Union Budget 2026 explained: How the last five years have shaped this year’s priorities?

The Union Budget 2026 for the financial year 2026–27 is fast approaching and the focus is not just on fresh announcements but also on the policy direction set over the past five years. Since the pandemic-hit Budget of 2020–21, successive Budgets presented by Nirmala Sitharaman have reflected a steady shift towards growth-driven public spending, tax simplification and long-term structural reforms. Together, these trends offer clear signals about the likely priorities of Budget 2026.

The focus of the last five Union Budgets has been centred on capital expenditure as a tool to drive economic growth. Government spending on infrastructure, covering roads, railways, logistics, and urban development, has more than doubled during this period, underlining the Centre’s belief that public investment can crowd in private capital and support job creation. This approach is expected to remain central to Budget 2026 as India focuses on sustaining growth momentum.

Tax policy over the past five years has also evolved gradually rather than through sweeping changes. The government has steadily promoted the new income tax regime, simplified slabs and raised exemption thresholds to reduce compliance burdens and improve disposable incomes. Instead of dramatic tax cuts, recent Budgets have favoured predictability and ease of filing, an approach that is likely to continue this year as well.

Another recurring theme has been the push for domestic manufacturing. Through Production-Linked Incentive (PLI) schemes and targeted support for key sectors, the government has sought to strengthen India’s manufacturing base and boost exports. This focus aligns with broader goals of supply-chain resilience and self-reliance, suggesting that Budget 2026 may further refine, rather than expand, existing incentive frameworks.

Defence spending has also seen a steady rise, reflecting heightened attention to national security and indigenisation. Over recent years, allocations have increasingly prioritised modernisation and procurement from domestic manufacturers, a trend that is expected to carry forward.

On the welfare front, the last five Budgets indicate a move away from broad-based subsidies introduced during the pandemic towards more targeted support. Food, fertiliser and fuel subsidies have been gradually rationalised, with an emphasis on fiscal discipline while continuing support for vulnerable sections.

Taken together, the trajectory of the past five years suggests that Budget 2026 is likely to focus on consolidation rather than reinvention building on infrastructure-led growth, tax stability, manufacturing support and calibrated welfare spending, while keeping fiscal sustainability firmly in view.