Budget 2026: What the past five years say about this year’s priorities

Each year, the Union Budget draws the nation’s attraction arsenic it defines the country’s economical absorption for the caller fiscal year. As Finance Minister wields the fiscal scalpel, focussed connected taxation rates, rebalancing expenditure, and mounting priorities, each Indian household, concern and policymaker watches keenly to recognize what they volition summation oregon lose.Past budgets person marked important idiosyncratic income taxation relief, which included raising the exemption bounds to incentivise consumption. Capital expenditure has consistently risen, marking the value of infrastructure and connectivity arsenic engines of growth.Looking astatine Budget 2026, to beryllium presented connected February 1, expectations would beryllium that it would beryllium yet different accidental to deepen reforms by pushing manufacturing competitiveness, improving quality capital, modernising taxation and commercialized regimes, and reinforcing concern successful emerging technologies that volition laic retired a roadmap for resilient, inclusive, and innovation-led growth.Here is simply a speedy rundown of the cardinal changes that person been seen successful the past 5 years and what is the scope for FY 2026-27.

Tax reforms

Over the past 5 budgets, FY 2021-22 done FY 2025-26, India’s taxation scenery has been shaped by progressive idiosyncratic taxation restructuring, targeted firm taxation continuity, and evolving indirect taxation policy. In the earlier portion of this period, the caller income taxation authorities introduced successful the 2020 Union Budget continued to evolve.

While Budgets 2021 and 2022 near halfway slabs mostly unchanged, Budget 2023 made the caller taxation authorities the default prime connected the income-tax e-filing portal and enhanced its operation with less slabs, a higher basal exemption and a modular deduction to payment idiosyncratic taxpayers. Budget 2024 further sweetened alleviation for salaried employees with the modular deduction for salaried individuals nether the caller authorities raised to Rs 75,000/- from Rs 50,000.Next year, Budget 2025 saw 1 of the astir important taxation reforms to date. Personal income taxation up to Rs 12 lakh was made afloat exempt nether the caller authorities (meaning Rs 12.75 lakh for salaried taxpayers aft modular deduction), with restructured slabs supra that threshold, substantially lowering the nonstop taxation load for the mediate class.

As for indirect taxes, GST (Goods and Services Tax), archetypal introduced successful 2017, besides had immoderate changes.

The astir important betterment came past year, erstwhile the GST complaint operation was simplified from aggregate slabs to a two-tier strategy of 5 per cent and 18 per cent, on with a 40 per cent levy connected prime luxury oregon “sin” goods. Although not portion of the Budget presentation, it was a determination aimed astatine reducing complexity and easing the taxation load for some consumers and businesses and volition surely beryllium a origin mounting the code for the upcoming Budget.

Looking toward Budget 2026, expectations stay connected refinements to the taxation authorities and compliance ease, specified arsenic less income taxation slabs nether the caller authorities and further indirect taxation rationalisation, alternatively than wide complaint reductions, arsenic fiscal abstraction is balanced against maturation priorities.Speaking connected the taxation reforms and scope successful the upcoming budget, Sanjiv Malhotra, elder advisor - Head of Tax Practice astatine Shardul Amarchand Mangaldas, talked to TOI and enactment airy connected the world of the GST reforms and what helium believes the authorities needs to bash now.

“Post pandemic India has experienced robust taxation collections (both for nonstop and indirect taxes) and with a bullish GDP maturation anticipation for FY 2026, Government should person been capable to marque ample fiscal abstraction without compromising excessively overmuch connected the fiscal shortage targets.

FY 2025-26, however, is witnessing weaker taxation collections some connected income taxation and GST,” helium said.Further talking astir the deed to authorities revenue, Malhotra added, “GST rationalisation successful 2025 has deed the Government’s wallet hard and the aforesaid does not look to person been off-set by stronger nonstop taxation collections.

Thus, the fiscal abstraction seems to beryllium limited. However, originative reallocation of funds tin ever make country for further spendings successful identified precedence sectors.”Meanwhile, Sumit Singhania, Partner, Deloitte India besides talked to TOI astir existent interaction connected taxation collections but had an optimistic outlook. “The fiscal shortage people for FY26 was pegged astatine 4.4 percent successful Budget 2025. Going by quarterly macro data, this people looks wrong the reach.

Direct taxation collections for the existent fiscal is showing beardown momentum 8%y-o-y maturation YTD) adjacent arsenic GST collections maturation whitethorn beryllium subdued owing to a caller acceptable of structural reforms.

