India’s Union Budget for 2026–27, presented by Finance Minister Nirmala Sitharaman, reinforced the government’s focus on fiscal stability while relying on indirect tax levers and higher defence spending to manage revenue and expenditure priorities, according to details reported by LiveMint.
The budget maintained the existing personal income tax slab rates, providing continuity for individual taxpayers amid global economic uncertainty. By avoiding changes to personal tax structures, the government signalled an intent to support consumption while relying on improved compliance and a broader tax base to sustain direct tax collections.
Indirect taxes remained a key policy tool in the fiscal framework. The budget retained flexibility around excise duties, allowing the government to adjust rates on select goods in response to commodity price movements, inflation trends, and revenue requirements. Excise duties have been used in recent years to balance fiscal needs while managing price pressures, particularly during periods of volatility in global energy and raw material markets.
Defence spending continued to command a significant share of total government expenditure in the 2026–27 budget. Allocations to the defence sector increased compared to the previous year, reflecting ongoing security considerations and sustained investment in military readiness. Defence remains one of the largest components of central government spending, alongside interest payments and capital expenditure.
The budget also reaffirmed the government’s commitment to medium-term fiscal consolidation. While prioritising essential spending, the fiscal roadmap outlined a gradual reduction in the fiscal deficit, supported by steady revenue growth and controlled expenditure. Capital expenditure remained elevated, underscoring the government’s focus on infrastructure development and long-term economic capacity building.
In line with established fiscal arrangements, the budget retained the existing formula for the devolution of central taxes to states. A fixed share of central tax revenues will continue to be transferred to state governments, providing predictability in state finances and supporting sub-national spending on development and welfare programmes.
Overall, the Union Budget 2026–27 reflects a policy approach centred on tax stability for individuals, calibrated use of indirect taxes, and prioritisation of defence and capital spending, while maintaining a disciplined fiscal framework that supports growth without compromising long-term fiscal sustainability.
