Key Points to Ponder:
— What is the Union Budget?
— What are the important budget documents?
— Know the important terms related to the budget, such as revenue budget, revenue expenditure, capital budget, fiscal deficit, effective capital expenditure (EffCapex), etc.
— Read about the securities transaction tax, Futures and options,
— What are MSMEs? What initiatives have been taken by the government for the growth of MSMEs?
— What is the Trade Receivables Discounting System (TReDS) platform?
— What are the challenges faced by the banking sector?
— What is the buyback of shares?
— Know about the Buddhist Circuits.
— What is India Semiconductor Mission 2.0?
— What is safe harbour taxation?
— What is the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-GRAMG Scheme?
— Know about the Sixteenth Finance Commission and its recommendations.
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— What are rare earth minerals? What is the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM)?
— What is speculative trading?
— What is India VIX?
— What is the significance of defence modernisation?
— SHANTI Act: Know about it in detail.
Key Takeaways:
— The Budget may be lacking on ambitious decisions in the second year of Prime Minister Narendra Modi’s third term in office but Sitharaman tries to make up for this by actions such as modest fund allocations to some industries, customs duty cuts on inputs for some others hit by US tariffs, and skilling schemes to tackle the unemployment problem.
— All these will take time to play out and add more muscle to the economy. Moreover, a lot depends on effective execution of the many schemes and programmes. The Budget probably recognises this, and it shows only a 10 per cent GDP growth in nominal terms for 2026-27; assuming inflation of 3-4 per cent, this could translate into a real growth rate of not more than 6-7 per cent.
— The modest growth estimates notwithstanding, what is disconcerting is that the tax growth is estimated to be just over 7 per cent — lower than the nominal growth rate for the fourth year in a row.
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— What hurt markets the most, despite Sitharaman’s prudence and fulfilling of the promise to keep the fiscal deficit below 4.5% of GDP in 2025-26, is the proposed hike in securities transaction tax for futures and options.
— Just three days ago, the Economic Survey 2025-26 had acknowledged drying up of foreign capital, and a resultant weakening of the rupee, as a major concern, raising expectations the Budget would announce measures to lure global capital — FDI and FII — into India. This was belied, so were market hopes of a cut in long-term capital gains tax and restructuring of the withholding tax.
— With FIIs shunning Indian equities, the Budget has tried to fall back on Individual Persons Resident Outside India (PROI), largely NRIs and OCI card holders. They can now invest in equities of listed companies through the Portfolio Investment Scheme, with the investment limit for an individual PROI under the scheme from 5% to 10%, with an overall investment limit for all individual PROIs to 24% from the current 10%.
— Within these constraints, the Budget also has hiked the allocation for capital expenditure by more than 10 per cent to Rs 12.22 lakh crore. Estimated at 4.4% of GDP in the next financial year, its the highest in the last 10 years, coming as it does on top of a 4 per cent increase in capex in the current financial year compared with the actual capex in 2023-24.
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— Analysts said the capex for the next fiscal was probably for the first time higher than the net borrowings excluding small savings. This shows that more assets are being created than liabilities being imposed on the next generation.
— The Budget also marks the transition to debt-GDP ratio as the fiscal anchor going forward. While the fiscal deficit for the next financial year is 4.3% of the GDP (compared with 4.4% of the GDP in 2025-26), the debt-GDP ratio is estimated to be 55.6 for the next year compared with 56.1 in 2025-26. The target is to bring it to 50% or lower by 2030-31.
— While the fiscal deficit is projected to fall in the coming year, subsidies have in general shown a rising trend over the years. Food and fertiliser subsidies are pegged to be slightly lower in 2026-27 compared with the revised estimates of 2025-26, but lack of any reform to better target these, have meant they remain at elevated levels of almost Rs 4 lakh crore, or approximately 1% of GDP.
— In a bid to reduce dependence on China, the Budget has proposed dedicated rare earth corridors to promote mining, processing and manufacturing of these in mineral rich states of Odisha, Kerala, Tamil Nadu and Andhra Pradesh.
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From the Front Page- “Transaction tax hiked to curb ‘speculation’ in F&O, but its volumes were already down”
— India’s stock markets slumped 2% Sunday as Budget 2026-27 proposed a hike in Securities Transaction Tax (STT) for futures and options (F&O) in an attempt to further curb what government officials called speculative trading.
— The negative sentiment was also reflected in the India VIX. An indicator of market volatility, the India VIX jumped 13% to close at 15.10.
— Futures and options are essentially instruments that are based on underlying company stocks or indices — hence called derivatives — and allow two parties to agree to trade a security at a later date at a predetermined price. This can help traders to protect themselves from unexpected stock price movements.
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From the Front Page- “In first Budget after Operation Sindoor, 15% hike for defence”
— In the first Budget following Operation Sindoor, which India conducted in May last year to dismantle terror infrastructure in Pakistan, Finance Minister Nirmala Sitharaman Sunday announced a major 15 per cent hike in the overall defence budget for fiscal year 2026-2027, raising it to Rs 7.85 lakh crore.
— This Budget also includes a nearly 22 per cent increase in the defence modernisation budget compared to the allocations set for the previous financial year. India’s defence capital outlay for 2025-26 stood at Rs 1.8 lakh crore, and has been raised to Rs 2.19 lakh crore for 2026-2027.
From the Front Page– “Corridor to future: High-speed rail, freight, one for rare earths”
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— In a major boost for connectivity, Finance Minister Nirmala Sitharaman on Sunday announced seven high-speed rail corridors that will be developed as “growth connectors”. She also announced a new dedicated freight corridor connecting Dankuni in West Bengal to Surat in Gujarat, and “rare earth corridors” in mineral-rich states “to promote mining, processing, research and manufacturing”
— India is currently developing its first high-speed rail corridor, the bullet train project, between Mumbai and Ahmedabad. The first stretch, Surat-Billimora, is scheduled to be operational by August 15, 2027; the entire corridor is scheduled to be operational by 2029.