That said, wide taxation and non-tax revenues maturation is so encouraging and volition assistance the government’s fiscal consolidation people connected track. It’s rather apt that the fiscal shortage people for FY27 could beryllium betwixt 4.1 and 4.3 percent,” helium said. He further talked astir the scope for changes that helium believes exist.

Infrastructure and superior expenditure

Over the past 5 Union Budgets, infrastructure-led superior expenditure has moved from a counter-cyclical betterment instrumentality to a important portion successful India’s maturation strategy. Central capex allocation roseate sharply from astir Rs 5.54 lakh crore successful FY 2021-22 to Rs 7.5 lakh crore successful FY 2022-23, earlier crossing the Rs 10 lakh crore people successful FY 2023-24, a leap of astir 37 per cent year-on-year.

The interim FY 2024-25 Budget sustained this trajectory astatine astir Rs 11.1 lakh crore, and FY 2025-26 pushed it further to astir Rs 11.2 lakh crore, equivalent to conscionable implicit 3 per cent of GDP.

A ample stock of this outlay has consistently flowed into transport infrastructure, peculiarly roads and railways.

Railways, successful particular, amusement the semipermanent interaction of sustained capex. With yearly superior enactment rising to astir Rs 2.6 lakh crore successful caller budgets, a decade-long concern rhythm has delivered disposable strategy upgrades, including the rollout of much than 160 Vande Bharat trains and caller Amrit Bharat services, accelerated electrification of implicit 99 per cent of the broad-gauge network, and the phased deployment of the Kavach automatic bid extortion strategy to amended safety.

Capacity augmentation, way renewal and presumption redevelopment person progressed alongside fleet expansion, with thousands of caller coaches planned implicit FY 2025-26 and FY 2026-27.Another cardinal portion of capex and infrastructure maturation is roads and highways. Since FY 2021-22, allocation for roads and highways has grown sharply. In that year, the Ministry of Road Transport and Highways’ full expenditure was humble compared with aboriginal levels, but by FY 2022-23, superior enactment had jumped significantly, mostly driven by a steep summation successful superior expenditure for nationalist highways. In FY 2023-24, the ministry’s fund allocation was astir Rs 2.7 lakh crore, up by astir 36 per cent from the erstwhile year, with the National Highways Authority of India receiving astir Rs 1.62 lakh crore for expanding and upgrading the network. The interim FY 2024-25 fund maintained this, allocating astir Rs 2.78 lakh crore to the sector, portion FY 2025-26 continued astatine akin levels astir Rs 2.87 lakh crore, adjacent arsenic commitments shifted toward caller task awards and expressway development.

These sustained allocations person supported enlargement of the nationalist road network, accrued regular operation targets and large corridor projects.The cardinal argumentation question up of Budget 2026 is fiscal sustainability. Although superior expenditure has remained precocious adjacent arsenic the fiscal shortage is steered lower, sustaining double-digit maturation successful outlays could beryllium hard if taxation revenues soften. The accent whitethorn truthful displacement from accelerated enlargement to amended plus utilisation, information improvements and timely completion of ongoing projects, ensuring earlier investments construe into productivity gains without overstretching nationalist finances.In this context, Budget 2026 could prioritise faster execution implicit simply higher allocations. The authorities whitethorn besides contiguous a clearer roadmap for plus monetisation to mobilise resources without widening the deficit. Industry groups specified arsenic the Confederation of Indian Industry person projected a National Infrastructure Guarantee Corporation to heighten capitalist confidence, trim financing costs and unlock stalled infrastructure projects.Talking astir imaginable changes to Railways and infrastructure and what different sectors could person accrued allocation, Anurag Gupta, Partner, Deloitte India told TOI, “While the increasing inclination successful budgetary enactment is expected to proceed successful Budget 2026, greater reliance connected PPPs would beryllium captious to conscionable the ambitious investments goals laid retired implicit adjacent 10 years by IR. Apart from Railways, we expect maturation crossed societal infra sectors similar h2o and sanitation.

Lastly, capableness instauration indispensable besides beryllium complemented with seamless infrastructure work transportation and prime of infrastructure.”

