Union Budget 2026: Date, Structure, Process, History, and Key Highlights

The Union Budget 2026 is one of the most significant policy documents of the Government of India. It is not merely an annual statement of income and expenditure. Rather, it reflects the government’s economic priorities, fiscal strategy, and long-term policy direction.

For policymakers, economists, and especially UPSC aspirants, the Union Budget is a crucial framework that explains how the State mobilises resources, allocates funds, and responds to economic challenges. Therefore, understanding its date, structure, constitutional basis, process, and components is essential.

Union Budget 2026–27: Important Highlights of Budget Speech

• Union Finance Minister Nirmala Sitharaman presented her 9^th Union Budget at Kartavya Bhawan on 1^st February, 2026.
• First, the Finance Minister (FM) said that India achieved stability, fiscal discipline, steady growth, and moderate inflation in the last 12 years.
• Moreover, the government chose action over ambivalence, reform over rhetoric, and people over populism.
• At the same time, the FM kept Aatmanirbharta as the core focus to build capacity and cut import dependence.

Economy & Global Context:

• Today, the Finance Minister warned that trade and multilateralism are under pressure and supply chains face disruptions.
• Meanwhile, new technologies are raising demand for water, energy, and critical minerals.
• Therefore, India will stay globally integrated, export more, and attract stable long-term investment.

Part A:

Vision and “3 Kartavya”:

• First, the Budget aims to convert aspiration into achievement and ensure growth reaches farmers, SC/ST, youth, women, and the poor.
• Additionally, ideas from Viksit Bharat Young Leaders Dialogue 2026 inspired proposals, making it a ‘Yuva Shakti-driven Budget’.
• Notably, this is the first Budget prepared in Kartavya Bhawan.

The 3 Kartavya:

• First, the government will speed up growth by raising productivity and building resilience.
• Second, it will fulfil aspirations by improving skills and capacity.
• Third, aligning with our vision of Sabka Sath Sabka Vikas, it will ensure equal access to resources and opportunities for all regions and sectors.

Support System for the 3 Kartavya:

• First, the Finance Minister stressed continuous structural reforms.
• Second, she highlighted a strong financial sector to mobilise savings and manage risks.
• Third, she pushed cutting-edge technologies including AI applications as governance multipliers.

Reform Express:

• First, the government rolled out 350+ reforms after Independence Day 2025.
• These include GST simplification, Labour Codes notification, and rationalised Quality Control Orders.
• Moreover, the Centre is working with States to reduce compliance and deregulate.
• Therefore, the Reform Express will continue with full momentum.

Growth Strategy: 6 Focus Areas:

• First, the Finance Minister proposed action in six areas:
  • Scale up manufacturing in 7 strategic sectors
  • Rejuvenate legacy industries
  • Create Champion MSMEs
  • Push infrastructure
  • Ensure energy security
  • Develop City Economic Regions

Manufacturing: Key Schemes

• First, the FM announced Biopharma SHAKTI with ₹10,000 crore (5 years) to boost biologics and biosimilars.
• Moreover, it includes 3 new NIPERs, upgrades to 7 existing NIPERs, and 1,000+ clinical trial sites.
• Next, India will launch India Semiconductor Mission (ISM) 2.0 to build equipment, materials, and full-stack design.
• Additionally, the Electronics Components Scheme outlay will rise to ₹40,000 crore.
• Further, the government will support Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
• Also, it will set up 3 Chemical Parks to cut import dependence.

Capital Goods & Logistics:

• First, CPSEs will set up 2 Hi-Tech Tool Rooms for precision manufacturing.
• Next, a new scheme will strengthen construction and infra equipment manufacturing.
• Additionally, Container Manufacturing will get ₹10,000 crore (5 years).

Textiles, Handloom & Rural Industry:

• First, the FM launched an Integrated programme with 5 sub-parts for the labour intensive textile sector (fibres, cluster modernisation, handloom support, sustainable textiles, skilling).
  • National Fibre Scheme – for self-reliance in natural fibre.
  • Textile Expansion and Employment Scheme – modernize traditional clusters.
  • National Handloom and Handicraft Programme – to integrate and strengthen existing schemes, ensure targeted support for weavers and artisans.
  • Tex-Eco Initiative – promote globally competitive and sustainable textiles and apparels.
  • Samarth 2.0 – modernize and upgrade the textile skilling ecosystem.
• Moreover, the government will build Mega Textile Parks in challenge mode.
• Additionally, Mahatma Gandhi Gram Swaraj initiative will boost khadi, handloom, and handicrafts.
• Also, a dedicated initiative will promote sports goods manufacturing.

