-backed securities.
On professional support, she proposed that professional bodies design short modular courses to create “Corporate Mitras” in tier-II and tier-III towns to support MSME compliance at lower cost. The 2025 speech focused on credit guarantee expansion, customised credit cards for micro enterprises, and a new fund of funds for startups with a fresh contribution of Rs 10,000 crore. The 2026 speech shifts towards receivables financing architecture and equity-style funds for scale-up.
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Energy Transition
The 2026 speech links energy stability with industrial competitiveness and new investment. Sitharaman proposed an outlay of Rs 20,000 crore over five years for carbon capture, utilisation and storage (CCUS), aligned with a roadmap launched in December 2025 and covering sectors including power, steel, cement, refineries and chemicals.
She also proposed multiple customs measures tied to energy transition and supply security. These include extending basic customs duty exemptions for capital goods used in manufacturing lithium-ion cells to battery energy storage systems, exempting duty on sodium antimonate for solar glass, and extending duty exemptions for nuclear power project imports until 2035 with broader coverage.
The 2025 speech had announced a Nuclear Energy Mission for R&D of small modular reactors with an outlay of Rs 20,000 crore and set a 2047 target for nuclear capacity. In 2026, the minister's focus in the speech provided here moves from mission announcement to import-duty and industrial-readiness measures, and it places CCUS outlay as a new headline.
Cities And Transport
The 2026 speech places cities at the centre of the growth plan and proposes “City Economic Regions” (CER) as an organising unit. Sitharaman proposed an allocation of Rs 5,000 crore per CER over five years to implement plans through a challenge mode with a reform-and-results-based financing mechanism.
She also proposed seven high-speed rail corridors between city pairs, including Pune–Hyderabad, Hyderabad–Bengaluru, and Hyderabad–Chennai, and framed them as “growth connectors”. She added freight and waterways measures, including proposed dedicated freight corridors and a plan to operationalise 20 new national waterways over five years.
In the 2025 speech, she proposed an Urban Challenge Fund of Rs 1 lakh crore, with an allocation of Rs 10,000 crore for 2025–26, and tied it to “Cities as Growth Hubs” and other urban programmes. The 2026 speech moves from that pooled fund framing to CER-specific allocations and adds municipal bond incentives, including Rs 100 crore for a single issuance above Rs 1,000 crore.
Services And Skills
The 2026 speech places renewed emphasis on services as part of the second “kartavya”. Sitharaman proposed a High-Powered “Education to Employment and Enterprise” standing committee to recommend measures that position services as a core driver and to work towards a stated 2047 goal, while also assessing the impact of AI on jobs and skills.
She proposed sector-linked interventions across health, tourism, education, design and the creative economy. These include upgrading and adding allied health institutions to add 100,000 allied health professionals over five years, training 1.5 lakh caregivers in the coming year, and supporting states to create five university townships near industrial and logistic corridors.
The 2025 speech had emphasised education and skilling capacity through measures such as Atal Tinkering Labs, broadband connectivity to schools and PHCs, and an AI centre of excellence for education with an outlay of Rs 500 crore. In 2026, the speech expands into sector workforce pipelines and committee-led reform architecture for services.
Tax Changes
The 2026 speech shifts from intent to implementation on direct tax reform. Sitharaman said the review of the Income Tax Act, 1961 is complete and the Income Tax Act, 2025 will come into effect from 1 April 2026, with simplified rules and forms to follow.
She listed “ease of living” measures such as exempting interest awarded by Motor Accident Claims Tribunals to natural persons from income tax and removing related TDS. She also proposed lowering TCS rates under the Liberalised Remittance Scheme for education and medical purposes from 5% to 2%, and lowering TCS on overseas tour programme packages to 2% without an amount condition.
The 2026 speech also proposed market-tax changes, including raising securities transaction tax on futures and options, and it proposed changes to minimum alternate tax by making MAT a final tax with a reduced rate of 14% from 15%, with set-off conditions for MAT credit tied to moving into the new regime. In the 2025 speech, Sitharaman had said she will introduce a new income-tax bill and announced personal income tax relief under the new regime, including “no income tax payable” up to Rs 12 lakh under the new regime.
Track all the changes the taxation here.
Customs And Trade
The 2026 speech continues tariff simplification and ties import duties to manufacturing priorities. Sitharaman proposed removing certain exemptions where domestic manufacturing exists or imports are negligible, and she said the government will incorporate certain effective rates into the tariff schedule to simplify rate determination.
She listed sector moves, including duty-free imports of specified inputs for seafood processing exports with the limit rising from 1% to 3% of prior-year export turnover, and extending the export time window for specified leather and textile products from six months to one year. She also proposed a one-time measure to facilitate eligible SEZ manufacturing units' sales to the domestic tariff area at concessional duty rates, within a prescribed proportion of exports.
The 2025 speech similarly used customs policy to support domestic value addition and export competitiveness, including critical minerals exemptions and medicines relief. In 2026, the speech adds a wider set of process reforms such as trust-based clearance, expanded advance ruling validity from three to five years, and a plan for an integrated digital window for clearances.
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