ECONOMY | MARCH 2026
Prelims: Union Budget 2026-27 highlights, SHAKTI initiative, ISM 2.0, MSME classification, CapEx allocation, CCUS, Rare Earth Minerals
Mains: GS-III — Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment; Infrastructure: Energy, Ports, Roads, Airports, Railways
Kartavya 1 — Accelerate and Sustain Economic Growth
Union Finance Minister Nirmala Sitharaman presented her record ninth Union Budget 2026-27 on February 1, 2026 — tagged as a ‘Yuva Shakti Driven Budget’ focused on poor, underprivileged and disadvantaged sections. The FM laid down three Kartavyas (duties) that guided the Budget formulation:
- Kartavya 1: Accelerate and sustain economic growth by enhancing competitiveness and building resilience to volatile global dynamics
- Kartavya 2: Fulfil aspirations of people, build their capacity, and make them strong partners in India’s path to prosperity
- Kartavya 3: Ensure ‘Sab ka Saath, Sab ka Vikas’ — every family, community, region has access to resources and opportunities
Under Kartavya 1, the FM proposed 6 key interventions: scaling manufacturing in 7 strategic sectors, creating champion MSMEs, rejuvenating legacy industrial sectors, delivering a push for infrastructure, ensuring long-term security and stability, and developing city economic regions.
Scaling Up Manufacturing in 7 Strategic Sectors
• Biopharma SHAKTI: Rs 10,000 crore over 5 years for biologics and biosimilars ecosystem
• India Semiconductor Mission (ISM) 2.0: Next phase of semiconductor manufacturing push
• Rare Earth Mineral Corridors: Dedicated corridors in Odisha, Kerala, Andhra Pradesh, Tamil Nadu
• CIE Scheme: Scheme for Enhancement of Construction & Infrastructure Equipment
• 3 Dedicated Chemical Parks: To be established for chemical manufacturing
• Container Manufacturing: Rs 10,000 crore over 5 years to reduce China dependency
• 200 Legacy Industrial Clusters: Revitalization scheme to improve cost competitiveness
SHAKTI stands for Strategic for Healthcare Advancement through Knowledge, Technology and Innovation. It aims to develop India as a global bio-pharma manufacturing hub for domestic production of biologics and biosimilars. Rare earths are a subset of critical minerals — 17 metallic elements from lanthanum (atomic number 57) to lutetium (71), plus scandium (21) and yttrium (39) — vital for defence, electronics, and clean energy technologies.
B — Biopharma SHAKTI
I — India Semiconductor Mission 2.0
R — Rare Earth Mineral Corridors
C — CIE (Construction & Infrastructure Equipment)
C — Chemical Parks (3 dedicated)
C — Container Manufacturing
L — Legacy Industrial Clusters (200)
Champion MSMEs and Textile Sector Push
Recognising MSMEs as a vital engine of growth, the Budget proposed a three-pronged approach to help them grow as ‘Champions’:
- Equity Support — to strengthen capital base
- Liquidity Support — to ease credit access
- Professional Support — to build management capacity
The MSME classification limits were revised significantly — investment limits increased by 2.5 times and turnover limits by 2 times. The new micro enterprise investment limit is Rs 2.5 crore, small enterprises Rs 25 crore, and medium enterprises Rs 125 crore. Turnover limits are Rs 10 crore, Rs 100 crore, and Rs 500 crore respectively.
– Mahatma Gandhi Gram Swaraj Yojana: Boost Khadi handloom sector with training, skilling, production, quality checks
– 5-Part Integrated Programme: National Fibre Scheme (self-reliance in natural fibres), Textile Expansion and Employment Scheme, National Handloom and Handicraft Programme, Tex-eco initiative, Samarth 2.0
Infrastructure Push — CapEx, Freight, Rail and Climate
The Budget proposed public CapEx of Rs 12.2 lakh crore — a multifold increase compared to just Rs 2 lakh crore in FY2014-15. This continues the government’s infrastructure-led growth momentum. Key infrastructure proposals include:
- Infrastructure Risk Guarantee Fund: Prudently calibrated partial credit guarantees to lenders
- Dedicated Freight Corridors: Dankuni (East) to Surat (West) for environmentally sustainable cargo movement
- 20 new National Waterways to be operationalised over next 5 years
- Coastal Cargo Promotion scheme for modal shift from rail and road
- Ship-repair ecosystems at Varanasi and Patna
- 7 High-Speed Rail corridors as ‘growth connectors’ between cities
- CCUS (Carbon Capture Utilization and Storage): Rs 20,000 crore over 5 years
• PROI Scheme: Permitted Individual Persons Resident Outside India to invest in equity instruments of listed Indian companies through Portfolio Investment Scheme
• FEMA Review: Comprehensive review of Foreign Exchange Management Act proposed for user-friendly framework
• Tax Holiday: For foreign cloud data centres in India — extended until 2047
• CapEx (Capital Expenditure): Funds allocated for developing assets contributing to economic growth — includes infrastructure, machinery, healthcare, education
• The Budget’s focus on 7 strategic manufacturing sectors signals a deliberate industrial policy shift from generic PLI to sector-specific interventions
• MSME reclassification could bring thousands of medium enterprises into formal support frameworks
• The CCUS outlay of Rs 20,000 crore represents India’s first major fiscal commitment to carbon capture — critical for net-zero targets
• CapEx at Rs 12.2 lakh crore maintains the infrastructure multiplier effect while the CCUS and green initiatives address climate commitments
Source: UPSC Essentials, The Indian Express — March 2026
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