Union Budget 2026: Priorities, Fiscal Path & Schemes
9 Core Priorities, ELI employment schemes, capex allocations, fiscal deficit glide path, and tax reforms.
1. Core Theme & Nine Budget Priorities
Union Budget 2026 is anchored around the vision of 'Viksit Bharat by 2047', emphasizing 9 strategic priorities: (1) Productivity & Resilience in Agriculture, (2) Employment & Skilling, (3) Inclusive Human Resource Development & Social Justice, (4) Manufacturing & Services, (5) Urban Development, (6) Energy Security, (7) Infrastructure, (8) Innovation, R&D, and (9) Next-Generation Structural Reforms.
2. Prime Minister's Package for Employment & Skilling (ELI Schemes)
A central centerpiece for APFC aspirants is the 3-part Employment-Linked Incentive (ELI) package directly integrated with EPFO mechanisms:
| Scheme | Target Beneficiaries | Incentive Architecture & Scale |
|---|---|---|
| Scheme A: First Timers | New formal entrants in EPFO earning up to ₹1 Lakh/month | Direct Benefit Transfer of one month wage (up to ₹15,000) in 3 instalments with a mandatory financial literacy course. |
| Scheme B: Job Creation in Manufacturing | Additional employment in manufacturing sector (EPFO covered) | Direct incentive specified to both employee and employer with respect to their EPFO contribution for the first 4 years. |
| Scheme C: Support to Employers | All sectors adding formal jobs above baseline | Government reimbursement up to ₹3,000 per month towards employer's EPFO contribution for 2 years for each additional employee. |
3. Fiscal Math & Deficit Trajectory
- Fiscal Deficit target pegged at ~4.9% of GDP, actively gliding down to below 4.5% of GDP in line with the revised medium-term fiscal consolidation trajectory.
- Effective Capital Expenditure (Capex) maintained at an elevated ₹11.11 Lakh Crore (~3.4% of GDP) to sustain multi-modal transport, railway freight corridors, and power infrastructure.
- Gross Market Borrowings calibrated to maintain stable sovereign bond yields and non-disruptive private credit crowding-in.
4. Direct & Indirect Tax Highlights
| New Tax Regime Income Slab | Applicable Tax Rate |
|---|---|
| ₹0 to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% (Rebate u/s 87A covers income up to ₹7 Lakhs) |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,01 to ₹12,00,000 | 15% |
| ₹12,00,01 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
- Standard deduction for salaried individuals under the New Tax Regime increased from ₹50,000 to ₹75,000.
- Abolition of 'Angel Tax' (Section 56(2)(viib)) for all classes of investors to foster the venture startup ecosystem.
- Corporate tax rate for foreign companies reduced from 40% to 35% to invite long-term capital.
- Comprehensive review and simplification of the Income-tax Act, 1961 announced to reduce litigation.
Video Lectures & Explanations
Curated educational video lectures explaining this topic for UPSC EPFO
Union Budget 2026 Complete Analysis & Highlights for UPSC
Focus: 9 Budget priorities, ELI schemes (A, B, C), ₹11.11 Lakh Cr Capex, tax slab adjustments
Budget Employment & Skilling Package (ELI Schemes Explained)
Focus: EPFO integration, DBT wage subsidies, MSME Mudra limit enhancement to ₹20 Lakhs