From the UNION BUDGET 2026-27 New Economy Page- “To cut China reliance, support for rare earths, critical minerals”
— From dedicated rare earth corridors to customs duty exemptions, the Union Budget FY27 has marked a sharper push to build India’s critical minerals ecosystem. The Budget proposed establishment of dedicated rare earth corridors in India’s coastal states — Odisha, Kerala, Andhra Pradesh and Tamil Nadu — aimed at promoting mining processing, research and manufacturing. It also announced exemption of basic customs duty on import of capital goods required for processing of critical minerals.
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— Announcements are considered as part of the government’s broader effort to secure the entire critical minerals supply chain — from domestic exploration and mining to processing, recycling and overseas acquisition.
— The push comes against the backdrop of China’s overwhelming dominance across the global critical minerals and rare earth value chain. Over the past year, Beijing has imposed curbs on several critical and heavy rare earth minerals amid escalating trade tensions with the US.
— Although some curbs were eased following talks between US President Donald Trump and Chinese President Xi Jinping, the prolonged controls have already forced countries — including India — to diversify supply and dependence.
— Presenting the Budget in the parliament, Finance Minister Nirmala Sitharaman said the proposal to establish dedicated rare earth corridors is in line with the recently announced scheme to promote manufacturing of Sintered Rare Earth Permanent Magnet (REPM). With financial outlay of Rs. 7,280 crore, the scheme aims to support 6,000 metric tonnes per annum (mtpa) of integrated REPM manufacturing capacity, which will be allocated among five beneficiaries selected through a competitive bidding process, with each eligible for up to 1,200 mtpa.
PAGE-5: MACROECONOMY
Centre’s capex thrust intact, FY27 target at Rs 12.22 lakh cr
— In a continuation of the Centre’s thrust on public investment post the Covid-19 pandemic, the government has allocated Rs 12.22 lakh crore for financial year 2026-27, up 11.5% from the revised estimate of Rs 10.96 lakh crore for the current fiscal.
— Economists said that the government’s continued focus on capital expenditure will support the cyclical growth recovery.
— The road transport and highways sector, along with railways, continued to be the primary driver of India’s infrastructure, accounting for over 64% of the Centre’s total capital expenditure allocation for the upcoming financial year 2026-27.
— For states, the 50-year interest-free loans under the Scheme for Special Assistance to States for Capital Investment, an amount of Rs 2 lakh crore has been allocated for FY27 as against Rs 1.5 lakh crore for the current financial year.
FY27 debt-to-GDP target at 55.6%; nominal GDP growth pegged at 10%
— In the first year of the finance ministry’s pivot to the debt-to-GDP ratio as its primary fiscal target, Finance Minister Nirmala Sitharaman on Sunday said the government will aim to bring down the ratio to 55.6% in 2026-27 from 56.1% this year, with the country’s nominal GDP assumed to grow by 10% to Rs 393 lakh crore.
Another bumper RBI dividend expected in FY27, disinvestments seen at Rs 80,000 cr
— The Indian government expects to get another bumper dividend from the Reserve Bank of India (RBI) in FY27, with the Union Budget estimating Rs 3.16 lakh crore as dividend from the central bank, public sector banks, and financial institutions as part of its non-tax revenues. Money from disinvestments is also seen rising sharply to Rs 80,000 crore.
— The RBI’s surplus — which was a record Rs 2.69 lakh crore in FY26 — makes up the bulk of the dividend from RBI, public sector banks, and financial institutions. The revised estimate (RE) for the current year has been raised to Rs 3.05 lakh crore from Rs 2.56 lakh crore.
Fertiliser subsidy zooms amid unrestrained consumption, weak rupee
— The Centre’s fertiliser subsidy bill for 2025-25 has overshot the budget estimate by over Rs 18,500 crore, while threatening to further spiral in the ensuing fiscal year from April 2026 to March 2027 – thanks to elevated international prices, a depreciating rupee and geopolitical tensions.
— The Union Budget for 2026-27 has targeted the total subsidy at Rs 1,70,799 crore: Rs 116,799 crore on urea and Rs 54,000 crore on other subsidies.
PAGE 6- INFRASTRUCTURE
7 City Economic Regions in 5 yrs; Surat, Varanasi, Vizag to benefit
— The Centre will set up seven City Economic Regions, including in Surat, Varanasi and Visakhapatnam, at an expenditure of Rs 5,000 crore each over a five-year period, according to the Budget 2026-2027 presented by Union Finance Minister Nirmala Sitharaman on Sunday.
— To start off, in 2026-2027, the Budget made an allocation of Rs 2,000.01 crore for two new schemes — City Economic Regions (CERs) and Regional Medical Hubs. As per the Budget, allocation has been made for setting up CERs in Bengaluru, Pune, Surat, Varanasi and Visakhapatnam besides the tricities of Bhubaneswar-Puri-Cuttack (in Odisha) and Coimbatore-Erode-Tiruppur (in Tamil Nadu) “for implementing their plans in PPP mode with a reform-cum-results based financing mechanism”.
Tax holiday for foreign firms setting up data hubs
— To capitalise on the boom in data centres led by the rapid adoption of artificial intelligence (AI) technology, Union Finance Minister Nirmala Sitharaman has proposed to provide a tax break until 2047 to foreign companies looking to set up such infrastructure in the country.
Building on SHANTI Act, govt powers nuclear sector with zero customs duty
— Months after the government enacted the SHANTI Act to open India’s nuclear sector to private players, the Union Budget 2026-27 on Sunday announced exemption on custom duty on imports of goods required for Nuclear Power Projects till the year 2035.
— Earlier, goods required for nuclear power generation such as Control and Protector Absorber Rods, Burnable Absorber Rods used to attract a custom duty of 7.5%. After the budget announcement, the same will be nil for these goods.
