Union Budget 2026-27 — Three Kartavyas, Key Highlights and Constitutional Framework (Part A)

CURRENT AFFAIRS | MARCH 2026

The Ninth Consecutive Budget

The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman, marks her ninth consecutive budget — a record in Indian fiscal history. The Budget was framed around the philosophical construct of Three Kartavyas (duties), providing a thematic architecture for resource allocation across the government’s development priorities. With a total estimated expenditure of Rs 53.47 lakh crore and a fiscal deficit target of 4.3% of GDP, the Budget balances expansionary developmental spending with continued fiscal consolidation.

Constitutional Framework for the Budget

The Union Budget derives its constitutional mandate from Article 112, which requires the President to cause an Annual Financial Statement to be laid before both Houses of Parliament. This statement must show estimated receipts and expenditure for the financial year, distinguishing between revenue and capital accounts and between expenditure charged upon the Consolidated Fund of India (non-votable) and other expenditure (votable).

Article 265 is particularly significant for judicial services aspirants — it establishes the principle of “no taxation without legislation,” a foundational principle of fiscal constitutionalism that traces to the Magna Carta (1215) and was crystalised in British parliamentary sovereignty. Every tax levy, cess, surcharge, or fee must have explicit legislative authority, and any imposition without such authority is void and recoverable.

Key Budget Announcements

Biopharma SHAKTI — Rs 10,000 Crore

The Biopharma SHAKTI (Strengthening Healthcare through Affordable Knowledge, Technology, and Innovation) initiative allocates Rs 10,000 Crore for biopharmaceutical research and manufacturing capacity development. Building on India’s demonstrated vaccine manufacturing prowess during the COVID-19 pandemic, this investment targets next-generation biologics, biosimilars, cell and gene therapies, and mRNA platform development. India’s pharmaceutical industry — the “pharmacy of the world” — currently exports to over 200 countries, and Biopharma SHAKTI aims to extend this leadership into advanced biologics.

ISM 2.0 — Indian System of Medicine Modernisation

ISM 2.0 modernises the Indian System of Medicine framework covering Ayurveda, Yoga, Unani, Siddha, and Homeopathy (AYUSH). The initiative includes evidence-based clinical validation of traditional formulations, integration of AYUSH with mainstream healthcare delivery, development of standardised pharmacopoeias, and establishing international quality certification for traditional medicine exports.

Rare Earth Corridors

The announcement of rare earth processing corridors addresses a critical strategic vulnerability. Rare earth elements — essential for defence equipment, electronics, permanent magnets for wind turbines and EV motors — are currently dominated by Chinese supply chains (approximately 60% of global mining and 85% of processing). India possesses significant rare earth deposits (estimated 6% of global reserves) but lacks processing capacity. Dedicated corridors will establish end-to-end processing from ore to finished magnets and alloys.

CCUS — Rs 20,000 Crore

The allocation of Rs 20,000 Crore for Carbon Capture, Utilisation and Storage represents the largest single climate technology investment in any Indian budget. This funding will support pilot projects in steel, cement, and refinery sectors; development of CO2 transport infrastructure; identification and characterisation of geological storage sites; and support for utilisation pathways (enhanced oil recovery, building materials, chemicals).

Seven High Speed Rail (HSR) Corridors

The announcement of seven HSR corridors (beyond the existing Mumbai-Ahmedabad project) represents a transformative infrastructure commitment. HSR corridors, operating at 250-350 km/h, would reduce inter-city travel times by 60-70%, create construction employment, catalyse real estate development along corridors, and reduce aviation demand for short-haul routes (thereby reducing aviation emissions).

Fiscal Architecture — Numbers and Analysis

The Budget’s fiscal architecture reflects continued commitment to capital expenditure-led growth:

Total Expenditure: Rs 53.47 lakh crore — representing a nominal increase of approximately 7.4% over revised estimates for the previous year. Revenue expenditure constitutes approximately 67% while capital expenditure accounts for 33% — a structural improvement from the pre-pandemic ratio of approximately 75:25.

Fiscal Deficit: Targeted at 4.3% of GDP, continuing the glide path from 9.2% (pandemic peak in 2020-21) through 6.4% (2022-23), 5.8% (2023-24), 5.1% (2024-25), and 4.8% (2025-26 RE). The medium-term target of below 4% by 2028-29 remains achievable on this trajectory.

Fiscal Federalism Implications

The Budget’s expenditure through centrally sponsored schemes raises fiscal federalism questions under Article 282 (grants for public purposes) and the recommendations of the Finance Commission. States have persistently argued that increasing earmarked transfers reduce their fiscal autonomy, while the Centre contends that national priority programmes require uniform implementation standards. The Supreme Court in S.R. Bommai v. Union of India (1994) emphasized that fiscal federalism is part of the basic structure, requiring genuine consultation and cooperation between Centre and States.

Source: UPSC Essentials, The Indian Express — March 2026

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