The Union Budget for 2026–27 has set out a policy roadmap focused on sustaining economic growth, increasing public investment, and maintaining fiscal consolidation, with targeted measures across manufacturing, services, infrastructure, and social sectors.
Presenting the Union Budget, Finance Minister Nirmala Sitharaman said the government would continue prioritising capital expenditure, particularly in infrastructure development, while keeping the fiscal deficit on a consolidation path. The fiscal deficit for 2026–27 has been estimated at 4.3 per cent of gross domestic product, marginally lower than the revised estimate for the previous financial year.
Infrastructure remains a central theme of the budget, with continued focus on transport, logistics, urban development, and connectivity in Tier II and Tier III cities. Proposals include new dedicated freight corridors, expansion of national waterways, and support for coastal shipping and inland water transport. The government has also indicated plans to strengthen industrial corridors, including projects along the eastern coast.
The manufacturing sector has received attention through a range of tax and customs measures aimed at boosting domestic production and export competitiveness. These include duty exemptions and deferments for selected inputs and components, particularly in electronics, defence, aviation, and processed food sectors. The budget also proposes steps to revive legacy industrial clusters and strengthen domestic capacity in high-value and technology-intensive manufacturing.
Micro, small and medium enterprises have been addressed through measures aimed at improving access to finance and easing compliance. The budget proposes additional equity support, credit guarantee mechanisms for invoice discounting, and wider use of digital trade receivables platforms to improve liquidity for smaller firms.
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The services sector features prominently, with announcements covering healthcare, medical tourism, education, information technology, design, sports, and the creative economy. Tax-related proposals include changes to safe harbour norms for IT services, faster dispute resolution mechanisms, and long-term incentives for data centre and cloud service operations based in India.
In agriculture and allied sectors, the budget outlines initiatives to enhance productivity and farmers’ income through fisheries, horticulture, animal husbandry, and reservoir development. Support has also been proposed for high-value crops and post-harvest processing, along with technology-driven interventions in farm advisory systems.
People-centric spending has been reflected in allocations for healthcare infrastructure, caregiver training, mental health institutions, disability-focused skill development, and emergency medical facilities at the district level. The budget also reiterates commitments to education, including higher education infrastructure and hostels for women in science and technology institutions.
On governance and compliance, the budget proposes further steps towards trust-based regulation, including simplified customs procedures, extended validity of advance rulings, decriminalisation of certain procedural offences, and reduced tax collection at source rates for specific categories such as overseas education, medical expenses, and travel.
The Union Budget also confirms the continuation of the states’ share of tax devolution at 41 per cent, alongside Finance Commission grants amounting to Rs 1.4 lakh crore for 2026–27, covering rural and urban local bodies and disaster management.
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