Finance Minister Nirmala Sitharaman is set to deliver her ninth consecutive Budget speech at 11 am today, on 1 February, marking a significant departure from recent tradition. This presentation of the India Union Budget on a Sunday is the first such occurrence in at least a decade, drawing heightened attention from citizens and markets alike.
Historic Sunday Presentation Amid High Expectations
Union Budget 2026 represents the second full-fledged Budget of the Prime Minister Narendra Modi-led government during its third consecutive term in power. The context is particularly notable following the interim Budget presented by Sitharaman in February 2025 ahead of Lok Sabha elections, and the subsequent Union Budget 2025 in July after the government's re-election.
Key Sectors Anticipated for Major Announcements
Expectations are running high across multiple sectors that are likely to receive substantial allocations and policy focus. Artificial intelligence, auto, defense, electronics, infrastructure, manufacturing, MSMEs, railways, renewable energy, and urban development are among the primary areas to watch closely.
Additionally, other critical sectors including agriculture, healthcare, logistics, and tourism are also expected to benefit from Centre's budgetary provisions, reflecting the government's comprehensive economic strategy.
Impact on Common Citizens: Direct and Indirect Effects
The Budget 2026 proposals will significantly affect the common man through both direct and indirect channels. Announcements concerning income tax, welfare schemes, and educational policies typically have immediate and visible impacts on household finances and opportunities.
Simultaneously, proposals targeting infrastructure development and public services influence daily life more gradually by enhancing facilities, boosting rural incomes, and creating employment opportunities over the medium to long term.
The Crucial Tax Regime Question
One of the most closely watched aspects of Budget 2026 is the potential fate of the old tax regime. The journey began six years ago when Budget 2020 introduced a new tax regime offering lower rates to taxpayers willing to forego deductions and exemptions.
Budget 2023 made this new regime the default option, and Budget 2025 took a dramatic step further by offering zero tax for individuals earning up to ₹12 lakh under the new system. With each successive year making the new regime increasingly attractive through reduced rates while leaving the old regime unchanged, speculation is mounting about its eventual retirement.
As Budget 2026 is tabled today, all eyes are on whether the government will finally phase out the old tax regime. While some tax experts suggest a complete immediate phase-out might not occur, they anticipate the old regime could be rendered increasingly insignificant, effectively nudging taxpayers toward the new system.
Economic Survey 2026: Setting the Tone
Tabled in Parliament ahead of the Budget speech, the Economic Survey provides crucial context for India's economic approach and the government's assessment of the economy. This year's document was presented by Sitharaman before both houses of Parliament on 29 January.
Historically, prior to 1964, the Economic Survey was integrated with the Budget presentation, serving as an official economic record to inform parliamentary budgetary discussions. Since 1964, it has been separated to provide lawmakers and the public with essential economic context and data-driven insights into the economy's condition.
Growth Projections and Fiscal Outlook
Economic Survey 2026 projects FY26 growth at 7.4% according to first advance estimates released earlier this month. Looking ahead, the survey states that the Indian economy is expected to expand at 6.8-7.2% in FY27, supported by strong macro fundamentals and a series of regulatory reforms.
The survey also notes that India's core and headline inflation rates are likely to be higher in FY27 than in FY26, though this is not expected to be a major concern. As of November 2025, India's fiscal deficit stood at 62.3% of Budget Estimates, with the government aiming to achieve a fiscal deficit target of 4.4% of GDP by FY26.
Real GDP growth in FY27 is projected in the range of 6.8 to 7.2%, with the survey concluding: "The outlook, therefore, is one of steady growth amid global uncertainty, requiring caution, but not pessimism."
Looking Back: Key Highlights from Budget 2025
Last year's Budget 2025 delivered significant benefits to Indian taxpayers, with Sitharaman providing a mega boost by cutting income tax on earnings up to ₹12 lakh, benefiting millions of middle-class taxpayers. For the salaried class, the non-taxable income under the new tax regime increased to ₹12.75 lakh after standard deduction.
She also announced the New Income Tax Act, 2025, scheduled to come into effect from 1 April. A breakdown of major expenditure items from Budget 2025 reveals substantial allocations across critical sectors:
- Agriculture and Allied Activities: ₹1,71,437 crore
- Commerce & Industry: ₹65,553 crore
- Defence: ₹4,91,732 crore
- Education: ₹1,28,650 crore
- Energy: ₹81,174 crore
- Health: ₹98,311 crore
- Home Affairs: ₹2,33,211 crore
- IT and Telecom: ₹95,298 crore
- Rural Development: ₹2,66,817 crore
- Social Welfare: ₹60,052 crore
- Scientific Departments: ₹55,679 crore
- Urban Development: ₹96,777 crore
As the nation awaits the Budget 2026 announcements, the combination of historic timing, economic projections, and potential policy shifts makes this a particularly significant fiscal event for India's development trajectory.
