**Union Budget 2026: Market & Fiscal Brief** **Executive Summary** Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 yesterday, outlining a strategy focused on fiscal consolidation and infrastructure-led growth. The total budget size is pegged at **₹53.5 lakh crore**, with a clear intent to maintain macroeconomic stability while aggressively funding capital assets. **Fiscal Mathematics** * **Fiscal Deficit:** Targeted at **4.3%** of GDP for FY27, a marginal improvement from the **4.4%** revised estimate for FY26. * **Capital Expenditure:** Public capex raised to **₹12.2 lakh crore** (up from ₹11.2 lakh crore), signaling a continued push for asset creation. * **Total Receipts:** Non-debt receipts estimated at **₹36.5 lakh crore**, with net tax receipts projected at **₹28.7 lakh crore**. **Market Reaction & Taxation** Markets reacted sharply to the budget announcement. * **Indices:** The Sensex plunged over **1,800 points** (~2.2%) and Nifty fell nearly **600 points** on Budget day (Sunday session), primarily driven by a hike in Securities Transaction Tax (STT). * **STT Hike:** STT on Futures increased from 0.02% to **0.05%**; Options raised from 0.1% to **0.15%**. * **Income Tax:** No changes to existing tax slabs, though a new Income Tax Act will be implemented from April 1, 2026, aimed at simplification. * **Recovery:** Early trading today (Feb 2) shows a slight rebound as value buying emerges in blue-chip stocks. **Sector Allocations & Key Initiatives** * **Agriculture:** Allocation increased to **₹1.63 lakh crore**. Launch of "Bharat Vistar," a multilingual AI tool for farmers, and a focus on high-value crops like cashew and coconut. * **Defense & Security:** Home Ministry allocated **₹2.55 lakh crore** (9% increase). Defense retains a major share (11%) of total expenditure. * **Infrastructure:** **7 new high-speed rail corridors** proposed along with a dedicated Surat-Dankuni freight corridor. * **Biopharma:** New "Biopharma Shakti" scheme introduced with an outlay of **₹10,000 crore** to boost domestic biologics production. * **Technology:** Launch of ISM 2.0 to strengthen the semiconductor ecosystem and a tax holiday for global data centers. **Strategic Roadmap** The budget reinforces a "confident and fiscally disciplined" approach. By holding the deficit line at 4.3% while expanding the capex kitty to **₹12.2 lakh crore**, the government aims to crowd in private investment without overheating inflation. The focus remains on long-term resilience through digital capacity building and high-multiplier infrastructure spending.