# ₹1.4 lakh crore tax devolution to states, ₹12.2 lakh crore capex boost, ₹10,000 crore SME Growth Fund, critical mineral facilities in Odisha, Kerala, AP & TN, and ₹4,000 crore Self Reliance Fund top-up announced. Read full details.
New Delhi: Finance Minister Nirmala Sitharaman wrapped up her ninth consecutive Union Budget presentation with a major federalism push, announcing ₹1.4 lakh crore tax devolution to states at 41% share, alongside a ₹12.2 lakh crore capex surge, rare earth corridors, and a ₹10,000 crore MSME Growth Fund. This has fueled searches for “Budget 2026 tax devolution states Rs 1.4 lakh crore live,” “16th Finance Commission Budget 2026,” “capex 12.2 lakh crore highlights,” and “MSME fund 10000 crore updates.” Here’s the complete breakdown of all key announcements from the speech.
Overview of Union Budget:
Presented on a historic Sunday, the Budget underscores India’s resilience as a “ray of hope” globally, with “reforms over rhetoric” and decisive steps towards Viksit Bharat. Part B focused on vision amid US tariffs and global volatility. Key fiscal targets: Deficit at 4.3% of GDP for FY27; debt-to-GDP at 50% by 2031. AI is a growth multiplier; “Reform Express” drives reforms.
Fiscal and Economic Targets
- Fiscal deficit estimated at 4.3% of GDP for FY27.
- Debt-to-GDP ratio targeted at 50% by 2031.
Capital Expenditure and Infrastructure Boost
- Public capital expenditure increased to Rs 12.2 lakh crore for FY27, up from Rs 11.2 lakh crore in BE 2025-26.
- Focus on infrastructure in tier-2 and tier-3 cities with over 5 lakh population.
- 7 high-speed corridors proposed as growth connectors: Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Delhi–Varanasi, Amritsar–Jamnagar, Varanasi–Kolkata, Chennai–Mysore.
- Northeast boost via ‘Mission Purvodaya’ for regional development.
Manufacturing and Strategic Sector Initiatives
- India Semiconductor Mission (ISM) 2.0 launched with Rs 40,000 crore outlay for chip equipment manufacturing, R&D, and training.
- Electronics Components Manufacturing Scheme announced.
- Biopharma Shakti scheme with Rs 10,000 crore over 5 years to develop India as a global biopharma manufacturing hub and support domestic innovation.
- Dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for critical mineral facilities.
- Scheme for container manufacturing ecosystem with Rs 10,000 crore over 5 years.
- Mega textile parks announced.
- Rs 20,000 crore outlay for carbon capture and utilisation scheme across sectors like steel and cement.
- Support for states in setting up 3 dedicated chemical paths.
- Proposal to restructure Power Finance Corp (PFC) and Rural Electrification Corp (REC).
MSME/SME Focus: The Rs 10,000 Crore Proposal
The government has announced a ₹10,000 crore SME Growth Fund to develop champion MSMEs, enhance access to capital, support future job-creating enterprises, and provide targeted incentives. At the same time, it unveiled a three-pronged strategy for MSMEs, which includes equity support through the SME Growth Fund, revival of 200 legacy industrial clusters, and an additional ₹2,000 crore top-up to the Self-Reliant India Fund to provide critical risk capital to micro-enterprises.
Furthermore, the government emphasised that MSMEs are a vital engine of economic growth, and the new fund will help protect the sector from external risks, including threats from US tariffs. In addition, the government stated that the TReDS platform will serve as a pricing benchmark for large corporations, thereby enhancing transparency, building trust, and ensuring timely payments to MSMEs.
Tax Devolution and Federalism (Latest Announcement)
- Govt accepts recommendations of 16th Finance Commission (report tabled in Lok Sabha).
- Retains 41% tax devolution share to states; Rs 1.4 lakh crore provided as tax devolution to states in FY27.
- Framework for tax devolution between Centre and states for 2026-2031 period.
Banking and Financial Sector Reforms
- High-level banking committee to be set up for Viksit Bharat.
- Committee to review banking sector and align it with India’s next growth phase.
Other Key Announcements
- PLI infusion of Rs 10,000 crore for medical devices to reduce 70% import dependence and create Rs 1.2 lakh crore domestic production by 2030.
- Extension of Ayushman Bharat to 50 crore more citizens, including gig workers.
- R&D credits up to 200% for biotech sector.
- Train 10,000 tourist guides to boost tourism.
- All items under MSPP list now get minimum 50% profit margin over production cost.
- MSP for major crops to be increased.
- New scheme for small taxpayers; several TCS, TDS changes (e.g., threshold adjustments and rate tweaks).
With the speech emphasizing manufacturing, federal cooperation, and MSMEs, the Budget aims for 7%+ growth. Markets rose 0.5-1% post-announcement on capex and devolution positivity. Post-speech, FM will interact with 30 college students. Stay tuned for full reactions and documents.
