The Union Budget 2026–27 outlined the government's spending and reform priorities for the coming financial year. The fiscal deficit for FY 2026–27 has been estimated at 4.3% of GDP, compared to 4.4% in the revised estimate for FY 2025–26. The Centre's debt-to-GDP ratio is projected at 55.6%, with a stated target of bringing it down to around 50% by 2030.
Union Budget 2026–27: Fiscal Snapshot (At a Glance)
A. Key Macro & Fiscal Indicators
| Indicator | FY 2025–26 (RE) | FY 2026–27 (BE) |
| Fiscal Deficit (% of GDP) | 4.4% | 4.3% |
| Revenue Deficit (% of GDP) | 3.0% | 2.8% |
| Primary Deficit (% of GDP) | 0.7% | 0.3% |
| Effective Revenue Deficit (% of GDP) | 1.5% | 0.7% |
| Debt-to-GDP Ratio | 56.1% | 55.6% |
B. Receipts (₹ lakh crore)
| Component | FY 2025–26 (RE) | FY 2026–27 (BE) |
| Revenue Receipts | 16.2 | 18.1 |
| Capital Receipts | 14.0 | 17.1 |
| Total Receipts | 30.2 | 35.2 |
C. Expenditure (₹ lakh crore)
| Component | FY 2025–26 (RE) | FY 2026–27 (BE) |
| Revenue Expenditure | 33.4 | 35.3 |
| Capital Expenditure | 12.2 | 12.2 |
| Effective Capital Expenditure | 14.0 | 17.1 |
| Total Expenditure | 38.7 | 41.3 |
D. Major Sectoral Allocations (₹ crore)
| Sector | Allocation |
| Transport | 5,98,520 |
| Defence | 5,94,585 |
| Rural Development | 2,73,108 |
| Home Affairs | 2,55,234 |
| Agriculture & Allied Activities | 1,62,671 |
| Education | 1,39,289 |
| Energy | 1,09,029 |
| Health | 1,04,599 |
| Urban Development | 85,522 |
| IT & Telecom | 74,560 |
| Commerce & Industry | 70,296 |
Key Announcements In 2026-27 Budget
Manufacturing: Sector-Specific Schemes and Tax Incentives
The Budget announces multiple targeted schemes aimed at strengthening domestic manufacturing, particularly in strategic and technology-intensive sectors.
Key initiatives for manufacture growth and tax incentive:
- Exemption from income tax for five years to nonresidents providing capital goods, equipment or tooling, to any toll manufacturer in a bonded zone.
- Provision of safe harbour to non-residents for component warehousing in a bonded warehouse.
- Deferred duty payment window to trusted manufacturers. Increase the limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1 per cent to 3 per cent of the FOB value of the previous year's export turnover.
- Duty-free imports of specified inputs extended to export of shoe uppers in addition to leather or synthetic footwear.
- Extension of time for the export of final product from the existing 6 months to 1 year, for exporters of leather or textile garments, leather and synthetic footwear.
- Exemption from basic customs duty on specified parts used in the manufacture of microwave ovens.
- Exemption from basic customs duty on components and parts used in aircraft manufacturing.
- Exemption from basic customs duty on raw materials imported for manufacture of aircraft parts used in maintenance, repair, or overhaul requirements defence units.
- Regular importers with trusted longstanding supply chains to be recognized in the risk system.
- Export cargo using electronic sealing to be provided through clearance from the factory premises to the ship.
- A special one-time measure to facilitate sale in domestic tariff area at concessional rate of duty by eligible manufacturing units of SEZs.
For MSMEs
- A ₹10,000 crore SME Growth Fund
- A ₹2,000 crore top-up to the Self-Reliant India Fund
- Mandatory use of the TReDS platform for CPSE procurement from MSMEs
- Credit guarantee support through CGTMSE for invoice discounting on TReDS
- Linking GeM with TReDS to facilitate faster and cheaper financing
- Securitisation of TReDS receivables to improve secondary market liquidity
To support manufacturing competitiveness, the Budget proposes several customs and tax measures. These include a five-year income tax exemption for non-residents supplying capital goods or tooling to toll manufacturers in bonded zones, deferred duty payment facilities for trusted manufacturers, and expanded duty-free imports for export-oriented sectors such as seafood, footwear and textiles.
Basic customs duty exemptions have also been extended to components used in aircraft manufacturing, defence maintenance and overhaul, and microwave oven production.
Services Sector: IT, Health, Tourism and Creative Industries
In the services sector, the Budget focuses on tax certainty and capacity expansion.
For IT services:
- The safe harbour threshold has been raised from ₹300 crore to ₹2,000 crore
- A unified safe harbour margin of 15.5% has been prescribed
- Safe harbour approvals will follow an automated, rule-based process
- Validity of safe harbour provisions extended up to five years
Foreign companies providing cloud services through India-based data centres have been granted tax holidays until 2047, while associated entities will receive a 15% cost-based safe harbour.
In health and tourism:
- States will be supported to establish five medical value tourism hubs
- 1.5 lakh caregivers will be trained under new skilling programmes
- Institutions for allied health professionals will be upgraded or established
- A National Institute of Hospitality will be set up
- Buddhist tourism circuits will be developed in the North-East
Financial Sector: Market Reforms and Higher STT
The Budget proposes several measures aimed at deepening financial markets:
- Incentive of ₹100 crore for municipal bond issuances exceeding ₹1,000 crore
- Introduction of market-making frameworks and total return swaps for corporate bonds
- Comprehensive review of FEMA (Non-Debt Instruments) Rules
- Formation of a High-Level Committee on Banking
At the same time, the government has increased transaction taxes:
- STT on futures raised from 0.02% to 0.05%
- STT on options premium and exercise raised to 0.15%
Education
- Establishment of five university townships in the vicinity of major industrial and logistics corridors to strengthen industry–academia linkages and improve graduate employability.
- Provision for a girls' hostel in higher education STEM institutions in every district, aimed at improving access and retention of women students, particularly from non-urban areas.
Agriculture and Allied Sectors
The Budget outlines productivity-focused interventions in agriculture and allied activities, including:
- Integrated development of 500 reservoirs and Amrit Sarovars
- Strengthening fisheries value chains and market access
- Dedicated programmes for cashew, cocoa, coconut and sandalwood
- Bharat-VISTAAR, integrating AgriStack and ICAR advisory systems with AI
- Capital subsidy-linked loans for private investment in veterinary infrastructure
- Expansion of high-density horticulture and orchard rejuvenation
Infrastructure and Energy
Infrastructure continues to receive the largest budgetary support:
- ₹12.2 lakh crore in public capex
- ₹2 lakh crore support to states under the SASCI scheme
- New Dedicated Freight Corridors linking Dankuni to Surat
- Operationalisation of 20 new National Waterways
- Coastal Cargo Promotion Scheme to raise coastal and inland shipping share to 12% by 2047
- Monetisation of CPSE real estate through REITs
Energy-related measures include:
- ₹20,000 crore allocation for a Carbon Capture, Utilisation and Storage (CCUS) scheme
- Extension of customs duty exemption for nuclear power projects until 2035
- Duty exemptions for inputs used in battery storage, critical mineral processing, solar glass, and biogas-blended CNG
Social Sector and Governance Measures
The Budget provides for:
- Expansion of mental health infrastructure, including NIMHANS-2
- Emergency and trauma care centres in district hospitals
- Divyangjan Kaushal Yojana and Divyang Sahara Yojana for skilling and assistive devices
- Simplification of tax compliance, extended timelines for revised returns, reduced TCS under LRS, and decriminalisation of procedural defaults.