UPSC Mains Current Affairs for 2 February 2026

Union Budget 2026–27 Latest News

• Union Minister for Finance presented the Union Budget 2026–27 in Parliament, the first to be prepared in Kartavya Bhawan.
• The Budget is anchored around three “kartavyas” (duties). The first focuses on accelerating and sustaining economic growth by boosting productivity, competitiveness, and resilience amid global uncertainties. 
• The second aims to fulfil people’s aspirations by strengthening their capacities and making them active partners in India’s prosperity. 
• The third, aligned with the vision of Sabka Saath, Sabka Vikas, seeks to ensure inclusive access to resources, amenities, and opportunities so that every family, region, and sector can meaningfully participate in growth.

Union Budget 2026–27: Key Fiscal Estimates

• Receipts and Expenditure
  • Non-debt receipts are estimated at ₹36.5 lakh crore.
  • Total expenditure is projected at ₹53.5 lakh crore.
  • Centre’s net tax receipts are estimated at ₹28.7 lakh crore.
• Borrowings
  • Gross market borrowings are pegged at ₹17.2 lakh crore.
  • Net market borrowings from dated securities are estimated at ₹11.7 lakh crore.
• Revised Estimates for 2025–26
  • Non-debt receipts stand at ₹34 lakh crore, with net tax receipts of ₹26.7 lakh crore.
  • Total expenditure is revised to ₹49.6 lakh crore, including capital expenditure of about ₹11 lakh crore.
• Fiscal Deficit
  • Fiscal deficit (BE 2026–27) is estimated at 4.3% of GDP.
  • Fiscal deficit (RE 2025–26) remains at 4.4% of GDP, unchanged from the Budget Estimate.
• Debt Position
  • Debt-to-GDP ratio is projected to decline to 55.6% in BE 2026–27, from 56.1% in RE 2025–26, indicating gradual fiscal consolidation.

First Kartavya — Accelerating and Sustaining Economic Growth

• The first Kartavya focuses on boosting productivity, competitiveness, and resilience through six major interventions.

1. Scaling Up Manufacturing in Strategic and Frontier Sectors

• Biopharma and Healthcare Manufacturing

• • Biopharma SHAKTI launched with an outlay of ₹10,000 crore over five years to position India as a global biopharma hub.
  • Creation of a biopharma network with 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgradation of 7 existing institutes.
  • Establishment of 1,000+ accredited clinical trial sites across India.

• Semiconductors and Electronics

• • India Semiconductor Mission (ISM) 2.0 to promote equipment and material manufacturing, full-stack Indian IP, and industry-led R&D and training.
  • Electronics Components Manufacturing Scheme outlay increased to ₹40,000 crore.

• Critical Minerals and Chemicals

• • Dedicated Rare Earth Corridors to be set up in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for mining, processing, R&D, and manufacturing.
  • Scheme to support States in establishing 3 Chemical Parks through a cluster-based, plug-and-play challenge route.
• Strengthening Capital Goods Capability
  • Hi-Tech Tool Rooms to be set up by CPSEs at two locations as digitally enabled automated service bureaus.
  • Construction and Infrastructure Equipment (CIE) Scheme to strengthen domestic manufacturing of high-value, advanced equipment.
  • Container Manufacturing Scheme with over ₹10,000 crore outlay over five years to build a globally competitive ecosystem.
• Integrated Programme for the Textile Sector
  • National Fibre Scheme for self-reliance in natural fibres (silk, wool, jute), man-made fibres, and new-age fibres.
  • Textile Expansion and Employment Scheme to modernise traditional clusters with capital support, technology upgradation, and common testing facilities.
  • Mega Textile Parks in challenge mode focusing on technical textiles.
  • Mahatma Gandhi Gram Swaraj Initiative to strengthen khadi, handloom, and handicrafts through skilling, quality improvement, branding, and global market linkage.

2. Rejuvenating Legacy Industrial Sectors

• Scheme announced to revive 200 legacy industrial clusters by improving cost competitiveness and efficiency through infrastructure and technology upgrades.

3. Creating “Champion SMEs” and Supporting Micro Enterprises

• ₹10,000 crore SME Growth Fund to nurture future “Champion SMEs” based on defined performance criteria.
• Additional ₹2,000 crore allocation to the Self-Reliant India Fund to support micro enterprises and ensure access to risk capital.
• Professional bodies such as ICAI, ICSI, and ICMAI to develop short-term courses and tools to create ‘Corporate Mitras’, especially in Tier-II and Tier-III towns.

