Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on February 1, 2026 in Parliament. She described it as a 'Yuva Shakti-driven Budget' emphasizing domestic manufacturing, high-growth services, and infrastructure. Key fiscal parameters: Fiscal deficit targeted at 4.3% of GDP (down from 4.4% RE in FY26). Capital expenditure: ₹12.22 lakh crore; effective capital expenditure: ₹17.15 lakh crore. Public capital expenditure hiked to ₹12.2 lakh crore (from ₹11.2 lakh crore in FY26). Total receipts (non-borrowing): ₹36,51,547 crore (7.2% higher than RE FY26). Debt-to-GDP ratio: 55.6% (down from 56.1%). The budget marks a structural shift with the implementation of the Income Tax Act, 2025 replacing the 1961 Act from April 1, 2026.
Union Budget 2026-27: FM Sitharaman Presents 'Yuva Shakti' Budget; Fiscal Deficit at 4.3%
Budget 2026-27: 'Yuva Shakti' theme; fiscal deficit 4.3% GDP; capex ₹12.2 lakh crore; Income Tax Act 2025 replaces 1961 Act from April 2026.
Key facts
- Budget 2026-27 total expenditure ₹53.5 lakh crore; fiscal deficit 4.3% of GDP; capital expenditure ₹12.22 lakh crore; effective capital expenditure ₹17.15 lakh crore
- Public capex hiked to ₹12.2 lakh crore from ₹11.2 lakh crore in FY26
- Total non-borrowing receipts ₹36,51,547 crore (7.2% higher than RE FY26); debt-to-GDP at 55.6%
- Described as a Yuva Shakti-driven Budget emphasizing domestic manufacturing, high-growth services, and infrastructure
- New Income Tax Act, 2025 replacing the 1961 Act to be implemented from April 1, 2026
PYQPrelims/PYQ angle
- RAS 2024 Measures in Union Budget 2025-26 to boost MSMEs — Both analyse Union Budget sectoral strategies; this article covers the subsequent Budget 2026-27's capex push and Income Tax Act 2025 rollout.
Mains angle
Q: Analyse the fiscal consolidation and capex priorities of the Union Budget 2026-27 presented as a 'Yuva Shakti' budget.
Answer (50 words):
Finance Minister Nirmala Sitharaman presented the Yuva Shakti-themed Union Budget 2026-27 on 1 February 2026. Fiscal deficit is targeted at 4.3 percent of GDP, down from 4.4 percent. Capital expenditure is ₹12.22 lakh crore and effective capital expenditure is ₹17.15 lakh crore; Income Tax Act 2025 replaces the 1961 Act.
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Frequently asked questions
Why did FM Sitharaman call Union Budget 2026-27 a Yuva Shakti budget?
Finance Minister **Nirmala Sitharaman** called Budget 2026-27 a **Yuva Shakti-driven budget** because it emphasizes **domestic manufacturing, high-growth services, and infrastructure** — sectors that generate employment for India's large young workforce. The budget includes measures for startups, deep tech, semiconductor manufacturing, and upskilling, all aimed at leveraging India's demographic dividend.
What is the total capital expenditure in Union Budget 2026-27 and how much higher is it than the previous year?
**Total capital expenditure in Union Budget 2026-27 is ₹16,95,768 crore**, which is **8.8% higher than the Revised Estimate of FY26**. **Public capital expenditure is ₹12.2 lakh crore** — up from ₹11.2 lakh crore in FY26.
What major structural tax law change is implemented from April 1 2026?
Union Budget 2026-27 implements the **Income Tax Act 2025 replacing the Income Tax Act 1961 from April 1 2026**. All Finance Bill 2026 amendments reference the new Act. This is a significant **structural simplification and modernization** of India's direct tax framework, though **no changes to tax slabs** were announced.
What is the debt-to-GDP ratio in Union Budget 2026-27?
The **debt-to-GDP ratio in Budget 2026-27 is 55.6%**, down from **56.1%** in the previous year. India targets reducing this to **50% by 2030-31**. The fiscal deficit of **4.3% of GDP** (down from 4.4% RE in FY26) continues the fiscal consolidation path.
What are the total non-borrowing receipts in Union Budget 2026-27?
**Total receipts (non-borrowing) in Budget 2026-27 stand at ₹36,51,547 crore**, which is **7.2% higher than the Revised Estimate of FY26**. This reflects the government's expectation of strong economic momentum and improved tax compliance.
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