— The move aligns with the government’s ambition of scaling India’s nuclear capacity to 100 GWe by 2047 — more than ten times the current installed capacity of 8.8 GWe — and builds on the SHANTI Act’s removal of long-standing legal and regulatory barriers to private participation in the sector. Days ago, the draft National Electricity Policy (NEP) also signalled a significant policy shift – Nuclear power as potential replacement for thermal power in the country.
— The exemption on custom duty likely led to more imported Light Water Reactor (LWR)-based nuclear projects of the kind being set up by the Russians in Kudankulam.
Railways, highways continue to be primary drivers, take 47% of capex
— Union Finance Minister Nirmala Sitharaman on Sunday announced Rs 12.2 lakh crore for capital expenditure in FY27. Of this, Rs 2.94 lakh crore has been allocated for Road Transport and Highways, and Rs 2.78 lakh crore for the Railways. With Internal and Extra Budgetary Resources (IEBR) of Rs 15,000 crore, the total capex of Railways for FY27 stands at Rs 2.93 lakh crore. It is followed by Defence, Telecommunication and Housing & Urban Affairs.
— While there was no direct announcement related to the National Highways, a scheme for enhancement of Construction and Infrastructure Equipment (CIE) has been proposed, which will strengthen the domestic manufacturing of high-value and technologically-advanced construction equipment.
PAGE 7- MANUFACTURING
Gadget charge: Outlay doubled to Rs 40,000 cr for electronic components
— In a bid to strengthen India’s domestic supply chains, the Centre will nearly double the outlay for electronics components manufacturing scheme from the current Rs 23,000 crore to Rs 40,000 crore to capitalise on the strong traction the incentive programme has received so far, Union Finance Minister Nirmala Sitharaman said in her Union Budget speech on Sunday. The Union Cabinet cleared the scheme last March with an outlay of Rs 22,919 crore.
Road cleared to revive 200 legacy industrial clusters
— To boost the manufacturing ecosystem amid global supply chain shifts, Finance Minister Nirmala Sitharaman on Sunday announced schemes to revive 200 legacy industrial clusters. This comes amid steep competition for manufacturing jobs with China as well as East Asian economies.
Rs 10,000-crore SME Growth Fund, reform to boost liquidity for MSMEs
— Aiming to improve the liquidity for Small and Medium Enterprises (SME), Union Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore SME Growth Fund to ensure timely payments to SMEs.
Finance Minister Nirmala Sitharaman presenting Budget 2026-27. (Source: Screengrab/SansadTV)
— She also proposed four measures to maximise the potential of the Trade Receivables Discounting System (TReDS) platform — mandating it as the transaction settlement platform for all purchases that central power sector companies make from MSMEs, introducing a Credit Guarantee Support Mechanism (CGTMSE) through the credit guarantee fund trust for MSMEs for invoice discounting on the platform.
— It thereby links the Government E-marketplace with the platform for information sharing with financiers about government purchases from MSMEs, in turn encouraging cheaper and quicker financing, and introducing TReDS receivables as tradeable asset-backed securities.
Healing shakti: Rs 10,000 crore to promote India as hub for complex biological drugs
— To promote India as a manufacturing hub for complex biological drugs, Union Finance Minister Nirmala Sitharaman on Sunday announced the Biopharma Shakti mission, with an outlay of Rs 10,000 crore over next five years.
— The FM said the mission will also create a network of 1,000 accredited clinical trial sites — essential before taking these medicines to the market.
PAGE 8- TRADE, TARIFFS & REFORMS
Manufacturing gets big boost as govt slashes customs duties
— Finance Minister Nirmala Sitharaman on Sunday slashed basic customs duties (BCD) on a range of items to address the inverted duty structures and spur domestic manufacturing. This follows several similar measures in recent months, including the rollback of quality control of orders (QCOs).
Committee to align banks to next phase of India’s growth
— Finance Minister Nirmala Sitharaman Sunday proposed the constitution of a high-level committee to comprehensively review the banking sector and align it with the country’s next phase of growth.
— While presenting the 2026-27 Budget, Sitharaman spoke about the strengths in the country’s banking sector — strong balance sheets, historic highs in profitability, improved asset quality and coverage exceeding 98 per cent of villages in the country.
New baggage rules: Govt raises limit for duty-free imported goods to Rs 75,000
— The government on Sunday raised the limit for passengers bringing duty-free imported goods into India from Rs 50,000 to Rs 75,000 under the newly-notified Baggage Rules, 2026. The rules, which will come into effect from Monday, allow a passenger duty-free clearance of goods worth up to Rs 75,000 “carried on the person or in his bona fide baggage”.
— However, this does not apply to firearms, cartridges of firearms exceeding 50, cigarettes exceeding 100 sticks, cigars exceeding 25, tobacco exceeding 125 grams, alcohol in excess of 2 litres, gold or silver in any form other than ornaments, and televisions.
Rs 10K crore for container scheme amid shortage, dependency
— Finance Minister Nirmala Sitharaman, in her Union Budget speech on Sunday, announced a Rs 10,000 crore container manufacturing scheme amid a shortage of shipping containers in India that leads to dependency on China.
— The renewed focus on containers comes after Covid-19 and the Red Sea crisis brought to the fore India’s dependency on other countries.
— China is the largest exporter of containers and manufactures up to 95 per cent of these boxes, globally. Much of these containers are being manufactured in China by a handful of highly subsidised state-owned enterprises, which have sparked security concerns in the US, EU, and India.
PAGE 9- MARKETS & TAXATION
Those residing outside India can now invest more in equities
— Amid concern over capital outflows, Budget 2026-27 proposed hiking the overall investment limit for Persons Resident Outside India (PROIs) to 24% from 10% and individual investment limit to 10% from 5%. Finance Minister Nirmala Sitharaman said PROIs will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme.
— There will also be a comprehensive review of non-debt instruments rules under the Foreign Exchange Management Act (FEMA) to create a more contemporary user-friendly framework for foreign investment.
