Union Budget 2026 LIVE: FM’s budget speech to put ‘unprecedented emphasis’ on Part B

The cut in GST and income tax last year to cushion the impact of 50% US tariff on India’s economy has led to a sharp drop in revenues. Net tax collection is seen at ₹28.3 lakh crore in FY26. The government is also aiming to garner ₹50,000 crore from divestments and ₹3 lakh crore in RBI dividend”>up to ₹3 lakh crore in RBI dividend in FY26.

Tax collections will need to rise 11.7% and 43% year-on-year, respectively, in the final four months of FY26 to meet budgeted targets, DBS Bank’s Radhika Rao told Bloomberg. Any shortfall is likely to be offset through a recalibration of spending without jeopardising the fiscal deficit target of 4.4% for FY26.

Finance Minister Nirmala Sitharaman’s budget speech is likely to place “unprecedented emphasis” on Part B of the Union Budget 2026-27, HT has learnt from government sources.

The budget speech is expected to look markedly different from those delivered over the past 75 years, with the second part taking centre stage. Read on.

The Union Budget 2026, to be presented by Finance Minister Nirmala Sitharaman today, is expected to accelerate regulatory reforms by dismantling compliance burdens for the Viksit Bharat 2047 goal, people familiar with the matter said, attributing it to Prime Minister Narendra Modi’s “Reform Express” focus in recent policy directives. Read on.

Economists expect India’s GDP growth rate at 6.5% to 7% in FY27, with inflation around the Reserve Bank of India’s 4% target.

The Economic Survey 205-26 expects growth to marginally slow, pegging it between 6.8% and 7.2% in the fiscal year starting 1 April 2026. Expansion is estimated at 7.4% in FY26.

The real estate sector is expecting a strong focus on affordable house and rental housing in Finance Minister Nirmala Sitharaman’s budget speech.

Industry stakeholders are seeking a broader definition of affordable housing, tax relief for homebuyers, and incentives for developers to encourage the construction of budget-friendly homes.

Section 24(b): Developers are pushing for the home loan interest deduction limit to be raised from ₹2 lakh to ₹5 lakh for first-time buyers.

Infrastructure Status: A long-standing demand for the real estate sector to receive “Infrastructure Status” to allow easier access to low-cost institutional credit.

The report of 16th Finance Commission is likely to be tabled in the Parliament today, along with the Finance Bill for Union Budget 2026-27. Finance Commissions are constitutionally mandated bodies that define the revenue sharing between centre and the states every five years.

Fiscal federalism is a widely debated and often emotive issue in the larger political economy space in India. Opinions and takes are often strong, although not necessarily rooted in facts.

Here is a brief summary of the larger environment which characterises fiscal federalism in India.

The government’s rework of its rural jobs scheme has put a renewed focus on the agriculture sector, for the fine print and beyond.

PM-KISAN: There are strong expectations for the annual benefit to be increased from ₹6,000 to ₹12,000 to boost rural disposable income.

Agritech Mission: Hopes for subsidised drones, AI-based soil testing, and digital marketplaces to modernise farming.

Post-Harvest Demands: Significant focus on building cold storage and warehousing to reduce perishable losses.

In last year’s budget, Sitharaman vowed to stick to fiscal consolidation and drew up a roadmap to reduce government debt to 50% of GDP, plus or minus one percentage point, by 2030-31.

According to Bank of America economists Rahul and Smriti Mehra, the revised framework gives the government greater flexibility to pursue a slower pace of fiscal-deficit reduction while gradually lowering debt-servicing costs that rose sharply during the pandemic. The fiscal deficit is seen at 4.2% of GDP in FY27, down from 4.4% in FY26.

India’s government debt rose to an estimated 81.29% of GDP in FY24 from 69% in FY15, according to the International Monetary Fund, largely due to heavy borrowing during the pandemic era.

The Union Budget 2026 is expected to focus on AI, given the outsized rhetoric that the technology is driving globally.

Bharat AI Mission: Reports suggest a potential ₹50,000 crore allocation to build India’s AI ecosystem, focusing on sovereign compute capacity, AI chip design, and data centres.

Semiconductors: The industry is looking at the India Semiconductor Mission) with higher budgetary allocations for approved projects and faster disbursement mechanisms.

Deeptech: Startups are seeking a dedicated deeptech fund and tax holidays for innovation-led firms.

Here’s a look at the key budget expectation of the auto sector:

FAME-III/PM E-DRIVE: With the current subsidy regime nearing its end, the industry expects an extension or a more robust PM E-DRIVE scheme with higher outlays for two-wheelers and commercial EVs.

GST Rationalisation: A major demand is to sync GST on all EV components (including batteries) to a uniform 5%, down from the current 18% on some parts, to reduce the “inverted duty structure” burden.

Hybrids: There is renewed pressure for concessional GST rates for hybrid vehicles to bridge the gap between ICE and EV.

The Indian stock market is open today—Sunday, 1 February 2026—for a special live trading session to coincide with Union Budget 2026 today.

Trading hours for today

The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are following standard market timings:

Pre-Open Session: 9:00 am – 9:08 am

Normal Market Hours: 9:15 am – 3:30 pm

Closing Session: 3:40 pm – 4:00 pm

Important rules for today’s session:

Since today is technically a settlement holiday, there are a few specific restrictions to keep in mind:

No T+0 Settlement: Same-day settlement is not available today.

Selling Restrictions: Stocks bought on Friday (30 January) cannot be sold today. Similarly, stocks bought today can only be sold starting tomorrow, Monday.

Fund Availability: Any profits or sale proceeds from Friday’s trades will not be available in your account today. They will be credited Monday.

Commodity Markets: The MCX is also open from 9:00 am to 5:00 pm, and the NCDEX is open from 10:00 am to 5:00 pm.

Track our market blog for the latest on how Union Budget 2026 is moving the stocks today.

Capital expenditure is set to remain a key focus of Sitharaman’s budget speech. The government is likely to allocate about ₹12.04 lakh crore for capex, or nearly 3% of GDP, according to a Bloomberg survey.

Some economists cautioned, however, that the government may be nearing a saturation point in expanding and executing large infrastructure projects.

Defence: Budget allocation is projected to rise to ₹2.3 lakh crore in FY26 from 1.8 trillion rupees in FY25.

Railways: An allocation of approximately ₹2.75 lakh crore is expected, with a focus on 400+ new Vande Bharat trains, safety upgrades (Kavach system), and track doubling.

National Infrastructure Pipeline 2.0: A shift toward “quality and resilience” in infrastructure rather than just quantity is anticipated for the 2026–2032 period.

Despite its commitment to reducing debt, the government is likely to resort to record bond borrowing. Economists expect gross market borrowing of ₹16.5 lakh crore and net borrowing of ₹11.6 lakh crore. The bond yield is seen at 6.7.% in December 2026.