What the 2026 Budget Actually Delivered

Budgets are designed to communicate intent.

Revised estimates tell us what actually happened.

As the final note in The India Budget Files, this blog steps away from speeches and headlines and looks only at how Budget 2025-26 played out once execution met reality,  across revenues, expenditure, ministries, and the balance sheet.

What emerges is not a story of fiscal stress or excess, but one of deliberate trade-offs, uneven execution, and cautious rebalancing.

1. Revenue & Expenditure: Policy choices came with a cost, and a cushion

One theme runs consistently through the revenue and expenditure numbers, as well as the one-rupee breakdown of the Budget. Tax policy choices mattered. 

On the revenue side, two deliberate measures shaped outcomes:

• Higher income tax thresholds under the new regime, aimed at individuals

• GST relief measures around consumption, including festive-season benefits

Both worked in the intended direction, easing the tax burden on households and supporting consumption. But they also had a visible fiscal impact.

What the numbers show:

• Income tax and GST collections came in below Budget Estimates

• The shortfall was not a surprise; it was the cost of policy intent

What is noteworthy is how this gap was managed. Lower tax receipts were partially offset by stronger non-tax revenues, including:

• Higher receipts from communications

• Improved interest receipts

• Dividends from public sector enterprises and financial institutions

In effect, the government chose to forego some tax revenue to support households, rely more on non-tax income to maintain fiscal balance

On the expenditure side:

• Revenue expenditure undershot the budget, helping contain the revenue deficit

• Core, non-discretionary spends (interest, defence, transfers) remained intact

• Adjustment happened at the margin, not at the core

This was not fiscal slippage. It was fiscal absorption of policy trade-offs.

2. Ministry Spending: When Ambition meets Execution

The sharper story emerges when we look at revenue expenditure by ministries and departments, especially those that were central to the government’s growth narrative over the last few years.

Several key ministries saw significant downward revision from Budget to Revised Estimates, most notably:

• Electronics & Information Technology

• MSME

• Housing & Urban Affairs

These are not peripheral departments. They are central to employment, manufacturing, and urban growth.

What explains the dip? The reductions do not suggest a withdrawal of intent. They raise a more uncomfortable question: execution versus absorption.

• In Electronics & IT, large allocations linked to manufacturing incentives and ecosystem development faced slower rollout than anticipated.

• In MSME, several scheme-based interventions saw a sharp fall in actual spending, despite strong policy emphasis. This points to challenges in scheme design, on-ground uptake and institutional capacity at the implementation level

• In Housing & Urban Affairs, project phasing, state-level coordination, and approval timelines constrained spending.

The pattern is consistent across these ministries. Allocations were ambitious. Absorption was uneven.

This raises an important distinction for readers of the Budget. Lower spending here is not necessarily a signal of reduced priority. But it does force a reassessment of execution readiness and delivery mechanisms

Intent without execution does not translate into outcomes, and the revised estimates make that visible.

3. The Balance Sheet: Fewer Losses, Different Liabilities

The balance sheet provides the clearest signal of how these choices ultimately played out. 

Revenue deficit and accumulated losses

The reduction in the revenue deficit against Budget Estimates is a meaningful positive. This improvement is mirrored on the asset side of the balance sheet. Accumulated losses declined, indicating slower fiscal erosion during the year

This is a quiet but important outcome. It suggests that expenditure restraint and revenue management translated into balance sheet stabilisation, not just flow-level adjustment.

Debt and liabilities: A subtle shift

There was also a reduction in internal debt relative to the budgeted level. However, this reduction did not occur in isolation.

It was partly offset by an increase in other liabilities, including:

• Small savings and reserve funds

• Provident and other earmarked savings instruments

This raises a more nuanced question.

Is this a healthier balancing act, reducing market borrowings and relying more on captive, long-term funds?

Or does it indicate greater use of funds earmarked for specific purposes to manage fiscal pressures?

The answer is not binary.

• From a cost and stability perspective, such liabilities are often cheaper and longer-tenure

• From a governance perspective, they require careful alignment with their intended use

What is clear is that fiscal consolidation is increasingly happening through balance-sheet choices, not headline deficit moves.

A Closing Perspective

The 2026 Budget, when read through revised estimates rather than announcements, reveals a government navigating trade-offs rather than extremes.

• Tax relief was prioritised, and its fiscal cost was consciously absorbed

• Spending ambition remained, but execution proved uneven in key growth ministries

• The balance sheet improved modestly, with debt management shifting toward quieter instruments

This was not a Budget of dramatic correction or unchecked expansion. It was a Budget of measured adjustment. And that, ultimately, is what the numbers, not the speeches, tell us.

* Disclaimer *

This article represents the author’s personal analysis and interpretation of publicly available data. The views expressed are for informational and educational purposes only and do not constitute financial, investment, legal, or policy advice.

No responsibility or liability is accepted for any loss or damage arising from reliance on this content.

Resources & Data Reference:

Annual Financial Statements, Expenditure Budget and Receipt Budget of the Government of India (FY 2020-21 to FY 2026-27)

Budget documents as presented to Parliament

Aggregations ,Variance, CAGR and other calculations performed by the author for analytical purposes