Union Budget 2026: The country’s Union Budget will be presented in Parliament on Sunday 1 February 2026. Now less than 24 hours are left for the budget to be presented. On the other hand, the general discussion is often on roads, railways, defense or welfare schemes. At the same time, from the old budget data, we are going to know for which sector the maximum allocation is made. Let us know in which sector the government spends the most.

Government’s biggest expense

According to the revised estimates of Budget 2024-25 and Budget at a Glance 2025-26, interest payments constitute the largest share of total government expenditure. Interest payments were about 24% of total expenditure in 2024-25. For 2025-26, this figure is expected to increase slightly to around 25%. In simple words, every rupee the government spends, almost a quarter of it goes to repay the previous debt. This money does not create new property, jobs or infrastructure.

Largest allocation as per ministry

Among all the ministries, the Defense Ministry gets the highest allocation. In the Budget 2025-26, Rs 6.81 lakh crore has been given to the Defense Ministry. This is about 10% more than last year. This expenditure includes salaries, defense pension, modernisation, purchase of weapons and operational preparation.

share of states

A large part of central expenditure goes directly to the states. The states’ share in central taxes and duties is about 22% of the total expenditure. This amount is mandated by constitutional provisions and the recommendation of the Finance Commission to support state level governance and development.

Infrastructure and transportation

Infrastructure remains a big priority area. A substantial budget is given to the Ministry of Road Transport and Highways for roads and highways. These allocations are focused on asset creation, logistics efficiency and long-term economic growth.

If we talk about rural development sector, Rs 2.66 lakh crore was given to this sector in the last budget. Its objective was to generate employment, housing, cleanliness and basic infrastructure in the village. Along with this, subsidy on food, fertilizer and other essential items is about 6% of the total government expenditure. Whereas the pension of government employees is about 4% of the budget. Old budget data clearly shows that interest payments dominate government expenditure. This is more than defense and infrastructure. This shows why fiscal discipline, controlled borrowing and economic growth are necessary.

Also read: How much money will be spent in which scheme, how is it decided while making the budget; What is the complete calculation?

Finance Minister Nirmala Sitharaman will present the Union Budget 2026–27 on 1 February 2026 and this time the expectations from the budget are very high. The biggest challenge for the government is to maintain fiscal discipline while supporting growth amid global geopolitical tensions, slow growth and market volatility. India’s economy may show around 7.4% growth in FY26, which will be supported by infra spending, services exports and private investment. Slight slowdown in consumption and global risks remain a concern. The focus of Budget 2026 is expected to be on Capital Expenditure, where infra spending could go up to Rs 12–13 lakh crore, which will include roads, railways, defence, renewable energy and urban infrastructure. An attempt may be made to keep the fiscal deficit in the range of 4.2–4.4% in FY27. Emphasis may also be on raising resources from targeted schemes, market reforms, ease of doing business, digital systems, asset monetization and RBI dividend for rural demand, jobs and skill development.

Union Finance Minister Nirmala Sitharaman said that the government has not made any shortage in capital expenses. He further said that for this, the Central Government has released Rs 1.46 crore to the states, which is more than the budget allocated in March.

The Union Minister said in his statement in Parliament that it was requested to continue the schemes running on behalf of the state governments, so the Center keeps increasing for the allocation of that scheme.

He said that such requests met Nagaland, Manipur, Rajasthan and Andhra Pradesh during last year i.e. 2024-25. The Finance Minister said that capital expenses have multidimensional effects and economy’s capacity increases, which is why the scheme was included in every financial year.

The Union Finance Minister said that under the Special Assistance Scheme, about Rs 3,27,558 crore is to be issued to the states in this order. A total of Rs 1,53,673 crore was fixed for the scheme in financial year 2025.

Responding to the questions of Congress leader P. Chidambaram, Nirmala Sitharaman said that the Center has not reduced any kind of capital expenses and the capital expenditure in the financial year 2025 was Rs 11.11 lakh crore, while it increased to Rs 11.21 lakh crore in FY 2026.

He said that the plan for special assistance to the states as an interest free loan of 50 years for capital expenditure was launched in October 2020. However, during the Corona epidemic, this scheme started in a difficult fiscal and in a period of reduction in tax revenue.

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