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2 Feb 2026·Source: The Hindu
4 min
EconomyPolity & GovernanceNEWS

Budget 2026-27: Sustained Growth as a Key Duty

Budget 2026-27 focuses on sustained growth through enhanced productivity and competitiveness.

Budget 2026-27: Sustained Growth as a Key Duty

Photo by Markus Spiske

The Finance Minister presented the Union Budget 2026-27, balancing short-term requirements with long-term objectives. The government's economic agenda is framed as 'kartavya', signaling a shift towards governance as a statement of duty. The budget focuses on accelerating and sustaining economic growth by enhancing productivity and competitiveness.

Interventions are planned across six key areas: scaling up manufacturing, rejuvenating legacy industrial sectors, creating champion MSMEs, delivering a strong push to infrastructure, ensuring long-term energy security, and developing City Economic Regions. The expansion of the India Semiconductor Mission into ISM 2.0 marks a deepening of India’s manufacturing strategy. Textiles and sports goods manufacturing also receive focused attention, reflecting their employment intensity and export potential.

The budget acknowledges the challenges faced by MSMEs and proposes measures such as the creation of Champion MSMEs, backed by a ₹10,000 crore SME Growth Fund.

Key Facts

1.

SME Growth Fund: ₹10,000 crore

2.

Focus: Sustained economic growth

3.

Framework: Governance as 'kartavya'

UPSC Exam Angles

1.

GS Paper III (Economy): Budgeting, Fiscal Policy, Economic Development

2.

Connects to syllabus topics like government policies, infrastructure, and industrial development

3.

Potential question types: Statement-based, analytical, and factual

Visual Insights

Key Highlights from Budget 2026-27

Dashboard highlighting key areas of focus in the Union Budget 2026-27, emphasizing sustained economic growth and support for manufacturing and MSMEs.

SME Growth Fund
₹10,000 crore

A dedicated fund to support the growth and expansion of MSMEs, addressing their financial needs.

More Information

Background

The concept of a budget has ancient roots, evolving from simple statements of accounts to complex economic documents. Early forms of budgeting can be traced back to ancient civilizations, where rulers kept records of income and expenditure. Over time, budgeting became more sophisticated, incorporating elements of planning and forecasting. In India, the modern budgeting system was introduced during British rule. The first budget was presented in 1860 by James Wilson. Post-independence, the Indian budget has evolved to reflect the country's changing economic priorities. Key milestones include the introduction of Five-Year Plans, which guided resource allocation and development strategies. The Planning Commission, now replaced by NITI Aayog, played a crucial role in shaping budgetary priorities. The Indian Constitution outlines the framework for the budget process. Article 112 mandates the presentation of the Annual Financial Statement (budget) before the Parliament. The budget is prepared by the Ministry of Finance and goes through various stages of approval in the Parliament, including general discussion, scrutiny by committees, and voting on demands for grants. The Finance Bill, which contains proposals for new taxes and changes to existing tax laws, is also a crucial part of the budget process.

Latest Developments

Recent years have seen a greater emphasis on fiscal consolidation and efficient resource allocation in the Indian budget. The government has focused on reducing the fiscal deficit and promoting sustainable economic growth. Initiatives like Make in India and Digital India have influenced budgetary priorities, with increased allocations for manufacturing and technology sectors. There are ongoing debates about the optimal level of government spending and the balance between growth and equity. Some economists argue for increased public investment to boost economic growth, while others emphasize the need for fiscal discipline and debt management. Institutions like the Reserve Bank of India (RBI) play a crucial role in advising the government on macroeconomic policy and managing inflation. Looking ahead, the Indian budget is expected to focus on long-term sustainable development and inclusive growth. The government has set ambitious targets for infrastructure development, renewable energy, and social welfare. The budget will likely continue to prioritize investments in key sectors such as healthcare, education, and agriculture. The goal is to achieve sustained economic growth while addressing social and environmental challenges.

Frequently Asked Questions

1. What is the central theme of the Union Budget 2026-27, and how is it framed?

The central theme is sustained economic growth achieved through enhanced productivity and competitiveness. The government frames its economic agenda as 'kartavya', indicating governance as a duty.

