As Finance Minister Nirmala Sitharaman presents the Union Budget 2026 in Parliament today, all eyes are on the key announcements for the fiscal year 2026-27. In a historic move, this is the first time the Union Budget is being presented on a Sunday. This is also Sitharaman's ninth consecutive budget presentation, a record in the finance ministry.
The government is expected to prioritize sustained economic growth while shielding the economy from global uncertainties through policy reforms. Economists anticipate the budget will focus on reducing the central government's debt-to-GDP ratio from 56% to 49-51% by 2031. The fiscal deficit is likely to be targeted at 4.2% of GDP for 2026-27, compared to 4.4% this year, with gross borrowing potentially rising to between ₹16 lakh crore and ₹16.8 lakh crore, from ₹14.6 lakh crore.
While the Economic Survey projects growth at 6.8-7.2% for FY27, some economists expect a slowdown to around 6.5%. The budget is likely to fast-track regulatory reforms and ease compliance to support the Viksit Bharat 2047 vision.
Several key areas are expected to be in focus during the budget presentation. Income tax will remain a central point, though major changes to tax slabs are unlikely after last year's relief measures. Taxpayers will be looking for potential changes to long-term capital gains (LTCG) tax thresholds and an expansion of the rebate under Section 87A for resident Indians.
Capital expenditure is expected to remain a central pillar of the budget, with continued increases in capex anticipated for FY27. Priority sectors are likely to include railways, renewable energy, power transmission, defence, and urban transport. Job creation is also expected to feature prominently, with potential incentives linked to labor-intensive manufacturing and a push for skilling and apprenticeship programs.
The Union Budget is expected to allocate ₹54.1 lakh crore for FY2026-27, representing a 7.9% year-on-year growth. Net tax collections for FY26 are estimated at ₹28.3 lakh crore. The government is also relying on ₹50,000 crore from divestments and a potentially large RBI dividend to bridge any gaps.
Ahead of the budget speech, FM Sitharaman met with President Droupadi Murmu, following established tradition. She was seen carrying a tablet enclosed in a 'bahi-khata' style pouch, a tradition she started in 2019, replacing the earlier briefcase custom.
Economists emphasize that managing debt and deficits effectively will enable the government to fund development projects and services without increasing taxes. The focus will remain on improving the efficiency of capital expenditure, lowering logistics and energy costs, encouraging research and development, and accelerating green and digital transitions to define the next decade's growth.