Share buyback proceeds to be taxed as capital gains
— In a move that would benefit individual investors, Finance Minister Nirmala Sitharaman in her Budget 2026-27 speech Sunday proposed changing the taxation of proceeds from buyback of shares to capital gains.
— Buyback of shares refers to a company’s repurchase of its own shares from existing shareholders. The process reduces the number of outstanding shares in the open market over a period which can lead to better valuation and earning per share (EPS).
Overseas spending eased, TCS down to 2%
— In a major relief for students pursuing education abroad, overseas travellers and individuals seeking medical treatment outside the country, the Union Budget 2026 has announced a substantial reduction in Tax Collected at Source (TCS) under the Liberalised Remittances Scheme (LRS). The TCS rate on remittances for foreign education, international travel packages and medical expenses has been slashed from 5 per cent to 2 per cent, easing the upfront tax burden on residents.
Penalties rationalised; more room for disclosure
— Providing additional room for disclosures, and some relief to individual taxpayers from penalties and prosecution, the Union Budget 2026-27 has introduced a comprehensive rationalisation of the tax penalty and prosecution framework, with measures including integration of assessment and penalty proceedings, decriminalisation of technical defaults, and expansion of immunity schemes. The Budget announcements by Finance Minister Nirmala Sitharaman also included a one-time foreign asset disclosure scheme for small taxpayers.
PAGE 10- SKILLS & JOBS
NIMHANS-2 in North; institutes in Tezpur, Ranchi to be upgraded
— In a significant step for mental health, India is set to get a second NIMHANS – this one in North India – while two other Centre-run mental health institutes, in Tezpur and Ranchi, will be strengthened.
— The announcement in this regard was made by Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2026-2027 on Sunday.
— Established in 1974 in Bengaluru, India’s lone NIMHANS (National Institute of Mental Health and Neurosciences) is a multidisciplinary institute for patient care, known for performing cutting-edge research in the field of mental health and neurosciences.
AI impact on jobs and services: Panel to look at the road ahead
— Renewing the government’s focus on the services sector in India, Union Finance Minister Nirmala Sitharaman in her Budget Speech on Sunday said a high-level ‘Education to Employment and Enterprise’ Standing Committee will be formed to recommend measures that focus on the services sector.
— The committee will prioritise areas to optimise the potential for growth, employment and exports. It will also assess the impact of emerging technologies, including AI, on jobs and skill requirements and propose related measures.
Soon, Buddhist Circuits and vibrant destinations
— Finance Minister Nirmala Sitharaman said in her Union Budget speech Sunday that the tourism sector has the potential to play a large role in employment generation, forex earnings, and expanding the local economy, as she announced a slew of measures for the sector, which hasn’t been able to touch the pre-pandemic figures of foreign tourist arrivals yet.
— Presenting the Union Budget 2026, Sitharaman proposed setting up a ‘National Destination Digital Knowledge Grid’ to digitally document all places of significance across the country, including cultural and spiritual, and a ‘National Institute of Hospitality’.
— Further, the finance minister also proposed to “develop 15 archaeological sites”, including Lothal, Dholavira, Rakhigarhi, Sarnath, Hastinapur, and Leh Palace into “vibrant experiential cultural destinations”.
— Bringing together the government’s focus on the Northeast and its push to establish India as the birthplace of Buddhism, Sitharaman proposed launching a Scheme for Development of Buddhist Circuits in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura. The scheme will cover preservation of temples and monasteries, pilgrimage interpretation centres, connectivity, and pilgrim amenities, Sitharaman said.
For a strong care system, FM shifts focus to allied health professionals
— Institutions for allied health professionals will be upgraded and new centres established in the private and government sector to train one lakh professionals over the next five years, Union Finance Minister Nirmala Sitharaman said on Sunday.
— The training institutes will cover 10 selected disciplines, including optometry, radiology, anaesthesia, OT technology, applied psychology and behavioural health, according to Sitharaman.
PAGE 11- NEW ECONOMY
In fresh chip push, focus shifts to supply chains, IP and equipment
— To sustain India’s semiconductor manufacturing push, Union Finance Minister Nirmala Sitharaman has announced the India Semiconductor Mission (ISM) 2.0 to produce equipment and materials, design full-stack Indian IP and fortify supply chains. The second iteration of the scheme will also have a focus on industry-led research and training centres to develop technology and skilled workforce in the country.
— The first iteration of the flagship scheme, announced in December 2021 with an outlay of around $10 billion, focused primarily on subsidising the setting up of semiconductor fabrication, and assembly and testing plants.
IT boost: Budget offers tax certainty with safe harbour reforms
— Identifying the tech services sector as a key driver in India’s developmental journey, Union Finance Minister Nirmala Sitharaman announced a slew of measures for IT services companies, as the sector faces heightened pressure from the proliferation of artificial intelligence (AI).
— The Budget proposes to club software development services, IT-enabled services (ITES), knowledge process outsourcing services and contract research and development services relating to software development under a single category of IT services with a common safe harbour margin of 15.5%.
— Further, the threshold for availing safe harbour for IT services will be enhanced from Rs 300 crore to Rs 2,000 crore. Safe harbour for IT services shall be approved by an automated rule-driven process, and once applied by an IT services firm, the same safe harbour can be continued for a period of five years at a stretch.
— Safe harbour taxation refers to provisions in tax laws that allow taxpayers to follow simplified, pre-defined rules, ensuring the tax authority will accept their declared transfer prices or tax liability without further audit or dispute.
PAGE 15- SOCIAL & AGRICULTURE
5 varsity townships, girls hostel in each district soon: FM
— Five University townships in the vicinity of industrial and logistics corridors, and a girls’ hostel in every district were among the key announcements for the education sector in the Union Budget.
— The Education Ministry has seen an 8% increase in allocation from around Rs 1.28 lakh crore last year to Rs 1.39 lakh crore this year, with a larger increase of Rs 5,649 crore in higher education (total allocation of Rs 55,727 crore), compared to an increase of Rs 4,990 crore in school education (total allocation of Rs 83,562 crore).