4. Delivering a Powerful Push to Infrastructure

• Public Capex and Risk Mitigation

• • Public capital expenditure increased to ₹12.2 lakh crore in FY 2026–27.
  • Infrastructure Risk Guarantee Fund to boost private developer confidence during construction phases.
  • Monetisation of CPSE real estate through dedicated REITs.

• Logistics, Waterways and Coastal Shipping

• • New Dedicated Freight Corridor from Dankuni to Surat.
  • 20 new National Waterways to be operationalised over five years, starting with NW-5 in Odisha.
  • Ship repair hubs for inland waterways at Varanasi and Patna.
  • Coastal Cargo Promotion Scheme to raise modal share of waterways and coastal shipping from 6% to 12% by 2047.

• Aviation and Connectivity

• • Incentives for indigenous seaplane manufacturing and last-mile connectivity.
  • Seaplane VGF Scheme to support operations and tourism.

5. Ensuring Long-Term Energy Security

• ₹20,000 crore outlay over five years for Carbon Capture, Utilisation and Storage (CCUS) technologies.

6. Developing City Economic Regions (CERs)

• ₹5,000 crore per CER over five years through a reform-linked, results-based challenge mechanism.
• Development of seven high-speed rail corridors as growth connectors:
  • Mumbai–Pune
  • Pune–Hyderabad
  • Hyderabad–Bengaluru
  • Hyderabad–Chennai
  • Chennai–Bengaluru
  • Delhi–Varanasi
  • Varanasi–Siliguri

Financial Sector and Urban Finance Reforms

• High-Level Committee on Banking for Viksit Bharat to align banking with future growth needs.
• Restructuring of PFC and REC to improve scale and efficiency of public sector NBFCs.
• Review of FEMA (Non-Debt Instruments) Rules to modernise foreign investment regulations.
• ₹100 crore incentive for municipal bond issuances above ₹1,000 crore to deepen urban bond markets.

Second Kartavya: Fulfilling Aspirations and Building Human Capacity

• The Second Kartavya focuses on strengthening human capital, skills, and services-led growth, positioning people as central partners in India’s development journey.

Education–Employment–Enterprise Linkage

• A High-Powered ‘Education to Employment and Enterprise’ Standing Committee to be set up.
• The committee will recommend measures to strengthen the services sector as a core driver of Viksit Bharat.

Creating Professionals for Viksit Bharat

• Upgradation of existing Allied Health Professional (AHP) institutions and establishment of new AHP institutions in both government and private sectors.
• Addition of 1 lakh Allied Health Professionals over the next five years.
• Establishment of five Regional Medical Hubs to promote India as a global medical tourism hub.

Strengthening AYUSH Systems

• Establishment of three new All India Institutes of Ayurveda to strengthen education, research, and healthcare delivery in traditional medicine systems.

Animal Husbandry and Veterinary Services

• Scaling up availability of over 20,000 veterinary professionals.
• Launch of a loan-linked capital subsidy scheme to support:
  • Veterinary and para-veterinary colleges
  • Veterinary hospitals
  • Diagnostic laboratories
  • Breeding facilities in the private sector

Promoting the Orange Economy (Creative Industries)

• Support to the Indian Institute of Creative Technologies, Mumbai to set up AVGC (Animation, Visual Effects, Gaming and Comics) Content Creator Labs in:
  • 15,000 secondary schools
  • 500 colleges

Education Infrastructure and Inclusion

• Creation of five University Townships near major industrial and logistics corridors through a challenge-based approach.
• Establishment of one girls’ hostel in every district through VGF or capital support to improve access to education.

Tourism and Hospitality Development

• Skill Development in Tourism

• • National Council for Hotel Management and Catering Technology to be upgraded to the National Institute of Hospitality.
  • Pilot scheme to upskill 10,000 tourist guides at 20 sites through a 12-week standardized training programme in hybrid mode, in collaboration with an IIM.

• Digital Tourism Infrastructure

• • Creation of a National Destination Digital Knowledge Grid to digitally document all cultural, spiritual, and heritage sites.

Heritage and Cultural Tourism

• Development of 15 major archaeological and heritage sites—including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace—into experiential cultural destinations.

Sports Development

• Launch of the Khelo India Mission to transform India’s sports ecosystem over the next decade.

Third Kartavya: Sabka Saath, Sabka Vikas through Targeted Inclusion

• The Third Kartavya focuses on inclusive growth, ensuring that farmers, vulnerable groups, and lagging regions actively participate in India’s development process.

Increasing Farmer Incomes

• Water Resources and Rural Assets - Integrated development of 500 reservoirs and Amrit Sarovars to strengthen irrigation, water security, and rural livelihoods.
• High-Value Agriculture Push - Government support for high-value crops such as coconut, sandalwood, cocoa, and cashew, particularly in coastal regions.
  • Launch of a Coconut Promotion Scheme to increase production and productivity.
• Digital Agriculture: Bharat-VISTAAR - Launch of Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources).
  • A multilingual AI-based platform integrating AgriStack portals with ICAR’s agricultural practice packages to improve farm decision-making.

