The Union Budget 2026 set out the government’s approach to fiscal consolidation, public investment and sector-specific policy support.
While reaffirming its commitment to debt management through a gradual reduction in the fiscal deficit, the Budget also increased capital expenditure and announced tax and policy measures across manufacturing, services, agriculture and employment-focused sectors.
Below are the key Budget 2026 highlights across fiscal policy, taxation and sectoral initiatives.
The fiscal deficit remains a central instrument for managing public debt. The government confirmed that its commitment to bring the fiscal deficit below 4.5% of GDP by FY26 has been achieved.
For FY26, the revised estimate places the fiscal deficit at 4.4% of GDP, matching budgeted levels. For FY27, the deficit is projected at 4.3% of GDP, in line with the stated path of fiscal prudence and debt consolidation.
Public capital expenditure has expanded significantly over the past decade, rising from ₹2 lakh crore in FY15 to ₹11.2 lakh crore in FY26. For FY27, the allocation has been increased to ₹12.2 lakh crore.
The higher outlay aims to sustain infrastructure development and support economic activity through continued public investment.
Read More: Union Budget 2026: Key Announcements for Common Man.
The Budget introduced several changes to tax collection and deduction mechanisms. Tax collected at source on foreign tour packages has been reduced to a flat rate of 2%, replacing the earlier structure of 5% and 20%, with no minimum transaction threshold.
Under the Liberalised Remittance Scheme, the TCS rate for education and medical expenses has also been lowered from 5% to 2%. For sellers of specified goods, including alcoholic liquor, scrap and mineral products, the TCS rate has been rationalised to 2%, while the rate on tendu leaves has been reduced from 5% to 2%.
Tax deducted at source on these services will now apply at either 1% or 2%.
The Budget proposed changes to securities transaction tax on derivatives. STT on futures has been raised to 0.05% from 0.02%. For options, the STT on premium and on exercise has been increased to 0.15%, from earlier rates of 0.1% and 0.125%, respectively.
Following the launch of a scheme for rare earth permanent magnets in late 2025, the government announced plans to support mineral-rich states in establishing dedicated Rare Earth Corridors.
These corridors are intended to promote mining, processing, research and manufacturing activities linked to critical minerals.
Building on the first phase of the India Semiconductor Mission, the government announced the launch of ISM 2.0.
The new phase will focus on equipment and materials manufacturing, development of domestic intellectual property, supply chain strengthening and industry-led research and training.
The outlay for the Electronics Components Manufacturing Scheme has been increased from ₹22,919 crore to ₹40,000 crore, following strong investment commitments.
A dedicated ₹10,000 crore SME Growth Fund has been proposed to support the scaling up of enterprises based on defined criteria.
In addition, the Self-Reliant India Fund will receive a further ₹2,000 crore to continue providing risk capital support to micro enterprises.
The Budget extended the permissible export period for certain leather and textile products from six months to one year.
It also announced an integrated programme for the textile sector, including initiatives to promote self-reliance in natural fibres, man-made fibres and emerging fibre technologies.
Read More: FM Expands Lakhpati Didi Programme to Promote Women Entrepreneurs.
To promote medical value tourism, the government proposed a scheme to establish five regional medical hubs in partnership with the private sector.
These hubs will function as integrated healthcare complexes, combining medical services, education, research, diagnostics, post-care and rehabilitation facilities, alongside AYUSH centres.
A new scheme for container manufacturing has been proposed with a budgetary allocation of ₹10,000 crore over five years.
The initiative aims to develop a globally competitive domestic container manufacturing ecosystem.
The Budget outlined support for high-value crops to improve farm productivity and incomes.
Focus areas include coconut, sandalwood, cocoa and cashew in coastal regions, agarwood in the North East, and nuts such as almonds, walnuts and pine nuts in hilly areas.
Seven high-speed rail corridors have been proposed to promote environmentally sustainable passenger transport and regional connectivity. These corridors are intended to act as growth connectors between major urban centres.
Read More: Union Budget 2026: FM Proposes ₹100 Crore Incentive for Single Bond Issuances Over ₹1000 Crore.
Building on the Lakhpati Didi programme, the Budget proposed measures to support women in transitioning from credit-linked livelihoods to enterprise ownership.
Self-Help Entrepreneur marts will be established as community-owned retail outlets supported by enhanced financing mechanisms.
The Budget announced the launch of a Khelo India Mission aimed at developing the sports sector over the next decade.
The mission will focus on talent development, training infrastructure, coaching, sports science integration and organised competitions to support employment and skills creation.
In line with the carbon roadmap announced in December 2025, the government proposed an outlay of ₹20,000 crore over five years for carbon capture, utilisation and storage technologies.
The initiative will focus on industrial sectors such as power, steel, cement, refineries and chemicals.
Budget 2026 presented a balanced framework combining fiscal discipline with increased public investment and targeted sectoral initiatives. The measures outlined aim to support medium-term growth, strengthen domestic capabilities and promote employment, while maintaining a gradual and structured approach to debt consolidation.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Feb 1, 2026, 2:36 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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