No mention in speech but Rs 95Kcr to VB-GRAMG
— The Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-GRAMG Scheme, which is poised to replace the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), did not find a mention in Union Finance Minister Nirmala Sitharaman’s budget speech but has received an allocation of Rs 95,692.31 crore for the financial year 2026-27.
16th Finance Commission recommends Rs 4.35-lakhcr grant for rural local bodies
— The Sixteenth Finance Commission has recommended a grant of ₹7.91 lakh crore for local bodies for the next five years (2026-27 to 2030-31), of which ₹4.35 lakh crore will be for rural local bodies, including gram panchayat, block panchayat and district panchayat, and ₹3.56 lakh crore for urban local bodies.
— The commission report was tabled by Union Finance Minister Nirmala Sitharaman in the Lok Sabha on Sunday.
— The grant recommended for the rural local bodies is almost double the amount recommended by the Fifteenth Finance Commission, which had recommended a grant of ₹2.37 lakh crore, of which ₹1.75 lakh crore has been released by the Centre till July 2025.
Bharat-VISTAAR to SHE Marts: Rural development gets a push
— From Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources) to SHE-Marts to promotion of high-value agriculture, Finance Minister Nirmala Sitharaman announced several new initiatives for the agriculture and rural sector in the Union Budget 2026-27.
— Among the new announcements for the agriculture sector was Bharat-VISTAAR, a multilingual AI tool that aims to provide information to farmers in their own language on crop planning, packages of practices and pests, weather forecasts, markets, scheme information, eligibility, application, and grievance.
— The Finance Minister allocated Rs 150 crore for the Bharat-VISTAAR for the next financial year (2026-27).
PAGE 16- PRESS MEET
At Rs 2,288 cr, Bhutan gets largest development aid share among neighbours
— Bhutan was on Sunday allocated the largest share of Rs 2,288 crore as development aid in the Union Budget for 2026-27, followed by Rs 800 crore to Nepal and Rs 550 crore each to the Maldives and Mauritius. In the latest Budget, the Ministry of External Affairs (MEA) was allocated a total of Rs 22,118 crore as against current fiscal’s Budget Estimate of Rs 20,516 crore and revised estimate of Rs 21,742 crore.
— For the next fiscal, the allocation for Bangladesh has been pegged at Rs 60 crore. While the budget allocation to Bangladesh for 2025-26 was Rs 120 crore, the revised estimate put the amount at Rs 34.48 crore as ties between the two sides have been strained in the last year and a half.
— In a departure from the last few years, no allocation has been made for the Chabahar Port project amid the US-Iran tensions. In the Budget last year, an amount of Rs 100 crore was set aside for the project and the amount increased to Rs 400 crore in the revised estimate.
— While Sri Lanka has been allocated Rs 400 crore, an amount of Rs 300 crore has been set aside for Myanmar.
Do You Know:
— The Union Budget (technically called the Annual Financial Statement under Article 112 of the Constitution of India) lays out an account of the government’s financial health. It tells the citizens not only how much money the government raised last year, where it spent it, and how much it had to borrow to meet the gap, but also gives an estimate of what it expects to earn in the next financial year (in the present case, the current financial year), how much and where it plans to spend it, and how much it would likely have to borrow to bridge the gap.
— The Revenue and the Capital sections together, make the Union Budget. The Budget is caused to be presented before both the houses of the Parliament by the President. It is presented by the Finance Minister with Budget Speech.
Other Important Articles Covering the same topic:
📍After bids to boost consumption, focus back on supply side
📍Union Budget 2026 : Key highlights for UPSC and other competitive exams
📍To cut China reliance, support for rare earths, critical minerals
Previous year UPSC Prelims Questions Covering similar theme:
(1) A country’s fiscal deficit stands at 50,000 crores. It is receiving 10,000 crores through non-debt creating capital receipts. The country’s interest liabilities are 1,500 crores. What is the gross primary deficit? (UPSC CSE 2025)
(a) 48,500 crores
(b) 51,500 crores
(c) 58,500 crores
(d) None of the above
(2) Along with the Budget, the Finance Minister also places other documents before the Parliament which include ‘The Macro Economic Framework Statement’. The aforesaid document is presented because this is mandated by (UPSC CSE 2020)
(a) Long standing parliamentary convention
(b) Article 112 and Article 110(1) of the Constitution of India
(c) Article 113 of the Constitution of India
(d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003
Previous year UPSC Mains Question Covering similar theme:
Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets. (UPSC CSE 2021)
The public expenditure management is a challenge to the Government of India in the context of budget-making during the post-liberalization period. (UPSC CSE 2019)
FRONT
Syllabus:
Preliminary Examination: Current events of national importance, Economic development.
Mains Examination: General Studies-II, III: Government Budgeting, Effect of policies and politics of developed and developing countries on India’s interests, Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
What’s the ongoing story: The UNION Budget 2026-27 has accommodated several US-focussed demands raised during ongoing trade negotiations while upping support for the most tariff-vulnerable sectors, such as textile, footwear and marine products. The aim is to prepare them for diversification in the face of 50 per cent US tariffs. While the US trade deal remains elusive, other markets are set to open up following implementation of trade deals, particularly the UK and the EU.
Key Points to Ponder:
— What are tariffs and how do tariffs work?
— How do countries generally retaliate against tariffs, and what are the potential consequences of such retaliatory measures?
— What is the impact of the US tariff on India?
— Read about the India-US trade deal.
— What is a tax holiday?
— What is Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025?
— What are Special Economic Zones?
— Read about the Quality Control Orders.
— How does the Union Budget support tariff-vulnerable sectors such as textiles, footwear and marine products?
— What measures have been announced to support the textile and apparel sector in India?