Legacy Industrial Clusters:

• First, the FM proposed reviving 200 legacy industrial clusters with infra and tech upgrades.

MSMEs: Champion Strategy

• First, the FM announced a ₹10,000 crore SME Growth Fund for future champions.
• Additionally, she topped up the Self-Reliant India Fund by ₹2,000 crore for micro-enterprise risk capital.

Liquidity Boost via TReDS:

• First, CPSEs must use TReDS for MSME purchases.
• Next, CGTMSE-backed credit guarantee will support invoice discounting on TReDS.
• Moreover, GeM will link with TReDS to improve financing speed.
• Finally, TReDS receivables may become asset-backed securities to improve liquidity.

Corporate Mitras:

• Additionally, ICAI/ICSI/ICMAI will train Corporate Mitras to help MSMEs with compliance in Tier 2 and Tier 3 towns.

Infrastructure Push:

• First, public capex will rise to ₹12.2 lakh crore in FY 2026–27.
• Moreover, an Infrastructure Risk Guarantee Fund will give partial credit guarantees to lenders.
• Additionally, CPSE assets will be monetised faster through dedicated REITs.

Green Freight and Connectivity:

• First, a Dedicated Freight Corridor will connect Dankuni to Surat.
• Next, the government will operationalise 20 new National Waterways in 5 years.
• Moreover, a Coastal Cargo Promotion Scheme will raise waterways share from 6% to 12% by 2047.
• Also, seaplane manufacturing will get incentives and a Seaplane VGF Scheme will support operations.

Climate Action:

• First, the FM proposed ₹20,000 crore (5 years) for CCUS (Carbon Capture) across major industries.

City Economic Regions & Rail:

• First, the government will develop City Economic Regions with ₹5,000 crore per CER (5 years) via challenge mode.
• Moreover, 7 High-Speed Rail corridors will connect key city routes as growth connectors. These are – Mumbai – Pune, Pune – Hyderabad, Hyderabad – Bengaluru, Hyderabad – Chennai, Chennai – Bengaluru, Delhi – Varanasi, Varanasi – Siliguri.

Financial Sector Reforms:

• First, the FM proposed a High-Level Committee on Banking for Viksit Bharat.
• Next, the government will restructure Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to scale public sector NBFC efficiency.
• Moreover, the government will review FEMA Non-debt Instruments Rules to ease foreign investment.
• Also, the Budget proposed stronger corporate bond market tools like market-making and return swaps.
• Additionally, big cities will get a ₹100 crore incentive for municipal bond issues above ₹1,000 crore.

Services, Skills & Capacity Building:

• First, the FM said 25 crore people moved out of multidimensional poverty in the last decade.
• Therefore, the government will boost the services sector as a major growth engine.
• Next, a High-Powered Education to Employment and Enterprise Committee will target 10% global services share by 2047.

Job Creation Sectors:

• First, the government will add 1 lakh Allied Health Professionals in 5 years.
• Moreover, it will train 1.5 lakh caregivers in the coming year.
• Next, it will set up 5 Medical Value Tourism hubs with AYUSH and research support.
• Additionally, it will set up 3 new All India Institutes of Ayurveda and upgrade AYUSH labs.
• Also, the government will support Animation, Visual Effects, Gaming and Comics (AVBC) labs in 15,000 schools and 500 colleges.
• Further, it will build 5 University Townships near industrial corridors.
• Moreover, it will build one girls’ hostel in every district for STEM students.

Tourism, Culture & Sports:

• First, a National Institute of Hospitality will be created by upgrading NCHMCT.
• Next, 10,000 tourist guides will be trained across 20 sites.
• Additionally, a National Destination Digital Knowledge Grid will document heritage sites.
• Moreover, 15 archaeological sites will become experiential destinations.
• Also, the Khelo India Mission will expand sports talent pathways and infrastructure. The mission will facilitate – integrated talent development pathway, systematic development of coaches and support staff, integration of sports science and technology, competition and league to promote sports culture and development of sports infrastructure.

