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Union Budget 2026: Defence Stays Top Priority; Railways, broader infrastructure to see steady allocations
- 8bit Market News Desk
- 1 day ago
- 3 min read
As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026-27 on February 1, 2026 (a historic Sunday presentation, her ninth consecutive budget), experts anticipate a disciplined, execution-focused approach. The emphasis will likely remain on defence as a strategic priority, while railways and broader infrastructure receive consistent allocations to sustain momentum without major spikes.
Recent data from the 2025-26 Budget provides context: Defence received the highest ministerial allocation at ₹6,81,210 crore (13.4% of total expenditure), including ₹1,80,000 crore for capital outlay (modernisation). Railways saw gross budgetary support around ₹2.52-2.65 lakh crore for capex, with overall infrastructure capex at ₹11.21 lakh crore (3.1% of GDP).
Experts view Union Budget 2026 as reinforcing long-term stability rather than delivering short-term surprises. Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, noted: "A disciplined, growth-oriented budget emphasizing productivity, capex quality, and policy stability would reinforce India’s long-term investment narrative. The signal matters more than the size."
Defence Sector: Continued Priority on Indigenisation
Defence is expected to stay a core focus, building on trends of rising allocations and push for self-reliance (Aatmanirbharta). Key drivers include higher domestic procurement, R&D support, export promotion, and reduced import dependency.
Defence Budget Allocation Trend (Recent Years, in ₹ crore):
Year | Total Defence Allocation (₹ crore) | YoY Growth (%) | Capital Outlay (Modernisation, ₹ crore) | Notes |
2023-24 | ~6,09,504 (Actual) | - | - | Strong rise in prior years |
2024-25 | ~6,21,940 (BE) / 6,41,060 (RE) | ~5-9% | - | Continued upward trajectory |
2025-26 | 6,81,210 | 9.53% | 1,80,000 | Highest ministerial share (13.4%) |
2026-27 (Expected) | 7.3-7.5 lakh+ (8-10%+ hike anticipated) | 8-15% est. | ~1.9-2.0 lakh+ | Focus on drones, electronics, indigenisation |
Sources: PRS India, PIB, expert estimates (Motilal Oswal, Mirae Asset). Trends show consistent double-digit growth in recent years, with experts eyeing 8-15% increase for FY27 amid geopolitical uncertainties.
This sustained push is expected to benefit private players through long-term orders, improved margins, and export growth.
Railways & Infrastructure: Steady Allocations, Execution Focus
Railways and infrastructure are projected to see steady (not sharp) increases, prioritizing efficient execution over headline hikes. Priorities include freight corridors, rolling stock upgrades, station redevelopment (e.g., Amrit Bharat), and safety enhancements.
Recent Railways Capex/Support Highlights (₹ crore):
Fiscal Year | Gross Budgetary Support / Capex (₹ crore) | Key Notes |
2024-25 | ~2.65 lakh (Total allocation) | High utilisation (~79% by Jan 2025) |
2025-26 | 2.52-2.65 lakh (Capex focus) | Unchanged from prior; emphasis on PPP, electrification |
2026-27 (Expected) | Steady ~2.5-3.0 lakh | Freight/rolling stock upgrades; multiplier effects on steel, cement, logistics |
Sources: PRS India, PIB, Budget documents. Experts stress project delivery for employment and economic multipliers.
Broader infrastructure (roads, highways, urban development) aligns with continuity, supporting overall capex at ~3.1-3.2% of GDP.
Broader Sector Expectations
Other areas in focus:
Agriculture → Productivity via irrigation, warehousing, insurance reforms.
BFSI → Credit growth, PSU bank recapitalisation.
Real Estate → Streamlined approvals, tax incentives.
Healthcare → Preventive care, PPPs.
Market participants view the budget as an opportunity to reinforce India's growth story through targeted support, especially in defence, infrastructure, and railways, while balancing fiscal consolidation. With the presentation just weeks away, stakeholders are watching closely for how these priorities translate into actual allocations and policy measures to sustain momentum toward a Viksit Bharat.
This pre-budget outlook underscores a pragmatic approach: prioritizing quality execution and structural reforms over headline-grabbing spends in a challenging global environment. Investors and industry leaders alike see steady sectoral support as key to maintaining India's economic resilience.
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