Key Takeaways:
— In her Budget speech, Finance Minister Nirmala Sitharaman announced a tax holiday until 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India, a move that directly benefits top American companies in expanding their foothold in India. The Budget has also proposed the elimination of duty on aircraft components and nuclear-generation equipment. The US is the global market leader in the aviation sector, and is one of the largest exporters of nuclear reactor components.
— For the domestic sector, Sitharaman announced a host of measures, particularly in the textile sector, to increase productivity, including capital support for textile machinery in clusters and a targeted scheme to boost the availability of input items — a longstanding challenge.
— As part of the bilateral trade agreement negotiations, the US had sought greater market access for its companies looking to establish their data centres in India. The demands are understood to have included tax breaks, affordable access to resources like land, energy and water, and duty exemptions on some imports. With the announcement of a tax holiday until 2047 to foreign companies for setting up data centres in the country, the government has acted on one of the US’s key demands.
— However, the tax break comes with some riders: the companies would need to provide services to Indian customers through an Indian re-seller entity.
— Several US companies have announced massive investments in setting up data centres in India to fuel artificial intelligence’s hunger for such infrastructure. Last month, Union IT Minister Ashwini Vaishnaw said that private investments in India’s AI infrastructure could double from last year’s $70 billion by the end of the ongoing financial year (FY26).
— With the passage of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, and opening the sector for private players to enter the operations side of the tightly-governed nuclear power sector, the government had already addressed a key US demand.
— On Sunday, the Budget proposed zero customs duty on nuclear-generation equipment, absorber rods and project imports for all registered nuclear plants until 2035, signalling long-term market access. In the aviation sector too, India has eliminated duties on aircraft components and Maintenance, Repair and Operations (MRO) inputs, benefiting US aerospace firms and engine and maintenance suppliers.
— Aimed at preventing job losses in the Special Economic Zones (SEZs), Sitharaman announced “a special one-time” measure to facilitate sales by eligible manufacturing units in SEZs to the Domestic Tariff Area (DTA) at concessional duty rates.
— SEZs are zones which receive a simplified system of official clearances and procedures, and other duty benefits aimed at spurring investments and manufacturing. The Budget announcement comes amid distress calls from SEZ units that completely depend on the US market and are on the verge of closure due to US tariffs under President Donald Trump.
— Amid concerns of irreversible damage to the textile sector due to tariffs and missed Summer orders, Sitharaman announced an integrated programme aimed at modernising the sector, focusing on each segment of the supply chain.
— She announced the National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres; Textile Expansion and Employment Scheme to “modernise traditional clusters with capital support for machinery”, technology upgradation and common testing and certification centres; National Handloom and Handicraft programme to “integrate and strengthen existing schemes and ensure targeted support for weavers and artisans”; and Tex-Eco Initiative to promote “globally competitive and sustainable textiles and apparel”.
— After broad-based reforms, including the elimination of certain Quality Control Orders (legal directives issued by the government) and the reduction of duty on key input items such as cotton, Sitharaman announced further easing of the duty structure.
— Indicating emphasis on the labour-intensive sector, she proposed to increase the limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1% to 3% of the Free on Board (FOB) value of the previous year’s export turnover.
— Sitharaman announced a Rs 10,000 crore container manufacturing scheme amid the continued shortage of the large boxes essential for trade, as well as India’s dependency on China for their supply. The allocation covers a five-year period and is aimed at creating “a globally competitive container manufacturing ecosystem.”
Do You Know:
— Tariffs are taxes or duties imposed by a government on imported goods and services. Their objective is to make foreign products more expensive compared to domestically produced goods, thereby encouraging consumers to prefer local products.
— Tariffs also act as a protective measure for domestic industries against foreign competition. Additionally, they serve as a source of revenue for the government.
Other Important Articles Covering the same topic:
📍UPSC Issue at a Glance | Tariff war: 4 Key Questions You Must Know for Prelims and Mains
UPSC Prelims Practice Question Covering similar theme:
(3) Consider the following statements:
1. Tariffs are taxes or duties imposed by a government on imported goods and services.
2. Objective of tariffs is to make foreign products more expensive compared to domestically produced goods
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
NATION
Syllabus:
Preliminary Examination: Indian Polity and Governance-Constitution, Public Policy, Rights Issues, etc.
Mains Examination: General Studies-I, II: Population and associated issues, Government policies and interventions for development in various sectors and issues arising out of their design and implementation, Government Budgeting.
What’s the ongoing story: Although enumeration for the National Population Register (NPR) has not been notified yet, the Union Budget 2026-27 has allocated Rs 6,000 crore for NPR and Census 2027. The NPR, under the Census rules, is supposed to be conducted with the Houselisting phase of the Census. The Houselisting phase has been notified to be carried out between April 1 and September 30 this year. There is no mention of NPR in this notification.
Key Points to Ponder:
— What are the constitutional provisions related to citizenship?
— What is the National Population Register?
— National Register of Citizens and NRP – know the difference
— What is the census and its significance?
— What is the history of the census in India?
— Read about the Office of the Registrar General of India.
— What are the powers and functions of RGI?
— Read about the Citizenship Act, 1955 and Citizenship Amendment Act.
Key Takeaways:
— Under the head of “Census, Survey and Statistics/Registrar General of India (RGI)”, the Union Budget has allocated Rs 6,000 crore, of which Rs 218 crore is capital expenditure. The Budget describes this allocation as including “provisions for the office of the Registrar General and Census Commissioner of India and various schemes of RGI including National Population Register (NPR) and expenditure on Census, 2027”.
— The NPR, which is the enumeration of the usual residents of the country, has been a controversial exercise. It ran into rough weather in 2019 following the passage of the Citizenship Amendment Bill in the Parliament as it was seen paving the way for the conduct of the National Register of Citizens (NRC), which Opposition leaders alleged was being proposed to deprive minorities of citizenship.
— In response to public protests, while several states passed resolutions opposing the exercise in their respective Assemblies, the Centre itself put it on the back burner, even though the Union Cabinet had approved Rs 3,941.35 crore for the NPR exercise then.
