Union Budget of India 2026–27 Explained | Complete Analysis for UPSC Prelims 2026 | Shyam Sir | IAS

Hello, good evening and welcome to ANA

Academy IAS a one-stop destination for

all the English medium civil services

aspirants. Welcome to the budget 2026

2027 analysis session. This is Sham

Kagura taking up the compreh

comprehensive analysis of the budget

presented by the finance minister today

morning. Before I start the discussion,

please do let me know that I'm audible

and visible for all of you. Those

present please do give the confirmation.

Am I audible and visible for all of you?

Thanks a lot. So before I start with the

first set of announcements done by the

finance minister, here are the two very

important announcements. The budget as

well as economic survey are important

for your prelims examination as well as

mains examination. So to test whether

you have understood the budget as well

as the concepts in economic survey

correctly or not, the best way is to

attempt a test. On February 8th, make a

note of the date. On February 8th at

11:00 a.m. The UNAC Academy is going to

conduct the biggest budget and economic

survey test for all the UPSC aspirants

and that is those who are appearing for

the civil services examination 2026.

Now, how do you appear for the test?

Simple. One way is look at the comment

section of the video. There will be a

link which has been pinned. Click on the

link register for the test. Now, those

who will watch the session in a recorded

format later, you can go to the

description box of the video. A link

will be provided there. Click on the

link and register for the test. Do not

miss out. budget and economic survey are

indispensable for you. Now second, a lot

of you earlier have sent a mail to me or

have requested in the videos of uh let's

say the other subjects etc asking for a

comprehensive analysis of the economic

survey chapter by chapter analysis.

This week I'll be taking up the

comprehensive analysis of economic

survey and we will go chapter by

chapter. But for that all you need to do

is scan this particular QR code. You'll

be joining our ANA Academy is English

official telegram channel. I'm asking

you to join the channel for a simple

reason. The discussion on the economic

survey which I'll do comprehensively

chapter by chapter will happen on our

platform in the form of special classes.

Again absolutely free no nothing to pay

for that. But how do you know when the

class is scheduled on which date the

class is scheduled? All this information

along with the class link will be pasted

in our official channel. So do not miss

out. Use the QR code, scan, join and

let's understand the economic survey

also in detail. Now let me start. The

government of India or specifically the

finance minister today for the ninth

consecutive time presented the union

budget. Now the presentation has been

done in a time period wherein the Indian

economy is facing certain issues in the

domestic market as well as external

market as well. For example, because of

the frictions that are happening in the

global market. Some of the commodities

prices have increased or some of the

commodities the supply has been

disrupted. Major trading partners such

as USA has imposed tariff barriers on

India and threatens to impose higher

amount of tariff barriers if the present

bill in the Congress is passed. In

addition to that, in the domestic market

itself, there are multiple issues that

Indian economy is facing. For example,

there is issue associated with right

let's say agriculture, labor, issues

associated with rupee depreciation, MSME

sector etc. Having said so, understand

the other side of the coin as well. Does

it mean Indian economy is performing

very badly in the current situation?

Absolutely no. The GDP growth rate, if

you look at the GDP growth rate, India

is the fastest growing economy in the

world. The fastest growing economy in

the world. If you look at the inflation

rate for December, the inflation rate is

1.3%.

And for the 9 months April to December

the inflation rate was 1.7%

much lower than mandated 4% under the

inflation targeting for Reserve Bank of

India. Look at the forex reserves.

India's forex reserves have crossed more

than $700 billion. In agriculture we

have become the largest producer of rice

in the global market. So it's not that

everything is bad in terms of the

factors associated with the Indian

economy. There are certain concerns in

this particular situation. The budget

has been presented. So what are the

important announcements done by the

finance minister? Let's analyze the

announcements. First in the area of MSME

micro, small medium enterprises. Why

this particular area is so important for

the Indian economy? The MSMES account

for large production contribution to

GDP, GVA as well as exports and

employment generation. These are very

very important. But whenever you talk

about the global uncertaintity, global

volatility etc. these are also the

hardest hit. These are also the hardest

hit. So in order to provide certain

protection, promote MSME, what kind of

reforms have been announced by the

government? The finance minister simply

stated the government will be following

a three-pronged approach. Three-pronged

approach. What are these? One, the

government will be establishing an

equity support. There is already a type

of equity support. The government will

be establishing an equity support. Now,

what is the basic idea of a equity

support that has been proposed under

this? That is right 10,000 cr rupees.

The idea of equity support is the

government through one more financial

institution. I repeat government will

not directly invest and get the equity

of the MSMES. No, what the government

generally does through another

institution, right? One more financial

institution which is under the

government of India. They will provide

the funds to this particular institution

and this is basically called as a

daughter fund. Please remember this is

essentially called as a daughter fund.

