1 February 2026

• Budget Day: Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27, the first prepared in the newly named Kartavya Bhawan.
• Defence: Record ₹7.85 lakh crore allocation, a 15.19 per cent rise, with ₹1.39 lakh crore earmarked for indigenous procurement.
• New missions: Biopharma SHAKTI with ₹10,000 crore and Semiconductor Mission 2.0 launched to anchor domestic high-tech manufacturing.
• Capital expenditure: Capex outlay raised 9 per cent to ₹12.2 lakh crore, the highest ever.
• Rare earths: Dedicated corridors established in Odisha, Kerala, Andhra Pradesh and Tamil Nadu with a ₹7,200 crore incentive package.

GS area: Economy (Government budgeting, fiscal policy)

Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on 1 February 2026. The centrepiece is capital expenditure and domestic manufacturing.

• Capex at ₹12.2 lakh crore: A 9 per cent increase over the revised estimate for 2025-26. Capital spending crowds in private investment and builds productive assets.
• Defence at ₹7.85 lakh crore: A 15.19 per cent year-on-year rise. The allocation is roughly 2 per cent of GDP. Indigenous procurement gets ₹1.39 lakh crore of the capital acquisition budget.
• Fiscal deficit target: To be maintained within the FRBM Act glide path. The Fiscal Responsibility and Budget Management Act, 2003 mandates that the Central Government reduce the fiscal deficit progressively.
• Revenue receipts: Gross tax revenue projected at ₹42.7 lakh crore. Direct taxes and GST are the two largest components.

Static linkage: Government budgeting, FRBM Act (Economy).

GS area: Economy (Manufacturing), Science and Technology

The budget launches Biopharma SHAKTI with ₹10,000 crore over five years. The scheme targets biologics, biosimilars and the clinical-trial ecosystem.

• Three new NIPERs: National Institutes of Pharmaceutical Education and Research are premier institutions under the Ministry of Chemicals and Fertilizers. Three new ones will be added to the existing seven.
• Clinical trial sites: The target is 1,000 accredited sites across India. The current count is inadequate relative to India's disease burden and population size.
• CDSCO strengthening: The Central Drugs Standard Control Organisation is India's national regulatory body for pharmaceuticals and medical devices. Faster approval timelines are a key deliverable.
• Why it matters: India is the world's pharmacy by volume (generic drugs) but lags in biologics. Biosimilars and vaccines are the next frontier.

Static linkage: Pharmaceutical sector, CDSCO, NIPER (Economy/S&T).

GS area: Economy (Critical minerals, Manufacturing)

The Electronics Components mission outlay rises from ₹22,919 crore to ₹40,000 crore. Rare-earth corridors are a new structural intervention.

• Rare-earth corridor states: Odisha, Kerala, Andhra Pradesh and Tamil Nadu each host beach-sand mineral deposits bearing rare-earth elements.
• Incentive design: ₹6,450 crore in sales-linked incentives plus ₹750 crore in capital subsidy. The target is 6,000 metric tonnes per annum of sintered rare-earth permanent magnets.
• Why permanent magnets: They are essential for EV motors, wind turbines and defence electronics. China dominates global supply of both the ores and the processing.
• Container manufacturing: A ₹10,000 crore Capital Goods scheme for container manufacturing addresses a gap exposed when global supply chains seized up.

Static linkage: Critical minerals, India Semiconductor Mission (Economy/S&T).

GS area: Social justice, Governance (Education)

Several education-linked announcements target manufacturing corridors and digital skills.

• University townships: Five new university townships near industrial corridors. The idea links higher education supply to industry demand.
• AVGC labs: Audio-Visual-Gaming-Comics-Animation Content Creator Labs in 15,000 secondary schools and 500 colleges. AVGC exports are a government priority under the National AVGC-XR Mission.
• Girls' STEM hostels: One hostel in every district to support girls pursuing STEM courses. Access barriers, not aptitude, are the documented constraint.
• Allied health professionals: Target of 1,00,000 new allied-health professionals over five years. The current shortage is acute relative to Ayushman Bharat's scale.

Static linkage: Right to Education Act, National Education Policy 2020 (Society/Governance).

GS area: Security, Economy

The defence allocation is the largest in absolute terms for any ministry.

• Capital vs revenue split: Of the ₹7.85 lakh crore total, capital acquisition is ₹1.85 lakh crore. Revenue spending covers salaries, operations and maintenance.
• Indigenous share: ₹1.39 lakh crore of the capital budget is reserved for domestic procurement. The iDEX (Innovations for Defence Excellence) and DAP 2020 (Defence Acquisition Procedure) are the policy vehicles.
• DAP 2020 categories: The procedure classifies procurements from Buy (Indian-IDDM, highest indigenous content) down to outright foreign purchases. IDDM stands for Indigenously Designed, Developed and Manufactured.

Static linkage: Defence procurement, iDEX, Make in India (Security/Economy).

GS area: Art and Culture, Economy (Tourism)

A new scheme targets Buddhist temples and monasteries in the North-east as a tourism corridor.

• 4,000 e-buses: Deployed for tourist circuits in the North-east. E-buses reduce diesel dependence on a region with limited fuel logistics.
• Major monasteries in scope: In Arunachal Pradesh these include Tawang (the largest in India and second largest in the world), Bomdila and Urgelling. In Sikkim they include Rumtek, Pemayangtse and Enchey.
• ₹5,000 crore CITY Economic Regions: City-hinterland linkages over five years. The acronym covers clustering of services and infrastructure in selected urban zones.

Static linkage: North-east India, Buddhist heritage sites (Art and Culture).

GS area: Economy (Fiscal policy, Direct taxation)

The Income Tax Act 2025 replaces the Income Tax Act 1961 and takes effect from 1 April 2026. Key changes:

• Filing deadlines clarified: ITR 1 and 2 by 31 July; non-audit businesses and trusts by 31 August.
• Decriminalisation of technical defaults: Minor procedural lapses previously attracting imprisonment are converted to fees. Maximum imprisonment reduced to two years for the most serious offences.
• FAST DS 2026: Foreign Asset and Tax Settlement Disclosure Scheme. A six-month window grants immunity from prosecution for voluntary disclosure of undisclosed foreign assets.

The rewrite removes archaic language from the 1961 Act but does not change the rate structure fundamentally.

Static linkage: Direct tax policy, black money legislation (Economy).

GS area: Economy (Agriculture, Animal husbandry)

The combined livestock and fisheries allocation rises 26.7 per cent to ₹8,915 crore.

• Rashtriya Gokul Mission: ₹800 crore for conservation and development of indigenous cattle breeds. The mission promotes high-yielding indigenous breeds through semen stations and breeding networks.
• Fisheries: ₹2,761 crore, the highest-ever. The Pradhan Mantri Matsya Sampada Yojana targets doubling fisheries export revenue.
• 500 reservoirs and Amrit Sarovars: Desilting and fish stocking in 500 water bodies under the fisheries outlay. Amrit Sarovar is a programme to develop and rejuvenate 75,000 ponds per state.

Static linkage: PM Matsya Sampada Yojana, Blue Revolution (Economy/Agriculture).

• Kartavya Bhawan: The budget was the first prepared in the renamed building, previously North Block of the Central Secretariat. The renaming is part of a broader Central Vista redevelopment programme.
• 16th Finance Commission: Expected to submit its report for the 2026-31 devolution period. The FC is constituted under Article 280 of the Constitution to determine the distribution of taxes between the Centre and states.