The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, reiterates the government’s commitment to sustaining high growth while adhering to fiscal discipline, with a strong emphasis on infrastructure-led development through higher public capital expenditure for roads, railways, logistics, housing and urban projects.
The Budget sharpens its focus on manufacturing and strategic sectors, announcing an expanded India Semiconductor Mission 2.0, rare earth and critical mineral corridors, and new industrial initiatives in textiles, chemicals and container manufacturing to strengthen domestic value chains and global competitiveness. Support for MSMEs is reinforced through a proposed SME Growth Fund, additional resources for the Self-Reliant India Fund, and measures to improve access to timely credit and liquidity.
On the fiscal and reform front, the deficit is pegged at 4.3 percent of GDP for FY 2026–27, while income tax slabs remain unchanged, signalling stability for taxpayers and a preference for simplifying compliance over rate changes. Technology and human capital form key pillars, with the Bharat Vistar AI platform for farmers, incentives for data centres and IT services, and investments in IIT Creator Labs, a new design institute, girls’ hostels and expanded healthcare and clinical research, positioning Budget 2026 as growth-oriented, reform-driven and inclusive.
Here’s a quick look at the main highlights:
1. Public Capital Expenditure Boost
The government raised public capital expenditure (capex) to ₹12.2 lakh crore for FY 2026–27, up from ₹11.2 lakh crore, marking a nearly 9% increase to sustain infrastructure-led growth.
2. New High-Speed Rail Corridors
Seven high-speed rail corridors were announced to connect major city pairs such as Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–Siliguri, aimed at enabling faster, cleaner inter-city travel.
3. India Semiconductor Mission 2.0
An expanded India Semiconductor Mission 2.0 was unveiled with a significantly higher outlay of ₹40,000 crore to build a comprehensive semiconductor ecosystem, covering equipment, materials and full IP stack development.
4. Rare Earth & Strategic Mineral Corridors
Dedicated “rare earth corridors” will be developed in mineral-rich states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu to support mining, processing and manufacturing of rare earth permanent magnets and other critical minerals.
5. MSME & SME Support
The Budget proposes:
A ₹10,000 crore SME Growth Fund to support high-potential micro, small and medium enterprises.
An additional ₹4,000 crore for the Self-Reliant India Fund to strengthen equity financing.
Mandatory use of TReDS by CPSEs to improve liquidity and faster payments for MSMEs.
6. Strategic Industrial Incentives
New schemes include:
Mega textile parks and an integrated textile programme to modernise production and generate jobs.
Promotion of container manufacturing and dedicated chemicals parks to expand industrial capacity.
An Infrastructure Risk Guarantee Fund to crowd in private investment and support project financing.
7. Tax & Fiscal Framework
Fiscal deficit pegged at 4.3% of GDP for FY 2026–27, continuing the fiscal consolidation path.
No change in basic income tax slabs, providing stability for individual taxpayers.
Several measures aimed at improving compliance and simplifying tax administration.
8. Technology & Digital Infrastructure
A new Bharat Vistar multilingual AI platform was introduced to provide farmers real-time agricultural insights in local languages, leveraging AI to improve productivity and input efficiency.
Tax holidays and incentives for foreign data centre firms and simplified provisions for IT services to boost digital infrastructure and cloud expansion.
9. Financial Sector & Market Reforms
A high-level committee on “Banking for Viksit Bharat” to review and guide banking sector reforms.
Steps to deepen corporate bond markets through a market-making framework and incentives for municipal bonds.
Modernisation of rules for foreign non-debt investments and an overhaul of FEMA to ease investing.
10. Social & Human Capital Investments
The Budget places strong emphasis on human capital with:
Establishment of IIT Creator Labs and a new design institute to foster innovation.
Setting up girls’ hostels in every district to improve access to education.
Creation of clinical trial hubs and expansion of healthcare institutions.
11.Health & Pharma
BioPharma Shakti initiative with a Rs 10,000 crore outlay over five years aims to position India as a global hub for biologics and biosimilars, reducing import dependence while strengthening domestic capabilities in high-value therapies.
Expansion of allied health education, networked clinical trial infrastructure, stronger regulatory systems and enhanced mental health services, Customs duty relief on 17 cancer and rare-disease medicines to improve affordability.
To support Ayurveda, traditional medicine research and integrated medical value tourism hubs further to combine healthcare delivery with global outreach.
12. Tourism: The Budget outlines a broad strategy to deepen India’s tourism potential through infrastructure creation, product diversification and skill development.
Development of five regional medical tourism hubs in partnership with states and the private sector, linking healthcare excellence with travel services.
Focus on upgrading heritage and cultural destinations, expanding Buddhist and thematic circuits, promoting eco- and adventure tourism, and strengthening hospitality training through dedicated institutions.