by
Sri Vani Harinmayi Somayajula
BAJMC Sem 2
The economists termed this
year budget by the Union Finance Minister Nirmala Sitharaman as ‘producer
centric’. The Union Budget of India is the annual financial statement of the
Union Government, presented under Article 112 of the Constitution. In the
backdrop of global economic uncertainty, rising geopolitical tensions, and
inflationary pressures, the Union Budget places strong emphasis on sustaining
India’s growth momentum. India remains one of the fastest-growing major
economies, with GDP growth projected at around 6.5–7 per cent. The budget seeks
to consolidate this growth through public investment, structural reforms, and
fiscal discipline.
A central pillar of the
budget is the sharp rise in capital expenditure, which has been increased to
over ₹11 lakh crore, amounting to roughly 3.4 per cent of GDP. This marks a
significant jump compared to pre-pandemic levels and reflects the government’s
infrastructure-led growth strategy. Major allocations have been directed
towards roads, railways, metro projects, ports, airports, and logistics
corridors. Railways alone have received an allocation exceeding ₹2.5 lakh
crore, aimed at modernisation, safety, and expansion.
Fiscal consolidation
remains a key concern. The fiscal deficit has been targeted at around 5.1 per
cent of GDP, continuing the gradual reduction from pandemic-era highs. The
government has reaffirmed its commitment to bringing the fiscal deficit below
4.5 per cent in the coming years, balancing developmental expenditure with
macroeconomic stability.
On the taxation front,
the budget continues to promote the new income tax regime by simplifying slabs
and reducing compliance burdens. Increased tax buoyancy, driven by better GST
collections and digital enforcement, has strengthened revenues without imposing
new tax burdens on citizens. Gross tax revenue growth has helped reduce
dependence on borrowing.
Social sector spending
remains robust. Education and healthcare together receive allocations exceeding
₹2.5 lakh crore, reinforcing human capital development. Agriculture, which
supports nearly half of India’s workforce, has received targeted support through
investments in agri-infrastructure, crop insurance, irrigation, and farmer
credit schemes. Welfare programmes related to food security, rural employment,
housing, and women empowerment continue to receive priority funding.
The budget also reflects
a forward-looking vision through strong emphasis on green growth. Allocations
for renewable energy, green hydrogen, electric mobility, and climate-resilient
infrastructure align with India’s net-zero commitments and long-term sustainability
goals. Support for start-ups, innovation, artificial intelligence, and skill
development highlights the shift toward a knowledge-driven economy.
Highlights of the Union
Budget
Record Capital
Expenditure:
Capital expenditure has been increased to over ₹11 lakh crore, accounting for
about 3.4% of GDP, aimed at boosting infrastructure-led growth and employment
generation.
Surge on Defence Budget: Allocated ₹7.85 lakh crore to the defence sector in the Union Budget 2026, higher than the ₹6.81 lakh crore provided in FY26, signalling a continued focus on military readiness, modernisation, and personnel welfare.
Infrastructure Push: Major investments in
roads, railways, metro projects, ports, airports, and logistics corridors, with
the Railways allocation exceeding ₹2.5 lakh crore for modernisation and safety.
Fiscal Deficit Control: Fiscal deficit targeted
at around 5.1% of GDP, continuing the government’s commitment to bring it below
4.5% in the medium term.
Tax Reforms: Continued emphasis on
the new income tax regime with simplified slabs and reduced compliance burden;
no major increase in tax rates.
Strong Revenue Growth: Improved GST
collections and digital compliance leading to higher tax buoyancy and reduced
reliance on borrowing.
Education &
Healthcare:
Combined allocation of over ₹2.5 lakh crore to strengthen human capital through
improved schooling, higher education, and healthcare infrastructure.
Agriculture & Rural
Development:
Targeted support for farmers through agri-infrastructure funding, irrigation
projects, crop insurance, and expanded credit facilities.
Social Welfare Schemes: Continued funding for
food security, rural employment, housing, and women-centric welfare programmes.
Green Growth Focus: Increased spending on
renewable energy, green hydrogen, electric mobility, and climate-resilient
infrastructure in line with sustainability goals.
Innovation &
Start-ups:
Support for start-ups, digital public infrastructure, artificial intelligence,
and skill development to promote a knowledge-driven economy.
In conclusion, the Union Budget represents a calibrated balance between growth, welfare, and fiscal responsibility. By prioritising capital investment, maintaining social protection, and advancing sustainability and innovation, the budget aims to strengthen India’s economic resilience while laying the foundation for long-term inclusive development. Its true success, however, will depend on effective implementation and timely execution of proposed measures.
Read on to know more:
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2221458®=3&lang=2
//efaidnbmnnnibpcajpcglclefindmkaj/https://www.ey.com/content/dam/ey-unified-site/ey-com/en-in/services/tax/union-budget-2026/ey-union-budget-2026-27-highlights.pdf
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