Beyond the FM’s speech: How to read the Union Budget document

From the Budget speech to the Finance Bill, here’s how to decode what the government is really saying

Last Updated: Jan 21, 2026, 16:47 IST6 min

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File) Union Finance Minister Nirmala Sitharaman holds up a folder outside the Finance Ministry ahead of the presentation of the 'Union Budget 2025-26', on February 1, 2025 in New Delhi, India. Photo by Salman Ali/Hindustan Times via Getty Images

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Finance Minister Nirmala Sitharaman will present the Union Budget 2026-27, her ninth consecutive Budget, on Sunday, February 1. For most people, the Union Budget is often reduced to a few headline outcomes: Whether there is income tax relief, whether fuel prices might shift, or whether spending on jobs, infrastructure and welfare will rise. But the Budget story is much bigger than what is captured in the speech alone.

For starters, the Union Budget is not a single document, but a set of documents that together explain the government’s plan for revenue, spending, borrowing and taxation down to the last rupee.

Here is a step-by-step guide to understanding the Budget.

What is the Union Budget?

The Union Budget is the Central government’s financial plan for the coming financial year, which runs from April 1 to March 31. Financial year 2026 (FY27) will begin from April 1, 2026 and run through to March 31, 2027.

In simplest terms, the Budget answers four core questions:

How much money will the government raise (through taxes and other sources)?
How much will it spend, and what are the priorities?
How much will it borrow to bridge the gap between receipts and expenditure?
What changes will it propose in tax laws and financial rules to implement these plans?

For example, in Budget 2025-26, the government estimated total expenditure at Rs50.65 trillion, up 7.4 percent over the revised estimate of 2024-25, according to PRS analysis. Receipts (excluding borrowings) were estimated at Rs34.96 trillion, implying borrowing would bridge the gap. PRS also pointed out that interest payments formed 25 percent of total expenditure, and about 37 percent of revenue receipts.

What it is not

The Union Budget is not the place where everything about the economy gets decided. For example, Goods and Services Tax (GST) rates are decided by the GST Council, where the Union and state finance ministers participate, and not unilaterally through the Budget speech.

Read the 'big picture' first

The fastest way to understand the government’s intent is to start with the top-level priorities. These typically show up in the opening sections of the Finance Minister’s speech and in headline numbers like the fiscal deficit and capital expenditure (capex). These are the markers that tell you what kind of Budget it is: Growth-focussed, consolidation-focussed, reform-focussed, or a balancing act.

A Budget can promise many initiatives, but its priorities are revealed by:

Fiscal deficit (how much the government plans to borrow)
Total expenditure (the overall spending plan)
Capital expenditure (spending on asset creation, infrastructure, long-term growth)
Revenue expenditure (day-to-day spending, subsidies, salaries, interest payments)
Assumptions on nominal GDP growth (important for revenue estimates)

In a Budget season, many discussions revolve around whether the government is prioritising growth support or fiscal consolidation. For instance, in its preview note for FY27, Motilal Oswal expects the government to target a gross fiscal deficit of 4.3 percent of gross domestic product (GDP), slightly lower than 4.4 percent in FY26, indicating continued fiscal consolidation, even while maintaining capex focus.

Understanding the Budget speech

The Budget speech is divided into Part A and Part B. Part A covers the government’s broad economic direction, welfare programmes, sectoral initiatives, and some important macro numbers. It may include the fiscal deficit target, allocations for large schemes, and priorities like infrastructure, manufacturing, agriculture, education, health, jobs and skilling.

Part B is where tax changes are announced. This includes changes to personal income tax, corporate tax, customs duties, and other direct and indirect tax measures (excluding GST).

It’s important to look out for what the government is signalling about:

How it sees growth and inflation risks
Whether it is tightening or expanding spending
Whether it is prioritising long-term capex over short-term giveaways
Which sectors it believes will shape India’s next phase of growth

In Budget 2025-26, the tax slabs announced were as follows:

Nil: Up to Rs4 lakh
5 percent: Rs4 lakh to Rs8 lakh
10 percent: Rs8 lakh to Rs12 lakh
15 percent: Rs12 lakh to Rs16 lakh
20 percent: Rs16 lakh to Rs20 lakh
25 percent: Rs20 lakh to Rs24 lakh
30 percent: Above Rs24 lakh

Reading the Budget in the right order

If you want to understand the Budget efficiently, follow this order:

1) Budget at a Glance

This is the best starting point for most readers. It summarises the key numbers: Receipts, expenditure, fiscal deficit, and major allocations. If you read only one document, it should be this one. It tells you, at a glance, how the government is balancing revenue, spending and borrowing.

2) Annual Financial Statement (AFS)

This is the main constitutional Budget document. It presents the government’s estimated receipts and expenditure for the year. This can be looked at through two lenses:

Revenue account (routine spending and income)
Capital account (investment and asset creation)

3) Expenditure Budget / Expenditure Profile

This breaks down planned spending ministry-wise, scheme-wise and purpose-wise. This is the place to track whether the government has increased funding for healthcare, railways, defence, rural development, education or housing.

Revenue expenditure here refers to recurring spending (salaries, pensions, subsidies, administration, interest payments). While capital expenditure (capex) is long-term spending (roads, railways, defence equipment, infrastructure).

4) Receipts Budget

This explains where the government expects to get its money, including tax revenue and non-tax revenue. This is where you can find:

Direct taxes (income tax, corporate tax)
Indirect taxes (customs, excise, GST components)
Non-tax revenue (dividends from public sector enterprises, RBI surplus transfer, telecom receipts, etc.)
Disinvestment or asset monetisation targets
Borrowing and other financing sources

The Finance Bill

Announcements in the Budget do not automatically become law. A large part of the Budget is implemented only after Parliament approves relevant legal changes through the Finance Bill, which later becomes the Finance Act.

The Finance Bill includes the text of amendments and changes to laws such as those related to:

Income tax
Customs duties
Excise duties
Other financial and taxation-related provisions

The Memorandum Explaining the Provisions in the Finance Bill summarises and explains the proposed changes in a more readable format.

Demands for Grants

The Demands for Grants provide detailed expenditure estimates for each ministry and department, and these are voted on in the Lok Sabha (Lower House of Parliament).

This document becomes especially useful if you want to track spending in a very specific way, such as how much is being spent on defence equipment vs defence pensions, how much a ministry is getting for a flagship programme, whether funding is shifting across years, etc.

Fiscal policy statements

The Union Budget includes fiscal policy statements mandated under the Fiscal Responsibility and Budget Management Act (FRBM Act), along with supporting macro framework documents.

These documents help answer how the government justifies its deficit and borrowing plan, what assumptions it is using about growth and inflation, and how the debt trajectory is being managed.

Where the Economic Survey fits in

The Economic Survey is published before the Budget. It is not the Budget but it is one of the most important documents to read if you want context. This year, it will be released on February 28.

The Economic Survey is the government’s annual review of the economy. It lays out:

What has happened to growth, inflation, trade, jobs and investment
What the government sees as risks and opportunities
What reforms it believes are needed
The analytical thinking that can shape Budget priorities

To understand why a Budget is prioritising certain areas—such as manufacturing, exports, capex, or welfare support—the Economic Survey can provide the framing.

What to watch in Budget 2026-27

First, the fiscal consolidation path, whether the government keeps the deficit trajectory steady while sustaining growth support.
Second, the capex story, especially where allocations are heading.
Third, the composition of revenue, particularly how much the Budget relies on tax buoyancy versus non-tax flows like RBI dividends.

First Published: Jan 21, 2026, 16:59

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