Defence

In the past fewer years, defence fund allocations person risen steadily, adjacent arsenic broader fiscal pressures person shaped allocations. In FY 2021-22, the defence fund hike was humble amid pandemic pressures, but it grew successful FY 2022-23 to astir Rs 5.25 lakh crore arsenic the authorities prioritised operational readiness and modernisation. Meanwhile the allocations for FY 2023-24 was accrued to astir Rs 5.94 lakh crore, showing continued maturation successful investments successful instrumentality arsenic good arsenic unit development. The FY 2024-25 fund further raised the defence allocation to astir Rs 6.22 lakh crore, making defence the second-largest ministry allocation and boosting superior outlay for modernisation and home procurement nether the self-reliance agenda.

In the FY 2025-26, the defence fund stood astatine a precocious of 6.81 lakh crore rupees, which signified a emergence of astir 9.5 percent compared to the fund fig of the erstwhile year, with astir 1.80 lakh crore rupees earmarked for buying newer defence instrumentality similar aircraft, ships, etc.Throughout this period, gross expenditure connected salaries, attraction and pensions has continued to relationship for a ample stock of the total, adjacent arsenic superior allocations emphasise modernisation and indigenous procurement nether initiatives specified arsenic Make successful India.

The rising fund and sustained enactment for home defence accumulation person coincided with grounds increases successful defence accumulation and exports, showing a displacement toward self-reliance successful subject hardware.For Budget 2026, defence spending is expected to prioritise subject preparedness and modernisation, successful the backdrop of Operation Sindoor successful May 2025. According to FICCI’s pre-Budget recommendations, India’s heightened outer information situation and advances by adversaries successful AI-enabled warfare, hypersonic systems, UAV swarms, and multi-domain operations marque a strong, modern, and well-resourced defence architecture a strategical imperative.

The manufacture assemblage suggests expanding superior outlay to 30 per cent of the defence fund from 26 per cent, boosting frontline assets, UAVs, physics warfare systems, and borderline air-defence capabilities, portion besides raising the DRDO allocation by Rs 10,000 crore to enactment frontier technologies, backstage assemblage collaboration, and deep-tech innovation.FICCI besides mentioned indigenisation nether Atmanirbhar Bharat, recommending enlargement of Defence Industrial Corridors, including a projected Eastern India corridor, to spur R&D, occupation creation, and planetary defence exports, which person grown astatine a CAGR of 46 per cent betwixt 2016–17 and 2023–24.

Establishing a Defence Export Promotion Council was besides suggested to coordinate among DPSUs, backstage manufacturers, and overseas buyers, helping India scope its people of Rs 50,000 crore successful exports by 2028–29.

Make successful India / Manufacturing

Over the past budgets, enactment for manufacturing nether the Make successful India docket has progressively centred connected Production-Linked Incentive (PLI) schemes and allied incentives aimed astatine boosting home production, concern and exports. PLI was introduced successful the Budget for the archetypal clip successful 2021 (after motorboat successful 2020) with Rs 1.97 lakh crore allocation crossed 13 sectors.As of August-2025, 806 PLI applications person been approved crossed antithetic sectors. Actual investments of astir Rs 1.76 lakh crore person been realised and incremental accumulation and income are estimated astatine implicit Rs 16.5 lakh crore, generating much than 12 lakh jobs (direct and indirect). Incentives of Rs 21,500 crore approx. person been disbursed truthful far, aiding aesculapian devices, pharmaceuticals and electronics grow capableness and exports, adjacent arsenic immoderate sub-programmes look delays successful payouts oregon delivery. Certain PLI initiatives, specified arsenic high-efficiency star and precocious artillery cells, person seen slower uptake truthful far, illustrating that outcomes alteration importantly by sector. Overall, the PLI model has strengthened manufacturing enactment and planetary competitiveness, peculiarly successful mobile and bulk drugs, though disposable returns beryllium connected assemblage readiness, compliance timelines, and businesslike inducement disbursement, mounting the signifier for refinements successful enactment arsenic Budget 2026 approaches.Subsidies: Food, fertiliser and fuelOver the past 5 budgets, India’s payment and subsidy allocations, peculiarly for food, fertiliser and substance person been sharply recalibrated from the pandemic highest to much normalised levels. In FY 2021‑22, nutrient and fertiliser subsidies remained elevated nether pandemic alleviation measures, including escaped grains nether PMGKAY, keeping the combined subsidy measure supra pre-pandemic levels. Then, according to the Budget documents, full subsidies connected food, fertilisers and petroleum were pegged astatine Rs 5,21,585 crore successful the revised estimates for 2022–23, up from Rs 4,46,149 crore successful the erstwhile year. Food subsidy saw a marginal dip to Rs 2,87,194 crore from Rs 2,88,969 crore. In contrast, fertiliser subsidy surged to Rs 2,25,220 crore from Rs 1,53,758 crore, driven by higher enactment for some urea and phosphatic & potassic (P&K) nutrients.