Agriculture, Women & Social Justice:

• First, fisheries support will cover 500 reservoirs and Amrit Sarovars.
• Next, animal husbandry support will build value chains and livestock FPOs.
• Moreover, high-value crops like coconut, cashew, cocoa, sandalwood, agarwood, and nuts will get support.
• Additionally, Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources) will provide multilingual AI-based farm advisory using AgriStack.
• Also, Self-Help Entrepreneur (SHE)-Marts will help rural women-led enterprises with credit and retail outlets.

Divyangjan & Mental Health:

• First, Divyangjan Kaushal Yojana will deliver customised, job-linked training.
• Next, Divyang Sahara Yojana will strengthen ALIMCO and expand assistive device markets.
• Moreover, the government will set up NIMHANS-2 and upgrade National Mental Health institutes in Ranchi and Tezpur.

Purvodaya & North-East Focus:

• First, the government will develop an East Coast Industrial Corridor with a node at Durgapur.
• Next, it will create 5 tourism destinations in Purvodaya states and provide 4,000 e-buses.
• Moreover, a Buddhist Circuit Scheme will cover Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura. This scheme will cover preservation of temples and monasteries, pilgrimage interpretation centres, connectivity and pilgrim amenities.

16^th Finance Commission & Fiscal Numbers:

• First, the government accepted 41% vertical devolution as per the 16th Finance Commission.
• Moreover, states will get ₹1.4 lakh crore as Finance Commission grants in FY 2026–27.
• Finally, the fiscal deficit is projected at 4.3% of GDP, while debt-to-GDP improves to 55.6% for 2026-27.

Union Budget 2026 Date and Presentation:

The Union Budget 2026 is presented on 1st February 2026, continuing the practice followed since 2017.

Importantly, the Budget will be presented after the release of the Economic Survey. This sequencing is crucial because:

• The Economic Survey assesses the current state of the economy.
• It identifies key challenges and growth drivers.
• The Budget proposals are largely shaped by this assessment.

As a result, the Union Budget and Economic Survey together provide a coherent macroeconomic narrative for the coming financial year.

What Is the Union Budget?

Constitutional Meaning of the Union Budget:

In constitutional terms, the Union Budget is known as the Annual Financial Statement, as provided under Article 112 of the Constitution of India.

Interestingly, the word “Budget” does not appear anywhere in the Constitution. However, the document performs a vital constitutional function.

It presents estimated receipts of the Government of India and estimated expenditure for the upcoming financial year.

Most importantly, it seeks Parliament’s approval for taxation and public spending, thereby ensuring democratic control over public finances.

Important Constitutional Provisions Related to the Union Budget:

The Union Budget of India is deeply rooted in the Constitution of India, which clearly lays down the legal framework for taxation, expenditure, parliamentary control, and financial accountability. Several constitutional articles govern different stages of the budget process – from presentation and approval to audit and borrowing. For UPSC and other civil services aspirants, a clear understanding of these provisions is essential, as questions are frequently asked from this area in both Prelims and Mains.

Important Constitutional Articles Related to the Union Budget:

Article	Provision
Article 109	Special procedure in respect of Money Bills
Article 110	Definition of Money Bills
Article 112	Annual Financial Statement (Union Budget)
Article 113	Procedure in Parliament with respect to Estimates
Article 114	Appropriation Bills
Article 115	Supplementary, Additional or Excess Grants
Article 116	Vote on Account, Vote of Credit and Exceptional Grant
Article 117	Special provisions relating to Financial Bills
Article 150	Form of accounts of the Union and the States
Article 151	Audit reports of the Comptroller and Auditor-General of India
Article 265	Taxes not to be imposed except by authority of law
Article 266	Consolidated Fund and Public Account of India and the States
Article 267	Contingency Fund
Article 275	Grants from the Union to certain States
Article 280	Finance Commission
Article 281	Recommendations of the Finance Commission
Article 292	Borrowing by the Government of India

Together, these constitutional provisions form the backbone of India’s budgetary and financial governance system. Articles 109–117 govern the legislative procedure of the Union Budget, while Articles 266–267 deal with public funds and expenditure. Meanwhile, Articles 280–281 strengthen fiscal federalism through the Finance Commission. For aspirants, mastering these articles helps in understanding how the Union Budget operates within constitutional limits, making this topic highly relevant for UPSC, APSC and APPSC Prelims, Mains GS-II, and GS-III.

