Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026-27, announcing key changes in income tax provisions as well as major allocations across railways, defence, agriculture, MSMEs, healthcare and infrastructure.
Nirmala Sitharaman leaves the Finance Ministry carrying the Finance Budget ahead of the presentation of the Budget 2024 in Parliament at North Block in New Delhi. (PTI File)Prime Minister Narendra Modi described the budget as “historic”, calling it a “highway of immense opportunity” that will accelerate India’s reform express and strengthen the foundation of a resilient India by 2047.
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While the largest share of the budget has been earmarked for the transport sector, including Indian railways and roads, defense spending has received a major boost in this year’s budget.
Sector wise resource allocationIn the Union Budget 2026-27, the highest allocation has been given to the transport sector ₹5,98,520 crore, followed closely by Defence ₹5,94,585 crores. Rural development allocations have been given ₹2,73,108 crore, while Home Affairs gets Rs ₹2,55,234 crores.
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Allotment has been made for agriculture and allied works ₹1,62,671 crore and education ₹1,39,289 crores. Energy consumption stands ₹1,09,029 crore with health benefits ₹1,04,599 crore.
Designated for urban development ₹85,522 crore, IT and Telecom ₹74,560 crore and Commerce and Industry ₹70,296 crores.
Social welfare is allotted ₹62,362 crore, Scientific Department ₹55,756 crore and tax administration ₹45,500 crore.
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Externally accepted ₹22,119 crores, Rs ₹20,649 crore, while the development of North East has been allocated ₹6,812 crores.
Here is how the allocation has been distributed among the major sectors.
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railwayAllocation has been kept in the budget ₹2,77,830 crore for capital expenditure for Ministry of Railways in FY27, up 10.25 percent. ₹2,52,000 crore in 2025-26 and the highest allocation ever, PTI reported.
The funds will be used for construction of new lines, procurement of rolling stock and infrastructure upgrades. In addition, ₹15,000 crore will be raised through the supplementary budget.
Rare earth mineralsThe government has announced the creation of a dedicated rare earth corridor in Odisha, Kerala, Andhra Pradesh and Tamil Nadu to promote mining, processing, research and manufacturing.
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The move aims to strengthen domestic capacity in the production of critical minerals and permanent magnets, which are seen as essential for the modern manufacturing ecosystem.
defenseDefense expenditure is fixed ₹5,94,585 crore, welcoming an increase of nearly 22 per cent in industrial capital expenditure. The decision to scrap basic duties on components used in aircraft manufacturing is expected to boost domestic production.
Defense firms say the allocation reflects India’s geostrategic priorities, with companies like Thales highlighting its role in modernizing the armed forces.
Home AffairsMinistry of Home Affairs received ₹2,55,234 crore, an increase of 9.44 percent over the previous year About 68 percent of the allocation went to policing, which covers the central armed police force, intelligence agencies, border development and policing in Delhi and Jammu and Kashmir, PTI reported.
Capital spending has risen sharply under the police chief, signaling a renewed focus on modernization and infrastructure. The Ministry is headed by Amit Shah.
Agriculture and related sectorsAllotment has been made for agriculture and allied works ₹1,62,671 crore, which is 7.12 percent higher than last year.
The budget focuses on livestock, fisheries and high-value agriculture, aiming to diversify rural livelihoods and reduce dependence on traditional crop cultivation, with special emphasis on small and marginal farmers.
Waterways and logisticsThe budget proposes dedicated freight corridors to connect Dankuni with Surat, launch of 20 new national waterways and create a ship repair ecosystem for inland transport.
A coastal cargo promotion scheme has also been announced to increase the share of inland and coastal shipping to 12 percent by 2047.
Industry players including Essar Ports said the moves will strengthen India’s maritime and logistics backbone.
MSMETo support small businesses, the government has announced a ₹10,000 crore MSME Growth Fund and use of TReDS for CPSEs to create “Champion MSMEs”. Indian Overseas Bank said these measures will improve access to credit, increase liquidity and support balanced industrial growth with job creation.
Health careHealth care allocation has been increased by 10 percent ₹1,06,530 crore. The budget includes measures to strengthen mental health infrastructure, establish regional treatment centers, increase biopharma production, train caregivers and reduce the cost of cancer drugs. As part of the mental health push, the government announced NIMHANS 2.0 to increase access to specialized care.