— With respect to the allocation for NPR in this Union Budget, a Ministry of Home Affairs (MHA) official said that no decision had been taken on conducting the NPR exercise yet. “There is no notification for the conduct of NPR. The allocation is in line with what has been made in previous budgets since 2020-21. The allocation has been made keeping in mind that if and as and when the government decides to conduct the NPR, the funds are there,” the official said.
— The NPR is the precursor to the NRC and the same stands enshrined in law. The NPR is governed by the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003. The rules were framed under sub-sections (1) and (3) of Section 18 of the Citizenship Act, 1955.
— As per Rule 3, which provides for NRC, and sub-rule (4), “The Central Government may, by an order issued in this regard, decide a date by which the Population Register shall be prepared by collecting information relating to all persons who are usually residing within the jurisdiction of Local Registrar.”
— Sub-rule (5) of the Rule then says, “The Local Register of Indian citizens shall contain details of persons after due verification made from the Population Register.”
— Under Rule 4, titled “Preparation of the National Register of Indian Citizens”, sub-rule 4 says, “During the verification process, particulars of such individuals, whose Citizenship is doubtful, shall be entered by the Local Registrar with appropriate remark in the Population Register for further enquiry and in case of doubtful Citizenship, the individual or the family shall be informed in a specified proforma immediately after the verification process is over.”
— Under Rule 7, the head of the family is supposed to provide correct information to enumerators during the NPR exercise, failing which he shall be penalised (under Rule 17) with a fine extending up to Rs 1,000.
— The data for NPR was first collected in 2010 along with the house listing phase of the 2011 Census. In 2015, this data was further updated in a door-to-door survey.
Do You Know:
— In pursuance to provisions contained in Citizenship Rules, 2003 framed under the Citizenship Act, 1955, the National Population Register is prepared by collecting information relating to all persons who are usually residing in the country.
— The first non-synchronous, nationwide census was in 1872. This census involved counting individuals across most parts of the country; however, it did not include all territories under British control.
— The first synchronous census of India was conducted in 1881.It was conducted by W.C. Plowden.
Other Important Articles Covering the same topic:
📍Explained: What is Citizenship Amendment Act?
📍Explained: Why NPR isn’t NRC, and yet
📍Knowledge Nugget | Census 2027 and Registrar General of India: A must-know for UPSC Exam
Previous year UPSC Prelims Question Covering similar theme:
(4) Consider the following statements with reference to the census in India:
1. The first All India Census was attempted in 1872.
2. From 1881, decennial censuses became a regular feature.
Which of the statements given above is/are correct? (UPSC-CDS(II) – 2024)
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
(Note: The aspirants should also refer to the questions from other competitive exams conducted by the UPSC which might be useful for UPSC–CSE.)
THE EDITORIAL PAGE
Syllabus:
Preliminary Examination: Current events of national importance, Economic development.
Mains Examination: General Studies-II, III: Government Budgeting, Government policies and interventions, Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
What’s the ongoing story: N.K. Singh and Nicholas Stern writes- “In an earlier article (‘History doesn’t end today, our old compass has run its course’, IE, December 31, 2025), we examined India’s policy challenges in an unsettled global environment. This article revisits that framework. Assessing the Union Budget against the templates we had outlined, we find that it has been marked by much greater openness to recognising trade as an engine of growth. The Finance Minister’s mantra this year has been capital, technology, and export competitiveness. This philosophy was behind the trade agreements with the EU and the UK, as well as Australia, the UAE and Oman.”
Key Points to Ponder:
— Read about the current account deficit, revenue buoyancy, fiscal deficit, fiscal consolidation.
— What is the debt-to-GDP ratio?
— Know about the Fiscal Responsibility and Budget Management Act.
— What are the trade agreements recently signed by India with different countries?
— How has geopolitical uncertainty impacted capital flows, technology access and global trade?
— What do you understand by the term “Goldilocks economy”?
— What is meant by “crowding in” of private investment?
— What are City Economic Regions (CERs)?
— What are the challenges faced by the Indian economy?
— What are the key highlights of the Economic Survey 2025-26?
Key Takeaways:
— “The Economic Survey cautions that a persistent current account deficit (CAD) raises India’s macro risk premium and keeps interest rates elevated. But eliminating the CAD of 1.3 per cent of GDP in Q2 FY26 by running down reserves would be counterproductive. India has sustained larger deficits in the past while maintaining adequate reserve buffers. During my chairmanship of the FRBM Review Committee, we placed sustainable CAD at around 2.3 per cent of GDP.”
— “While real activity outpaces nominal growth, revenue buoyancy has weakened even as fiscal demands intensify. This strains the exchequer at a time when debt sustainability and macroeconomic management are becoming more binding. The challenges of India’s “Goldilocks” economy call for the following blueprint:
— “First, fiscal credibility must be judged not only by headline deficit reduction but by the composition and economy-wide effects of public spending… Public capex has risen to Rs 11.21 lakh crore, while the general government debt-to-GDP ratio has declined by over seven percentage points. GST provides a new source of information as well as revenue, and encourages movement from informal to formal. Yet the fiscal stance must also be assessed against the domestic savings constraint.”
— “Government borrowing absorbs a large share of net household financial savings, which corporations no longer rely on. The shift in household savings toward greater risks on the stock market could raise borrowing costs rather than larger deficits. This is particularly relevant for manufacturing and smaller firms, where the cost of capital remains elevated. Fiscal discipline must crowd in private investment rather than pre-empt it. Public investment in efficient and clean infrastructure can open up opportunities for new private investment.”
— “Second, state finances reinforce this concern. State deficits have risen since FY22, reaching around 3.2 per cent of GDP in FY25, while state debt remains close to 28 per cent of GDP. In integrated sovereign debt markets, sub-national slippages raise borrowing costs for all. Cooperative fiscal federalism must move beyond transfers toward shared discipline and credible rules.”
