Budget 2026: Key Takeaways for the Economy

Finance Minister Nirmala Sitharaman on Sunday presented her ninth consecutive Union Budget, charting a steady course for the Indian economy amid strong domestic growth and an uncertain global environment. Budget 2026 continues the government’s focus on fiscal consolidation, infrastructure-led expansion and manufacturing, while promising meaningful relief for taxpayers and targeted support for MSMEs, farmers and emerging sectors.

Focus on Ease of Living and Tax Simplicity
A major highlight of Budget 2026 is the rollout of a simplified Income Tax regime from 1 April. The new framework aims to make tax filing easier, reduce litigation and lower penalties. Taxpayers will be allowed to file revised returns up to 31 March with a nominal fee, while non-disclosure of foreign assets below ₹20 lakh will attract immunity from prosecution.

For consumers, upfront tax burdens have been eased. Tax Collected at Source (TCS) on overseas tour packages has been reduced to a flat 2%, and TCS under the Liberalised Remittance Scheme for education and medical expenses abroad has also been cut to 2%. Select cancer drugs have been exempted from customs duty, and interest on motor accident awards has been made tax-free.

Manufacturing and MSMEs Take Centre Stage
The Budget sharpens India’s manufacturing ambitions by scaling up seven strategic sectors, including bio-pharma, semiconductors, electronics components, rare-earth magnets and capital goods. The India Semiconductor Mission 2.0 received a ₹40,000 crore allocation to deepen domestic capabilities in chips, equipment and materials.
To support small businesses, the government announced a ₹10,000 crore SME Growth Fund, enhanced equity support and expanded credit guarantees. CPSEs will be mandated to use the TReDS platform for faster MSME payments, while “Corporate Mitras” will help firms navigate regulatory requirements. The expanded Lakpati Didi programme aims to promote women-led enterprises and community-owned retail outlets.

Infrastructure Push with Fiscal Discipline
Capital expenditure has been increased to ₹12.2 trillion in FY27 from ₹11.2 trillion in FY26, reinforcing the government’s infrastructure-led growth strategy. Plans include seven high-speed rail corridors, a new freight corridor between Dankuni and Surat, and the operationalisation of 20 national waterways over five years. Despite higher spending, fiscal consolidation remains on track, with the fiscal deficit projected to fall to 4.3% of GDP in FY27 from 4.4% in FY26.

Rural Economy, Youth and Tourism
The Budget places renewed emphasis on high-value agriculture, fisheries and animal husbandry to raise farm incomes. Programmes to rejuvenate orchards, promote high-density cultivation and deploy AI-based advisory platforms were announced. Tourism and the creative economy were positioned as job engines, with investments in skilling, eco-tourism, AVGC labs, design institutes and university townships.

The Big Picture
With assumed nominal GDP growth of 10% in FY27, Budget 2026 balances growth aspirations with fiscal prudence. While execution will be key, the mix of simpler taxes, sustained public investment and a deeper manufacturing push signals continuity and confidence at a time of global uncertainty.