Significance of the Union Budget:

In practical terms, the Union Budget reflects:

• The government’s development priorities.
• Its assessment of economic challenges and opportunities.
• Its approach to growth, welfare, infrastructure, and fiscal discipline.
• Its broader vision for national resource mobilisation and allocation.

The Budget is prepared by the Department of Economic Affairs under the Ministry of Finance, in coordination with all ministries and departments.

History of the Union Budget in India:

Budget During the Colonial Period:

India’s budgetary tradition began during British rule. The first budget in India was presented on 7th April 1860 by James Wilson, the first Finance Member of the Viceroy’s Council.

Budget After Independence:

After Independence, the first Union Budget of independent India was presented on 26th November, 1947 by R. K. Shanmukham Chetty. This marked the beginning of India’s own fiscal journey as a sovereign nation.

Union Budget Process – From Presentation to Law:

The passage of the Union Budget follows a well-defined constitutional and parliamentary procedure.

Step 1: Budget Presentation in Parliament

The Finance Minister presents the Budget in Parliament. This is followed by a general discussion, where Members of Parliament debate on:

• Overall policy direction
• Economic priorities
• Broad fiscal strategy

At this stage, detailed figures are not discussed.

Step 2: Examination by Standing Committees

Next, the Department-related Standing Committees of Parliament examine the Demands for Grants of various ministries.

These committees:

• Scrutinise budgetary allocations
• Assess policy intent
• Submit reports that guide further debate

Step 3: Voting on Demands for Grants

The Lok Sabha then discusses and votes on the Demands for Grants. Once approved, two key legislations are passed:

• Appropriation Bill – authorises withdrawal of funds from the Consolidated Fund of India.
• Finance Bill – gives legal backing to taxation proposals.

Through this process, the Union Budget becomes a legally enforceable financial document.

What is the Structure of the Union Budget?

At a broad level, the Union Budget is divided into two main components:

1. Revenue Budget:

The Revenue Budget deals with the government’s routine financial operations.

It includes:

• Tax revenue and non-tax revenue.
• Expenditure on administration.
• Subsidies, salaries, and pensions.
• Interest payments and day-to-day government functions.

In short, it focuses on current income and recurring expenditure.

2. Capital Budget:

In contrast, the Capital Budget focuses on long-term financial transactions.

It includes:

• Capital receipts such as borrowings and disinvestment.
• Capital expenditure on infrastructure.
• Asset creation and long-term investments.

This component supports economic growth and development capacity.

Two Conceptual Parts of the Union Budget:

From a policy perspective, the Union Budget can also be understood in two conceptual parts.

Macroeconomic and Policy Component:

This part outlines:

• Overall economic priorities
• Sector-wise focus
• Strategy for resource allocation

It provides the policy vision of the government.

Finance Bill Component:

The Finance Bill contains:

• Taxation proposals
• Amendments to tax laws
• Other fiscal provisions requiring legal approval

Together, these two parts provide both policy direction and legal authority.

What are the Other Documents Presented with the Union Budget?

Apart from the Finance Minister’s Budget Speech, several supporting documents are presented to ensure transparency and clarity in public finance.

These documents collectively explain budgetary proposals in detail, provide fiscal data and projections. It helps Parliament and citizens understand government strategy.

Major Budget Documents	Other Explanatory Documents
Annual Financial Statement (under Article 112)	Expenditure Budget
Demands for Grants (under Article 113)	Receipt Budget
Financial Bill (under Article 110)	Expenditure Profile
Fiscal Policy Statements mandated under FRBM Act 2003:Macro-Economic Framework StatementMedium-Term Fiscal Policy cum Fiscal Policy Strategy Statement	Budget at a GlanceMemorandum Explaining the Provisions in the Finance Bill
	Output Outcome Monitoring Framework
	Key Features of Budget

Together, they present a complete picture of the government’s fiscal intent.

Conclusion:

In conclusion, we can say that the Union Budget 2026 will not only determine resources allocation for the coming year. At the same time, it will reveal how the government views India’s economic challenges and opportunities in the medium term. Moreover, for serious UPSC aspirants, the Budget is a framework which they need to understand deeply linking economy, governance, policy, and constitutional principles.

Sources:

https://www.indiabudget.gov.in

Frequently Asked Questions (FAQ) on  Union Budget 2026