The Union Budget 2026, presented in Parliament today, February 1, 2026, once again demonstrated the government’s narrow path between economic discipline and public aspirations. Finance Minister Nirmala Sitharaman began her speech with a vision of stability, continuity, and long-term growth. There were no unexpected populist announcements; instead, the budget adopted a realistic approach. The fiscal deficit was kept at 4.4 percent of gross domestic product (GDP) for fiscal year 2026, below the previously set target of 4.5 percent. This move sets a strong example of fiscal discipline. Capital expenditure was increased from ₹11.2 lakh crore last year to ₹12.5 lakh crore, representing an increase of nearly 12 percent. This increase is focused on infrastructure, urban development projects, and the digital technology sector. A target of raising ₹10 lakh crore has been set under the asset monetization scheme to encourage private sector investment.
The Indian economy achieved 6.8 percent growth in the last fiscal year, but challenges such as the global economic slowdown, US-China trade tensions, and domestic inflation persist. The budget tightly controlled the fiscal deficit at 4.4 percent, while the effective revenue deficit was limited to ₹96,654 crore, a mere 0.3 percent of GDP. A provision of ₹12.5 lakh crore for capital expenditure will give new impetus to the national infrastructure pipeline. The target of an additional 50,000 kilometers for highway construction and an allocation of ₹2.5 lakh crore for railway electrification and modernization demonstrate the commitment to laying the foundation for the future. States will be provided with ₹1.5 lakh crore in 50-year interest-free loans, strengthening the federal structure. Measures such as tax exemptions, a single-window system, and faster approval processes have been implemented to promote the public-private partnership (PPP) model. The government has sent a clear message: investors, come, we are fully prepared. But the big question is whether these huge investments will create jobs in rural and semi-urban areas, or will they remain confined to the glitz of the metropolises?
The middle class, which contributes approximately 40 percent to the country’s GDP, received substantial tax relief in this budget. The standard deduction in the old tax system was doubled from Rs 50,000 to Rs 1 lakh, while it is more generous for senior citizens. The new tax system simplified the tax slabs—zero tax on income up to Rs 5 lakh. TCS on education loans was removed (up to Rs 10 lakh), while the rent TDS threshold was raised from Rs 2.4 lakh to Rs 6 lakh. Tax relief was provided on two self-occupied residential properties, and the deadline for filing income tax returns was extended from two years to four years. The promise to simplify the tax code from 819 sections to 536 is commendable. These steps are aimed at transforming taxpayers from a mere source of revenue to a trusted partner. However, compliance processes must be further simplified at the ground level; these reliefs may remain limited to mere paperwork.
The budget focused on the agricultural sector, which still accounts for 18 percent of GDP and 65 percent of the rural population. The Pradhan Mantri Dhan Dhanya Yojana was expanded to 100 districts, encouraging crop diversification and increasing irrigation and storage capacity. The PM Kisan Samman Nidhi was increased, and the Kisan Credit Card limit was raised. Economic zones were declared in the Andaman and Lakshadweep for fisheries development, with provisions to strengthen the fruit and vegetable supply chain. The MNREGA budget was increased, and the rural credit scoring system facilitated loans to self-help groups (SHGs). The leather, footwear, and toy industries are projected to generate 2.2 million new jobs. These provisions will boost the rural economy, but the real test will be whether these schemes will move beyond paper and reach farms and markets. Small and marginal farmers should benefit, not be limited to large landowners.
Prioritizing women’s empowerment, the Lakshmi Vandana Yojana has been expanded, and guarantees on self-employment loans (up to ₹20 lakh) have been removed. Home-based work for urban women will benefit from tax exemptions. A special provision of ₹10,000 crore for Panchayati Raj institutions will promote real leadership in states like Haryana, where women’s reservation is 50 percent. These steps are important towards gender equality, but effective implementation at the Panchayat level will be essential.
To empower 60 percent of the country’s youth population (under 35 years), a budget of over ₹1.35 lakh crore has been allocated for the education sector, including the establishment of 50 new IITs and medical colleges. ₹2 lakh crore has been allocated for the Skill India program, and an internship scheme will provide ₹1 lakh monthly stipends to 50 million youth. Support for micro, small, and medium enterprises (MSMEs) and an employment-focused development model. There is a strong determination to bring the unemployment rate below 8 percent. An allocation of ₹50,000 crore to the Startup India Fund will encourage youth entrepreneurship. But the question remains: will these efforts lead to job creation, or will the younger generation continue to wander in search of jobs?
In the areas of technology and innovation, the establishment of an artificial intelligence (AI) center, a revenue target of 2 lakh crore rupees from the 5G spectrum auction, and 1 lakh crore rupees for Digital India, 5 lakh crore rupees for clean energy—solar parks and green hydrogen production. 100 percent insurance on foreign direct investment (FDI). The Public Trust Bill 2.0 simplifies over 100 outdated laws. These steps are part of a strategy to make India a developed nation by 2047, but the digital divide must be bridged so that rural areas are not deprived of technology.
Finally, the challenges are not insignificant. Keeping inflation under control at 5.5 percent and curbing food inflation. Strengthening border security with a defense budget of ₹6.5 lakh crore. ₹1 lakh crore for environmental protection, export promotion, and innovation. The budget has set the direction clear—now, the speed and integrity of implementation will determine the outcome.
Budget 2026 is a realistic roadmap across 10 key areas, focusing on the poor, farmers, youth, and women. It not only raises hopes but also questions. The real test will be implementation—the direction is clear, now it’s time to demonstrate speed!