Empowering Divyangjan

• Launch of Divyangjan Kaushal Yojana to enable persons with disabilities to access task-oriented and process-driven roles.
• Focus sectors include IT, AVGC, Hospitality, and Food & Beverages.

Strengthening Mental Health and Trauma Care

• Establishment of NIMHANS-2 in North India.
• Upgradation of National Mental Health Institutes at Ranchi and Tezpur as Regional Apex Institutions.

Focus on Purvodaya States and the North-Eastern Region

• Regional Infrastructure and Mobility - Development of an integrated East Coast Industrial Corridor with a key node at Durgapur.
  • Creation of five tourism destinations across the five Purvodaya States.
  • Deployment of 4,000 e-buses to improve sustainable public transport.
• Buddhist Circuit Development - Launch of a scheme to develop Buddhist Circuits across Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura.

Fiscal Support to States: 16th Finance Commission

• Allocation of ₹1.4 lakh crore to States in FY 2026-27 as Finance Commission grants, in line with the recommendations of the 16th Finance Commission.

Source: PIB | PIB

Union Budget 2026–27 Latest News

• Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27 in Parliament, describing it as a Yuva Shakti–driven Budget rooted in the government’s Sankalp to prioritise the poor, underprivileged and disadvantaged.

Direct Taxes: Key Proposals in Union Budget 2026–27

• New Income Tax Framework

• • The New Income Tax Act, 2025 will come into force from April 2026.
  • Simplified Income Tax Rules and Forms to be notified shortly.
  • Redesigned tax forms to enable easy compliance for ordinary taxpayers.

• Relief and Ease for Taxpayers
  • TCS Rationalisation- Overseas tour programme packages: TCS reduced to 2% (from 5%–20%), with no amount threshold.
    • Liberalized Remittance Scheme (LRS) for education and medical purposes: TCS reduced from 5% to 2%.
  • TDS Simplification
    • Manpower supply services brought under TDS provisions applicable to contractors.
    • TDS rate fixed at 1% or 2%, benefiting labour-intensive sectors.
    • Automated, rule-based process introduced for small taxpayers to obtain lower or nil TDS certificates.
  • Return Filing Reforms
    • Time limit for revising returns extended from 31 December to 31 March, with nominal fee.
    • Staggered timelines for filing income tax returns to ease compliance.
  • Foreign Asset Disclosure
    • One-time, 6-month disclosure scheme for small taxpayers such as students, young professionals, tech employees, and relocated NRIs to declare overseas income or assets below a specified threshold.
• Rationalising Penalty and Prosecution
  • Reducing Litigation- Assessment and penalty proceedings to be integrated through a single common order. Pre-payment requirement reduced from 20% to 10%, calculated only on core tax demand.
    • Taxpayers allowed to update returns even after reassessment begins, with an additional 10% tax.
  • Expanded Immunity Provisions
    • Immunity from penalty and prosecution extended from under-reporting to misreporting, subject to payment of 100% additional tax.
    • Decriminalisation of:
    • Non-production of books of accounts
    • Non-deduction of TDS where payment is made in kind
    • Immunity from prosecution for non-disclosure of non-immovable foreign assets below ₹20 lakh, with retrospective effect from 1 October 2024.
• Tax Support for Cooperatives

• • Deduction extended to cooperatives supplying cattle feed and cotton seed, in addition to milk, oilseeds, fruits and vegetables.
  • Inter-cooperative dividend income allowed as deduction under the new tax regime, if passed on to members.
  • Three-year tax exemption on dividend income for notified national cooperative federations on investments made up to 31 January 2026, subject to redistribution.

• Strengthening the IT Sector

• • Simplified Tax Regime for IT Services

• • • Software development, ITES, KPO and contract R&D services clubbed into a single category: Information Technology Services.
    • Common safe harbour margin fixed at 15.5%.
    • Safe harbour threshold increased from ₹300 crore to ₹2,000 crore.
    • Safe harbour approvals to be automated and valid for five continuous years.

• • Faster APA Mechanism

• • • Unilateral Advanced Pricing Agreements (APA) for IT services to be concluded within two years (extendable by six months).
    • Facility of modified returns extended to associated entities under APA.