2. What are the six key areas of intervention highlighted in the Budget 2026-27 for accelerating economic growth?

The six key areas are: scaling up manufacturing, rejuvenating legacy industrial sectors, creating champion MSMEs, delivering a strong push to infrastructure, ensuring long-term energy security, and developing City Economic Regions.

3. What is the SME Growth Fund mentioned in the Budget 2026-27, and what is its financial allocation?

The SME Growth Fund is allocated ₹10,000 crore. As per the topic data, the purpose of the fund is to boost the growth of Small and Medium Enterprises.

4. How does the expansion of the India Semiconductor Mission into ISM 2.0 contribute to India's manufacturing strategy?

The expansion signifies a deepening of India’s manufacturing strategy, with a focused approach on the semiconductor industry.

5. Besides semiconductors, which other manufacturing sectors receive focused attention in the Budget 2026-27?

Textiles and sports goods manufacturing also receive focused attention, reflecting a diversified approach to boosting domestic production.

6. What is the significance of framing governance as 'kartavya' in the context of the Budget 2026-27?

Framing governance as 'kartavya' signals a shift towards a duty-oriented approach, emphasizing responsibility and commitment in achieving economic goals.

7. What potential reforms could further enhance the effectiveness of the SME Growth Fund?

While the topic data doesn't provide specific reforms, potential areas include streamlining the application process, providing mentorship and training, and ensuring timely disbursement of funds.

8. How might the focus on sustained economic growth in the Budget 2026-27 impact the common citizen?

Sustained economic growth can lead to increased job opportunities, higher incomes, and improved living standards for common citizens. It can also fund social programs and infrastructure development.

9. Why is the Budget 2026-27 emphasizing scaling up manufacturing in India?

Based on the background context and current developments, scaling up manufacturing aligns with initiatives like 'Make in India' and aims to reduce reliance on imports, boost exports, and create jobs.

10. What recent developments have influenced the priorities outlined in the Budget 2026-27?

Recent developments such as the emphasis on fiscal consolidation, efficient resource allocation, and initiatives like 'Make in India' and 'Digital India' have influenced budgetary priorities.

Practice Questions (MCQs)

1. With reference to the Union Budget 2026-27, consider the following statements: 1. The budget's economic agenda is framed as 'kartavya', signaling a shift towards governance as a statement of duty. 2. The budget proposes the creation of Champion MSMEs, backed by a ₹20,000 crore SME Growth Fund. 3. The expansion of the India Semiconductor Mission into ISM 2.0 marks a deepening of India’s agricultural strategy. Which of the statements given above is/are correct?

  • A.1 only
  • B.2 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Statement 1 is CORRECT: The budget's economic agenda is indeed framed as 'kartavya', signaling a shift towards governance as a statement of duty. Statement 2 is INCORRECT: The budget proposes the creation of Champion MSMEs, backed by a ₹10,000 crore SME Growth Fund, not ₹20,000 crore. Statement 3 is INCORRECT: The expansion of the India Semiconductor Mission into ISM 2.0 marks a deepening of India’s manufacturing strategy, not agricultural strategy.

2. Which of the following sectors receive focused attention in the Union Budget 2026-27 due to their employment intensity and export potential? 1. Textiles 2. Sports Goods Manufacturing 3. Tourism Select the correct answer using the code given below:

  • A.1 and 2 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Textiles and sports goods manufacturing receive focused attention in the Union Budget 2026-27, reflecting their employment intensity and export potential. Tourism is not explicitly mentioned in the provided summary as receiving focused attention for these reasons.

3. Consider the following statements regarding the India Semiconductor Mission (ISM): 1. The India Semiconductor Mission aims to promote India as a global hub for electronics manufacturing and design. 2. The expansion of the India Semiconductor Mission into ISM 2.0 signifies a deepening of India's manufacturing strategy. 3. The ISM is solely focused on attracting foreign investment in the semiconductor industry. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Statements 1 and 2 are correct. The India Semiconductor Mission aims to promote India as a global hub for electronics manufacturing and design, and its expansion into ISM 2.0 signifies a deepening of India's manufacturing strategy. Statement 3 is incorrect as the ISM focuses on both attracting foreign investment and promoting domestic manufacturing capabilities.

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