The Government of India traditionally presents its Annual Budget on 1 February, laying out fiscal commitments for the coming financial year. Yet, the groundwork for that announcement, spanning state allocations, sectoral priorities, and industry needs, begins well in advance.

For the 2025–26 Budget, preparations kick off with pre-budget meetings from 9 October, where foundational revenue and expenditure plans are shaped under the guidance of the Secretary (Expenditure) of the Finance Ministry.

What’s Different in the Budget Planning for 2025–2026?

India’s fiscal planning for FY 2025–26 is unfolding amid escalating geopolitical instability. Ongoing trade conflicts, particularly the imposition of 50% tariffs on Indian goods by the U.S., have strained relations and rattled export sectors.

Simultaneously, the Indian rupee has plummeted to all-time lows against the dollar, inflation is under watch, and GDP growth, while strong recently, risks slowing. Below is a table summarising the geopolitical and macroeconomic stress points likely to influence budgeting decisions:

Scenario / Issue	Description & Budget Relevance
Tumbling Indian rupee	Hitting record lows (₹88/USD), worsening import costs and pressuring subsidies and revenues
50% U.S. tariffs	Severe blow to exports (e.g., textiles, gems), shrinking foreign earnings and tax receipts
Neighbour strains (China, Pakistan)	Border tensions and regional instability may necessitate higher defence and diplomatic outlays
Crawling inflation	Mandates tighter fiscal calibration to balance public support and price stability
Repo rate trends	Monetary easing or tightening affects the cost of capital and borrowing across sectors
Slow GDP growth risks	Though recent GDP grew 7.8%, long-term forecasts warn of deceleration under trade pressure

This table underscores how these dynamics will weigh on revenue forecasting, expenditure flexibility, and sectoral allocations.

In sum, planners must juggle currency volatility, trade headwinds, and domestic demand, all while striving to sustain growth. The 2025-26 Budget must thus prioritise economic resilience, export support, and stimulus where needed to offset external shocks.

Budget 2025-2026 Will Be Beneficial for These Sectors

The impending Budget seeks to advance three chief priorities: boosting GDP growth, strengthening domestic demand, and creating jobs.

Here’s how various sectors may be affected:

Infrastructure & Construction: Elevated capital expenditure on roads, rail, and urban development is expected to spur employment and demand.
Manufacturing & Exports: Targeted subsidies or relief schemes may offset U.S. tariffs, especially in textiles, gems, leather, and engineering goods.
Agriculture & Rural Economy: Enhanced credit, irrigation investment, and scheme expansions (e.g., PM-Kisan) could buoy rural demand.
Technology & Digital Services: Digital economy push, such as expanding UPI credit and fintech, may accelerate, supporting growth and inclusion.
Health & Education: Recurrent and capital allocations for staff, infrastructure, and new programs to improve human capital.
Defence & Strategic Outreach: Rising geopolitical risk may warrant moderated increases, especially on border infrastructure and technology.

Sectors likely gaining a positive boost: infrastructure, rural/agriculture, tech services, health/education.
Sectors potentially under strain include export-oriented manufacturing serving tariffs and certain capital-intensive industries, depending on global demand.

Transitioning now: ministries and financial advisers are required to submit complete data—provisioned in Appendices I through VII—by October 3, including hard-copy submissions for cross-verification.

What Data is Required from Ministries and Financial Advisers for Budget 2025-2026?

Under guidance from the Budget Circular (2026–27), ministries must submit detailed inputs across seven appendices via UBIS and in print by 3 October 2025. These form the basis for the pre-budget meetings starting 9 October.

Appendix I – Revenue Expenditure (Ongoing Expenses)
Includes recurring costs, salaries, pensions, subsidies, interest payments.
Example: The Ministry of Health details hospital staff wages and medicine subsidies.

Appendix II – Capital Expenditure (Assets & Infrastructure)
Covers spending on new infrastructure, roads, railways, defence assets, IT systems.
Example: Railways’ budget for new tracks or train procurement.

Appendix III – Scheme-wise Details
Breakdown of central schemes, existing and proposed—with costs, targets, outcomes.
Example: Agriculture ministry outlines PM-Kisan payouts and new irrigation initiatives.

Appendix IV – Grants & Loans
Funds allocated as grants or loans to states, PSUs, and autonomous bodies, with repayment schedules.
Example: Education ministry’s grants to KVs or IITs.

Appendix V – Receipts (Income Sources)
Revenue from taxes, fees, fines, and PSU dividends.
Example: Petroleum ministry’s dividend projections from ONGC/IOC.

Appendix VI – Pending Liabilities / Committed Expenditure
Unpaid bills, ongoing contractual obligations needing fulfilment.
Example: Defence ministry payments due for pending aircraft orders.

Appendix VII – New Proposals & Justifications
New initiatives with rationale, cost-benefit analysis, and expected impact.
Example: Ministry of IT proposes an AI-skills scheme with cost and outcomes.

These appendices ensure that day-to-day needs, long-term projects, ongoing schemes, revenues, liabilities, and future plans are all transparently captured, critical for informed budget allocation.

Conclusion

Budget 2025–26 presents a delicate balancing act: navigating export shocks from U.S. tariffs, defending against rupee volatility, and sustaining growth amidst global unease. Pre-budget planning commencing 9 October 2025, following data submission by 3 October, lays the foundation for addressing these headwinds while aligning with priorities of growth, demand revival, and job creation.

Sectors like infrastructure, rural/agriculture, digital services, health, and education could see robust support, while export-focused industries may need targeted fiscal cushioning. The seven appendices structure ensures that all facets—expenditure, revenue, liabilities, proposals, are meticulously assessed.

As India prepares to present its Budget on 1 February 2026, the choices made now—from currency defence to sectoral allocations, will shape the nation’s economic trajectory in tumultuous times.

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