Date: 1 February 2026
Presented by: Finance Minister Nirmala Sitharaman
Session: Ninth consecutive Union Budget speech in Parliament, starting at 11 am IST.
The Union Budget is the Indian government’s annual financial plan — it sets out how the government will spend money and raise revenue in the next fiscal year (April 2026–March 2027). This year’s Budget comes at a time when global trade pressures persist and India is targeting sustainable growth with equity.
📊 Macroeconomic Picture
🧾 Fiscal Targets
- The fiscal deficit — the gap between government spending and revenue — is planned around 4.4 % of GDP, signalling continued fiscal prudence.
🏗️ Capital Expenditure (Capex)
- Capex for FY27 is pegged at about ₹12.2 lakh crore, up ~9 % from the previous year. This continues a multi-year focus on public investment in infrastructure.
Why this matters: High capex supports sectors like construction, cement, infrastructure equipment, and logistics. This can be positive for stocks tied to physical capital formation.
📌 Key Policy & Sector Highlights
🚆 Infrastructure & Connectivity
- The government plans seven new high-speed rail corridors to link major cities (e.g., Mumbai–Pune, Delhi–Varanasi, Hyderabad–Chennai).
- 20 new national waterways will be operationalised to boost cargo movement.
Investor angle: Continued infrastructure focus benefits sectors from construction materials to transport & logistics.
🌐 Technology & Manufacturing
- India Semiconductor Mission 2.0 will be launched with a larger outlay (~₹40,000 crore) to strengthen domestic semiconductor manufacturing and supply chains.
- Rare earth and chemical corridors will be developed in key states to secure critical minerals and support green tech.
Why it matters: Reducing import dependence on semiconductors and rare earth processing aligns with global tech competition and supports domestic high-tech manufacturing.
🧵 Textiles & Traditional Industries
- A new integrated textile programme with five components aims to modernise traditional clusters, improve productivity, and enhance exports.
Implication: Boost for labour-intensive sectors and employment; may support firms in apparel and allied industries.
🌾 Agriculture & Rural Growth
- Initiatives will help farmers diversify into high-value crops, enhance fishery value chains, and improve productivity.
Investor view: Enhancing rural incomes can support consumption growth for FMCG and rural demand–linked sectors.
💻 Services Sector & Employment
- A new Education to Employment and Enterprises (E2E) committee is proposed to boost services sector growth and job creation.
Takeaway: With services aiming for larger global share, opportunities may arise in tech, education, and professional services.
💰 Taxation & Compliance Changes
📉 Business Taxes
- Minimum Alternate Tax (MAT) cut to 14 % from 15 % for certain companies.
- TCS (Tax Collected at Source) lowered to 2 % on foreign travel, education, and medical remittances.
- Extended tax holiday for foreign companies using Indian data centres till 2047.
🧾 Individual Taxes
- No change in personal income tax slabs, but compliance timelines are eased and senior citizen exemptions increased.
Investor insight: While direct changes for individual tax relief were limited, measures to ease compliance and incentivise digital business infrastructure are positive for small and tech-enabled firms.
📉 Market Reaction – Early Signals
After the Budget was presented, Indian markets experienced volatility with indices like Sensex dropping sharply — reflecting mixed sentiment as investors digest policy details and sectoral effects.
📈 Broad Themes Investors Should Watch
- Infrastructure Growth: Railway, highways, waterways — sustained spend can benefit capital goods and construction.
- Tech & Manufacturing Push: Semiconductor, rare earths, digital labour productivity — long-term structural plays.
- Rural & Consumption: Rural income support can revive demand for consumer staples and local services.
- Export-Led Growth: Textiles, services, specialised manufacturing — export dynamics may shift with trade incentives.
🧠 Conclusion – What This Means for Your Portfolio
The Union Budget 2026 emphasizes infrastructure, manufacturing self-reliance, tech ecosystem development, and rural incomes. For investors, the long-term growth narrative remains tied to India’s structural reforms rather than short-term tax cuts. Some markets may show volatility as details settle, but policy directions point to opportunities across infrastructure, tech, and export-oriented sectors.
Risk Disclosure: Investments in mutual funds, equities, and other financial instruments are subject to market risks. Past performance is not indicative of future results. The information provided above is for educational and informational purposes only and should not be considered as investment advice. Investors should consult their financial advisor before making any investment decisions. Market conditions, economic factors, government policies, and global events can impact returns and may result in loss of capital.
