Budget 2026: Sitharaman's 9th Speech Boosts Capex to ₹12.2 Lakh Crore

Finance Minister Nirmala Sitharaman presented her ninth consecutive Union Budget on Sunday, February 1, 2026, outlining the government's fiscal strategy for the upcoming year. In a speech lasting 1 hour and 25 minutes, she detailed a plan focused on accelerating economic growth, building capacity, and ensuring equitable access to resources. This presentation marks the second budget of the Modi government's third term and solidifies Sitharaman's position as one of India's longest-serving finance ministers.

Fiscal Roadmap for FY 2026-27

The budget lays out a total expenditure of ₹53.5 lakh crore. A key highlight is the continued emphasis on public infrastructure, with the capital expenditure (capex) target increased to ₹12.2 lakh crore for the fiscal year 2026-27. This represents a significant step up from the ₹11.2 lakh crore allocated for the current fiscal year. The government aims to maintain fiscal discipline, projecting a fiscal deficit of 4.3% of GDP, a slight reduction from the 4.4% estimated for 2025-26. Net tax receipts are estimated to be ₹28.7 lakh crore.

Key Financial Metrics: Budget 2026

Major Initiatives for Industry and Technology

Sitharaman announced several mission-mode projects to bolster India's capabilities in high-tech sectors. The 'Biopharma SHAKTI' initiative will receive an outlay of ₹10,000 crore over five years, aiming to establish India as a global hub for biologics and biosimilars. Building on previous efforts, the India Semiconductor Mission (ISM) 2.0 was launched to strengthen domestic semiconductor manufacturing and develop a complete supply chain. To support the green energy transition, customs duty exemptions were extended for capital goods used in manufacturing lithium-ion battery cells.

Taxation and Compliance Reforms

A significant announcement was the introduction of a completely redesigned and simplified Direct Tax Code, the Income Tax Act 2025, which is set to come into effect on April 1, 2026. This move is aimed at reducing litigation and simplifying compliance for taxpayers. For the stock market, the Securities Transaction Tax (STT) on commodity futures was hiked from 0.02% to 0.05%. In a procedural simplification, the deadline for revising tax returns has been extended from December 31 to March 31, with a nominal fee.

Focus on Infrastructure and Human Capital

The budget continues its push on large-scale infrastructure projects. Seven new high-speed rail corridors were announced, described as "growth connectors" to improve connectivity across the country. The government also plans to operationalize 20 new national waterways over the next five years. To enhance human capital, the budget includes support for five regional medical hubs and the establishment of five university townships near industrial corridors. Additionally, one girls' hostel will be set up in every district for students in STEM institutions.

A Historic Ninth Budget Presentation

With this presentation, Nirmala Sitharaman set a record for delivering the most consecutive Union Budgets, now totaling nine. This surpasses the previous record and places her in the company of former finance ministers like P. Chidambaram, who also presented nine budgets, though not consecutively. Morarji Desai holds the all-time record with ten budget presentations. Prime Minister Narendra Modi lauded the occasion as a 'moment of pride in India's parliamentary tradition.'

Sitharaman's Speech Durations Over the Years

The duration of Sitharaman's budget speeches has varied significantly over her tenure. While this year's 85-minute speech was moderately paced, she holds the record for the longest-ever budget speech in Indian history, delivered in 2020 and lasting 2 hours and 42 minutes. In contrast, her shortest was the 2024 interim budget, which concluded in just 56 minutes.

Market Reaction

The stock market reacted sharply to the budget announcements. The Sensex reportedly crashed by 1,600 points, with the Nifty falling below the 25,000 mark. The hike in the Securities Transaction Tax (STT) on futures was cited as a key factor contributing to the negative sentiment among traders.

Analysis and Forward Outlook

The Union Budget 2026 signals a continued focus on long-term capital investment as the primary driver of economic growth. The emphasis on mission-mode projects in semiconductors and biopharma indicates a strategic push towards self-reliance in critical technologies. The introduction of a new Direct Tax Code is a significant reform aimed at improving the ease of doing business and reducing tax-related disputes. While the immediate market reaction was negative, the budget's long-term impact will depend on the effective implementation of these ambitious infrastructure and industrial projects.

Conclusion

In summary, the Union Budget 2026-27 presented by Nirmala Sitharaman is a document of continuity and strategic ambition. It doubles down on the government's capex-led growth model while introducing targeted missions to build domestic capacity in future-critical industries. With a clear roadmap for infrastructure development and a major overhaul of the direct tax system on the horizon, the budget sets a definitive course for the Indian economy for the upcoming fiscal year.