— Third, private investment remains the bridge between macroeconomic stability and sustained growth. The Centre is leading by example with additional grants of Rs 1.6 lakh crore to raise states’ capex. States must play a larger role, though capex cannot remain the primary growth engine…The Budget emphasises simplified regulations, faster contract enforcement, and lowering the economy-wide cost of capital.”
— “Fourth, competitiveness and trade access are increasingly shaped by climate…The Budget strengthens competitiveness through rationalised customs duties, correction of inverted duty structures, faster MSME payments, and stronger private R&D. Climate risks to manufacturing now need to be addressed directly. Reducing emissions from cement and steel, supported by the Budget’s focus on carbon capture utilisation and storage, will be good for India while enabling exports to Europe and elsewhere.”
— “India must preserve atmanirbharta while deepening ties with trusted partners, particularly in the Asian economy. Call it Carney-ism: A blunt warning that we are living through a rupture, the old order is dead, and the transition disorderly. Influence will accrue to those capable of forming agile alliances across trade, energy, and security. The challenges will include finance, investment, energy, climate, biodiversity and security. The Budget implicitly acknowledges these as it seeks to protect growth.”
— “Cities generate a disproportionate share of output and FDI. The FM’s Budget speech highlighted the development of City Economic Regions (CERs), with funding of Rs 5,000 crore per CER over five years linked to results…Without stronger municipal finance and governance, India risks losing agglomeration benefits in labour absorption and capital attraction. Pollution and congestion are a major constraint on talent, investment, and growth. Urban infrastructure needs reforms that reduce emissions, manage mobility and improve service delivery. Stronger, cleaner public transport spurs inclusion and creates opportunities for poor people to benefit from urban growth.”
— “In a harsher global environment, this Budget positions India not merely to grow, but to govern growth with judgement and resilience. We are in the classic Schumpeterian case, often associated with “creative destruction”. This Budget provides new opportunities for investing in the new and enhancing India’s creativity.”
Other Important Articles Covering the same topic:
📍History doesn’t end today, our old compass has run its course
Previous year UPSC Prelims Question Covering similar theme:
(5) Consider the following statements: (UPSC CSE 2018)
1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
|
ALSO IN NEWS
|
| Finance Minister has bypassed large parts of farm sector |
Ashok Gulati, Purvi Thangaraj write- “The first advance estimates for GDP in 2025-26 present a sobering picture for agriculture. While the overall GDP growth is projected at 7.4 per cent, agriculture growth is likely to slow down from 4.6 per cent in FY25 to 3.1 per cent in FY26. Expectations that the Union Budget will give a booster dose to the sector, which employs 45 per cent of the workforce and contributes roughly 17 per cent to the overall GDP, have been belied. The business-as-usual approach of subsidies dominating over developmental expenditures continues.
Farm and allied sectors have received Rs 1.63 lakh crore. The Ministry of Agriculture and Farmers’ Welfare (MoAFW) received Rs 1.4 lakh crore in FY27 (budget estimate, BE), an increase of 5.4 per cent from Rs 1.33 lakh crore in FY26 (revised estimate or RE). Within the MoAFW, the Department of Agricultural Research and Education has seen a 3 per cent decrease. The allocation to the Ministry of Fisheries, Animal Husbandry, and Dairying increased by 26.7 per cent — a step in the right direction.
The vision of Viksit Bharat cannot be realised without a stronger and more productive rural economy. Developmental expenditures are the only way to improve rural livelihoods. But the higher share of welfare measures and subsidies compared to MoAFW’s budget does not advance this goal.
Our prescription for addressing this imbalance is straightforward: Invest in agricultural research and development…As the Economic Survey pointed out, a gradual shift from product-based fertiliser subsidies to per-acre, crop and agro-climatic zone-linked income support, combined with investments in soil testing and extension, will protect farmers while reducing distortions. The Budget has failed to bite the bullet. |
| Higher tax share for south states, Hindi heartland states see dip |
The five southern states of Karnataka, Kerala, Andhra Pradesh, Telangana and Tamil Nadu will see an increase in their allocation from the divisible pool of taxes, as recommended by the 16th Finance Commission, while the five Hindi heartland states ruled by the BJP and its allies — Uttar Pradesh, Bihar, Madhya Pradesh, Chhattisgarh and Rajasthan — will see a significant decline. Southern states have been demanding a higher share from the Finance Commission, citing their better performance on various developmental indicators. Introduction of ‘contribution to GDP’ as a new criteria with 10 per cent weight and lowering the weight for ‘area’ criteria to 10 per cent from 15 per cent, seem to have worked in favour of southern states. |
| Government is talking about menopause. Society must, too |
Rinku Ghosh- “For long, menopause was an inconvenient truth, never given priority in public health narratives. At best, it has been seen as a sad denouement of a woman’s reproductive life, at worst, an irritable mood swing, a foible even. Considering that women’s health in general is circumscribed by their ability to birth a generation, with even chronic illnesses like heart disease coming with a gendered priority tag, menopause is largely seen as an end-of-life compromise or endurance.
Some argue that it is not a disease, so it has been the least researched, least lobbied for, and least addressed. That’s why when the Maharashtra government launched the country’s first state-run menopause clinics across government hospitals and urban health facilities, a model followed by Kerala days later, it marked more than a significant shift in public health policy.” |
| PRELIMS ANSWER KEY |
| 1. (a) 2. (d) 3. (c) 4.(c) 5. (c) |
Join us in the next edition of Explained.Live with Prachi Mishra, Professor of Economics, Director and Head, Isaac Centre for Public Policy, Ashoka University in conversation with Sidharth Upasani, Deputy Associate Editor, The Indian Express
Register now: https://zoom.us/webinar/register/8417700282116/WN_a0KekEOLQyyL2oyhMTDL4g
February 4, 2026 | 6:00 PM | Zoom
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Finance Minister Nirmala Sitharaman presenting Budget 2026-27. (Source: Screengrab/SansadTV)