• Attracting Global Business and Investment

• • Tax holiday till 2047 for foreign companies providing global cloud services using Indian data centres.
  • 15% cost-based safe harbour for related-party data centre services.
  • Safe harbour for bonded warehouse component warehousing at 2% profit margin, resulting in low effective tax.
  • Five-year income tax exemption for non-residents supplying capital goods to toll manufacturers in bonded zones.
  • Exemption on global income of non-resident experts for five years under notified schemes.
  • MAT exemption for non-residents taxed on presumptive basis.

• Tax Administration Reforms

• • Constitution of a Joint MCA–CBDT Committee to integrate ICDS into IndAS, eliminating dual accounting from FY 2027–28.
  • Rationalisation of the definition of ‘accountant’ for Safe Harbour Rules.

• Other Key Tax Proposals
  • Buyback Taxation
    • Buybacks for all shareholders to be taxed as capital gains.
    • Additional buyback tax on promoters:
    • 22% for corporate promoters
    • 30% for non-corporate promoters
  • Transaction and Market Taxes
    • TCS on alcoholic liquor, scrap and minerals reduced to 2%.
    • TCS on tendu leaves reduced from 5% to 2%.
    • STT on futures increased to 0.05%.
    • STT on options premium and exercise increased to 0.15%.
  • MAT Reforms
    • MAT to become final tax from 1 April 2026.
    • MAT rate reduced from 15% to 14%.
    • No fresh MAT credit accumulation post April 2026.
    • Existing MAT credit usable only under new tax regime, limited to 25% of tax liability.

 

Indirect Taxes: Key Proposals in Union Budget 2026–27

• The proposals on Customs and Central Excise aim to simplify the tariff structure, support domestic manufacturing, enhance export competitiveness, correct duty inversion, and improve ease of living and doing business.

1. Rationalisation of Customs Duties

• Support for Exports and Manufacturing

• • Marine, Leather and Textile sectors:
    • Duty-free import limit for specified inputs used in seafood exports increased from 1% to 3% of FOB value.
    • Duty-free inputs for leather and synthetic footwear exports allowed.

• Energy and Clean Technology

• • Extension of basic customs duty (BCD) exemption on capital goods used for manufacturing Lithium-ion cells.
  • BCD exemption on sodium antimonate used in manufacturing solar glass.
  • Entire value of biogas excluded while calculating excise duty on biogas-blended CNG.

• Nuclear, Critical Minerals and Consumer Electronics

• • Extension of BCD exemption on imports for nuclear power projects till 2035.
  • BCD exemption on capital goods required for processing critical minerals.
  • BCD exemption on specified parts used in the manufacture of microwave ovens.

• Civil and Defence Aviation

• • BCD exemption on components and parts for manufacturing civilian, training and other aircraft.
  • BCD exemption on raw materials imported for manufacture of aircraft parts used in defence MRO operations.
  • Special Economic Zones
  • One-time special measure to allow eligible SEZ manufacturing units to sell goods to the Domestic Tariff Area (DTA) at concessional duty rates.

2. Ease of Living Measures

• Tariff rate on dutiable personal imports reduced from 20% to 10%.
• BCD exemption on 17 drugs and medicines.
• Seven additional rare diseases added for duty-free personal imports of medicines and Food for Special Medical Purposes (FSMP).

3. Customs Process Reforms

• Trade Facilitation

• • Customs processes to adopt minimal intervention for faster cargo movement.
  • Duty deferral period for Tier-2 and Tier-3 Authorised Economic Operators (AEOs) increased from 15 to 30 days and extended to eligible manufacturer-importers.
  • Validity of advance rulings binding on Customs extended from 3 to 5 years.
  • Government agencies encouraged to use AEO accreditation for preferential cargo clearance.

• Warehousing Reforms

• • Customs warehousing framework to shift to a warehouse-operator-centric model, with:
    • Self-declarations
    • Electronic tracking
    • Risk-based audits

4. Ease of Doing Business Initiatives

• Single interconnected digital window for cargo clearances from all government agencies by end-FY.
• Immediate customs clearance for goods with no compliance requirements after online registration.
• Roll-out of Customs Integrated System (CIS) within two years as a unified, scalable platform.
• Phased expansion of non-intrusive scanning using AI and advanced imaging, with the goal of scanning all containers at major ports.

5. Trade, Logistics and E-commerce Boost

• Fish caught by Indian vessels in the EEZ or High Seas made duty-free.
• Landing of such fish at foreign ports treated as export of goods.
• Removal of ₹10 lakh value cap per consignment on courier exports, supporting MSMEs, artisans and start-ups using e-commerce.

6. Baggage and Dispute Resolution Reforms

• Baggage clearance rules to be revised to enhance duty-free allowances in line with modern travel patterns.
• Dispute settlement mechanism allowing honest taxpayers to close cases by paying an additional amount in lieu of penalty.

Source: PIB | PIB