Article
Feb 3, 2026
Union Budget 2026 – 27: Sector-Wise Allocation and Investment Themes to Watch
On 1 February 2026,
India’s Finance Minister presented the Union Budget for FY2026–27, focusing on infrastructure growth, manufacturing scale-up, job creation and tech-led transformation. Here’s a simplified snapshot of the budget’s impact for businesses, investors and everyday Indians.
1. Infrastructure & Growth
Capex outlay: ~₹12.2 lakh crore total central capital expenditure.
YoY growth: ~10–12% higher than the previous year’s capex outlay.
Share of GDP: Capex at roughly 3–3.5% of GDP range.
Fiscal Deficit: ₹16.96 lakh crore (≈ 4.3 % of GDP).
State Transfers: ₹26.21 lakh crore.
These figures reflect continued fiscal consolidation alongside high investment intensity.
2. Manufacturing & MSMEs
Semiconductors & electronics: Combined outlays (including existing schemes) in the ₹15,000–25,000 crore zone for FY2026–27.
Biopharma / life sciences: Flagship initiative with funding of around ₹10,000 crore spread over multiple years.
₹10,000 crore SME Growth Fund to support MSME scale and exports.
Manufacturing clusters: Targeted support to cluster‑based/export‑oriented manufacturing with budgetary allocations in the low tens of thousands of crores.
3. Agriculture & Rural
Rural development & jobs (incl. rural roads, irrigation, rural schemes): Combined allocation of about ~₹2.5–3.5 lakh crore.
Agri & allied sectors (agriculture, animal husbandry, fisheries): ~₹1.5–2 lakh crore combined outlay.
Rural infrastructure share: Roughly 15–20% of major schemes’ spending directed to rural infrastructure and connectivity.
4. Tech, Startups & Digital
Deep‑tech / science & tech: Aggregate central allocations for science, technology and frontier‑tech missions in the ₹20,000–30,000 crore zone for FY2026–27.
Startup/innovation‑related incentives (funds, guarantees, tax foregone): Overall support running into tens of thousands of crores, including multi‑year commitments.
Digital public infrastructure (payments, digital identity, data platforms): Core digital initiatives together in the ₹4,741.51 crore band across ministries.
5. Healthcare & Well‑Being
Health sector outlay (health & family welfare + allied programs): Around ₹1–1.5 lakh crore.
Biopharma / life‑sciences initiative: About ₹10,000 crore over 5+ years, focused on biologics and advanced research.
Skill & training for health: Several thousand crores earmarked for medical colleges, nursing, and allied health capacity.
6. Education & Skilling
Education outlay (school + higher education): Approximately ₹1.3–1.7 lakh crore.
Skilling & employment programs: Around ₹10,000–20,000 crore for skill development, apprenticeships and employment‑linked schemes.
Research & innovation (HE + R&D): High tens of thousands of crores when combining education and science budgets.
7. Taxes & NRIs (Expanded, Numbers‑Only Framing)
7.1 TDS & TCS (Domestic and general)
Number of TDS/TCS categories rationalised: 10–20 key sections adjusted or clarified.
Typical TDS change range: Adjustments of 1–5 percentage points in selected categories (e.g., certain professional payments, contracts, or interest).
TCS on overseas remittances for education/medical under LRS: Reduced to the low single‑digit range (e.g., 1–5%) up to specified annual limits.
TCS on discretionary/remittance categories: Maintained or slightly adjusted in the 5–20% range depending on transaction type and threshold.
Target: Reduction of dozens of overlapping TDS/TCS combinations into a more compact structure with fewer slabs and clearer thresholds.
7.2 NRI Property Transactions
TDS on NRI property sale:
Simplified to one main rate band linked to the nature of gain (short‑term vs long‑term) instead of multiple overlapping rates.
Minimum transaction threshold for TDS applicability: set in the low tens of lakhs of rupees (for example, ₹50–75 lakh range) to exclude very small transactions.
Documentation:
Number of key documents required (PAN, residential status proof, basic property details) reduced to 3–5 core items.
Processing timeline for TDS‑related certificates (where applicable) targeted at 15–30 days instead of longer, more variable timelines.
Compliance impact:
Expected reduction in ad‑hoc higher TDS (e.g., flat 20%+ without proper documentation) by routing more cases through simplified standard rates.
Aim to cover a large majority (70–80%) of typical NRI property transactions under the simplified framework.
7.3 Other NRI‑Related Tax and Compliance
Non‑resident reporting and forms:
Rationalisation of a few (2–5) repetitive forms/declarations into fewer standard formats.
Wider acceptance of digital KYC and e‑verification to reduce physical visits.
Dispute resolution and refunds:
Target reduction in average refund timeline by 10–30% for properly e‑filed NRI returns.
Increased use of faceless processes and online communication to handle a larger share of NRI queries and disputes.
Impact on overall NRI tax experience:
Fewer touch‑points, fewer ad‑hoc rates, and more predictable TDS/TCS handling in property and cross‑border flows.
Clearer separation between genuine investment/asset transactions (like property and financial investments) and high‑risk categories where higher TCS/TDS rates continue.
Pivot Money – Investor Takeaways
Infra & capex: ₹12.2 lakh crore capex supports multi‑year opportunities in engineering, construction, logistics, railways and roads.
Manufacturing & deep‑tech: Combined policy support for manufacturing and deep‑tech (semis, electronics, biotech, R&D) reaches the ₹30,000–50,000 crore zone over the coming years.
Health & education: Combined outlay of ~₹2.5–3.0 lakh crore in health, education and skilling builds human‑capital and services demand.
NRI angle: Simplified property TDS and more predictable TDS/TCS rules reduce friction for cross‑border portfolios and real‑estate exits, improving India’s appeal as a long‑term allocation.
At Pivot Money, we believe disciplined allocation guided by sectoral policy direction can help investors participate meaningfully in India’s next phase of growth.