Petroleum subsidy besides increased, rising to Rs 9,171 crore from Rs 3,423 crore.For the pursuing fiscal year, full subsidies connected food, fertilisers and petroleum were projected to diminution by 28 per cent to Rs 3,74,707 crore, down from Rs 5,21,585 crore successful 2022–23. Fertiliser subsidy was estimated to autumn to Rs 1,75,100 crore from Rs 2,25,220 crore, portion petroleum subsidy was expected to driblet sharply to Rs 2,257 crore from Rs 9,171 crore.

Food subsidy was besides expected to person a simplification to Rs 1,97,350 crore, compared with Rs 2,87,194 crore a twelvemonth earlier, pursuing the discontinuation of the pandemic-era escaped foodgrain scheme.The interim FY 2024‑25 Budget allocated astir Rs 4.09 lakh crore, with flimsy declines successful fertiliser subsidies, portion FY 2025‑26 saw full subsidies astatine astir Rs 4.26 lakh crore, with nutrient astatine Rs 2.03 lakh crore and fertiliser astatine Rs 1.67 lakh crore.For Budget 2026, subsidy provisions are expected to stay focused connected targeted payment transportation and ratio alternatively than ample expansions. With pandemic-time exigency alleviation measures mostly withdrawn, allocations whitethorn centre connected the Public Distribution System, fertiliser enactment aligned with planetary terms trends, and existing LPG oregon cleanable vigor subsidy frameworks.

Agriculture

Over the past 5 budgets, agriculture and agrarian improvement person been seen arsenic fiscal priorities, FM Nirmala Sitharaman calling it the “first engine” of the country's improvement during the 2025-26 fund presentation. In Budget 2021-22 foundational schemes specified arsenic the Agriculture Infrastructure Fund, expanded e-NAM mandis and micro-irrigation enactment were emphasised upon amid pandemic recovery. By Budget 2023-24, the authorities had accrued allocations for the agriculture ministry to astir Rs 1.25 lakh crore, including important releases nether PM-Kisan Samman Nidhi with much than Rs 2.8 lakh crore disbursed to implicit 11 crore farmers via nonstop payment transfer.

This twelvemonth besides saw higher spending connected agrarian employment and security outlays to stabilise workplace incomes.Subsequently, successful the fund of FY 2024-25, the aggregate allocations funded to the agriculture and allied areas accrued by an further 4.5 per cent to Rs 1.40 lakh crores, with the second registering double-digit growth. Similarly, the fund of 2025-26 projected an allocation of astir Rs 1.37 lakh crores and launching missions similar agrarian prosperity, underemployment, skilling, and self-reliance.Throughout this period, agrarian information nets specified arsenic MGNREGA remained stable, supporting enactment connected agrarian infrastructure that progressively benefited cultivation productivity, arsenic evidenced by rising utilisation of funds for onshore development, irrigation and h2o harvesting.Looking into the expectations from Budget 2026, it would see the continued income support, raising the bounds of subsidised recognition (e.g.,

raising the bounds connected Kisan recognition cards), gathering connected the productivity and worth concatenation missions, and a stronger impetus to agrarian resilience and employment procreation to substance maturation successful the agrarian economy.

What tin we anticipation for successful 2026?

Based connected the past budgets, determination is simply a signifier emerging: a emergence successful superior expenditure, providing alleviation to the taxpayers, supporting the manufacturing sector, and providing impetus to payment measures, each with the purpose of cutting the fiscal deficit.

Budget 2026 is apt to beryllium a repetition show of the supra balancing act, arsenic the system is witnessing a pick-up successful infrastructure, defence, and manufacturing sectors on with a fine-tuning of subsidies and taxes.Sanjiv Malhotra, Senior Advisor - Head of Tax Practice, Shardul Amarchand Mangaldas told TOI, “Few sectors wherein I volition spot my bets (for accrued allocations) volition beryllium defense, hi-tech manufacturing and accomplishment development.”Thus, these signals bespeak that Budget 2026 volition apt absorption connected targeted investments and fiscal prudence, aiming to prolong maturation portion strengthening strategical sectors.