Union Budget 2026-27 Preparation Process Involves Multiple Stakeholders

The Union government has started the intricate process of crafting the Budget for 2026-27. This extensive task, led by the Ministry of Finance, involves contributions from NITI Aayog, various ministries, states, and other stakeholders. Typically, this process kicks off around August or September, well before the finance minister presents it in Parliament on February 1. This timeline allows for comprehensive groundwork and consultations.

The annual financial statement, known as the Union Budget, is prepared under Article 112 of the Constitution. It outlines expected revenue and expenditure, setting the economic direction and policy priorities for the coming year. The Ministry of Finance begins by issuing guidelines to ministries, states, and other bodies to prepare initial expenditure and revenue estimates, which lay the groundwork for the budget.

Budget Preparation Process

Officials compile detailed projections for revenue and expenditure to assess the fiscal deficit. The Chief Economic Advisor offers insights on the macroeconomic framework and fiscal policies. Based on these inputs, the finance minister allocates resources to various ministries and departments, considering feedback from stakeholders and experts.

Throughout December, the finance minister engages in pre-Budget consultations with states, industry representatives, economists, trade unions, and civil society organisations. These discussions aim to gather input on proposed measures and address sectoral needs. Following these consultations, ministries' spending demands are finalised and submitted to the Union Cabinet or Prime Minister for approval.

As the Budget preparation nears completion, the "Halwa Ceremony" marks the beginning of Budget document printing. From this point, strict confidentiality is maintained until the Budget is officially presented in Parliament. On February 1, the finance minister presents the Union Budget in the Lok Sabha, detailing revenue plans, spending priorities, and reforms. All Budget documents are simultaneously available to MPs and the public through the "Union Budget Mobile App" and official portals.

Key Expectations for Budget 2026-27

Finance Minister Nirmala Sitharaman is set to present her ninth consecutive Budget on February 1, 2026. This document will outline the government's policy direction for the financial year. After the presentation, the complete set of documents will be released online. Discussions at the Finance Ministry's pre-Budget consultation with economists in early December focused on strategies to enhance manufacturing, ease the fiscal consolidation path, and address food inflation, trade disruptions, and climate change.

The Budget planning cycle is a meticulous, multi-layered process. It ensures that the government sets a clear economic direction and addresses pressing issues like fiscal consolidation and inflation. As preparations continue, stakeholders hope for a balanced approach that fosters growth while managing challenges.