Union Budget-2026: Defence Soars To Rs 7.85 Lakh Crore; Major Bets Electronics, Biopharma & Railways

Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27. She pledged fresh resources to keep India’s economic engine robust amid global uncertainties.

The government prioritises manufacturing expansion, semiconductor growth, infrastructure upgrades, and incentives for data centres.

The minister proposed increasing capital expenditure by 9 per cent, raising it to Rs 12.2 lakh crore.

This represents one of the largest allocations in recent years, equal to 4.4 per cent of GDP.

She emphasised that the government aims to sustain annual growth above 7 per cent.

Nirmala Sitharaman noted that the allocation marks a sharp rise from Rs 2 lakh crore in 2014‑15.

Defence spending surged to Rs 7.85 lakh crore, with Rs 2.31 lakh crore earmarked for capital outlay.

The 21.84 per cent increase will modernise defence equipment. It will strengthen aircraft and naval capabilities and advance Aatmanirbhar Bharat amid ongoing border challenges.

Defence and Security Boost

The government doubled the Electronics Components Manufacturing Scheme to Rs 40,000 crore. This move aims to capitalise on ongoing investment momentum.

The Biopharma SHAKTI programme received Rs 10,000 crore over five years to position India as a global pharmaceutical hub.

The government allocated an additional Rs 20,000 crore to Carbon Capture, Utilisation, and Storage technologies. This funding will promote cleaner industrial practices.

A new Rs 10,000 crore initiative will support container manufacturing to enhance logistics competitiveness.

Railways will receive Rs 2.77 lakh crore, including plans for seven high-speed passenger corridors.

The Ministry of Home Affairs gets Rs 2.55 lakh crore to strengthen security and law enforcement.

States will obtain Rs 1.4 lakh crore via Finance Commission grants while retaining 41 per cent of tax devolution.

The Finance Ministry receives Rs 19.72 lakh crore, mainly for interest, subsidies, and transfers to states.

The budget backs mineral-rich states with dedicated rare-earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.

MSMEs gain a Rs 10,000 crore SME Growth Fund, plus Rs 4,000 crore to the Self-Reliant India Fund.

Sitharaman highlighted six key growth drivers for the economy. They include scaling manufacturing, revitalising industries, empowering MSMEs, accelerating infrastructure, ensuring energy security, and developing city-based economic zones.

The government set the total expenditure at Rs 53.47 lakh crore. It targets the fiscal deficit at 4.3 per cent of GDP, reflecting continued fiscal discipline.

The government projects that debt-to-GDP will ease to 55.6 per cent. It aims to reach around 50 per cent in the long term.

Prime Minister Narendra Modi aims to achieve developed-nation status by 2047.

Growth forecasts support this goal: 7.4 per cent this year, 7.3 per cent in 2025, and 6.4 per cent in 2026.

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