So a daughter fund is created and from

the daughter fund we are going to

identify some of the MSMES which are

viable in nature which have large

potential to grow in the economy and we

will be providing equity funding. Equity

funding essentially means ownership

funding. Shares are purchased and money

is provided. Ownership is taken, money

is provided. And mind you this is not a

debt. Debt is loan. It is not a debt. It

is essentially equity linked investment

that is one dedicated 10,000 crme growth

fund will be set up. In addition to this

there is also discussion associated with

liquidity support through treads

platform. What is the basic idea for

treads? Treads stands for trade related

e discisounting system. This is a

platform which has been set up by RBI.

Using the platform essentially the

receivables are traded. Now what is the

basic idea of a receivable? Imagine I'm

a microenterprise. You are a company.

You will purchase something from me with

a promise of paying after 45 days. Now

there is a piece of paper. This is

called as a receivable. There is a piece

of paper. This is called as receivable.

Instead of having a physical copy, it

will be in the form of a digital copy.

Now this digital receivable that is

piece of paper in the digital form, I

can sell it to somebody else a financier

and get the money. Reason being what if

I need the money after 30 days what if I

need the money after let's say uh 25

days I need the money after 15 days I

can simply provide it to or transfer it

to a financial get the money now this

particular platform has been set up by

reserve bank of India there are multiple

entities which are offering this

facility multiple financiers who are

part of the facility what is the

announcement of the government of India

all the CPSC's will be present on the

treads platform. All the CPSCs will be

present on the Treads platform. All the

CPSCs which means anme right that is

small and microenterprise which will

sell certain inventory to CPSC. Now that

CPSC has to provide the receivables that

is the receipt in the digital form

through the threads only and not just

this the government also has proposed

one more very important initiative here.

We have to wait and see how it will be

implemented. That is concept of the tra

t trads receivables as assetbacked

securities. Treads receivables as

assetbacked securities. Meaning what

these particular pieces of paper in

digital form can I basically borrow in

the market or basically sell it to

somebody else with a or basically show

this to somebody else and take money

from them with a promise of payment in

the future. Right? That is basically the

assetbacked securities. I'll repeat it

again. I will show this particular piece

of paper that is receivable to somebody.

they will give the money to me because

there is a guarantee that this piece of

paper will help me recover money from

you that is a buyer in the future. So

treadsbacked receivables as assetbacked

securities also has been proposed.

Credit guarantee system has been

proposed. What is a credit guarantee

system? Credit guarantee support

mechanism through CGTMS.

And some of you will be thinking sir

words are not visible. I can magnify

this and show it to you but please do

not panic.

Once the session is over, you'll be able

to download the PDF, right? You'll be

able to download the PDF. Please don't

worry. So, the credit guarantee support

mechanism through CGTMS has been

proposed. Essentially, the idea is

credit guarantee trust for micro and

small enterprises is already there. It

will provide certain credit guarantees.

Meaning a bank will provide a loan. Now

guarantees to a certain extent on the

loan will be guaranteed by the CGTMS to

the bank. This will help the

microenterprises, small enterprises etc.

Right? Essentially to borrow at lesser

rate of interest. So even this has been

proposed associated with invoice

discounting on platform. Everybody's

okay. In addition to this there is also

professional support that has been

proposed. Now what is a prof

professional support they are discussing

here? Simple

the government will facilitate certain

institutions and there will be right

certain corporate mitras that is experts

who will be trained. Now these corporate

mitras will help the micro small

enterprises in fulfilling the compliance

requirement in a cost effective manner.

they will help the MSC's to f fulfill

whatever compliance requirements of

government of India there they will be

able to meet these particular

requirements everybody is okay right so

these are some of the uh announcements

by the government of India in the

context of MSME micro small medium

enterprises can I move on to the next

one now I want everybody to answer yes

or no

everybody is able to follow the

discussion that I'm doing next one in

the financial sector. What have been the

announcements in the financial sector?

Let's start. First and foremost, the

government of India simply says the

banking sector will play a very

important role in order for the

government to achieve the objective of

Vikit Bharat. You want to achieve the

objective of Vix Bharat by 2047, banks

will play a very important role. How? So

banks will provide lot of loans for

industries for infrastructure for borrow

the consumers etc. lot of loans are

provided. Mobilization of the deposits

is done. Savings, right? Mobilization is

done by the banks. So banks play a very

important role. That's a reason the

government has announced that they will

set up a highlevel committee who is

going to head it. No idea as of now. No

announcement has been done regarding

that. Do not worry about this as of now.

It will come later in the newspapers. So

high level committee on banking for

Vixit Bharat will be set up. This

committee will study the structure of

banking. What can be the changes done?

How better the banking structure can be

utilized in order to achieve the

objectives etc. That recommendation will

be provided by the highle committee. And

next one have a look at this incentive

of 100 cr rupees. Have a look at the

next point. Incentive or incentive of

100 cr for single issuance of municipal

bonds. Now the municipal bonds in recent

times have been there in the newspaper.

Please read about it. What are the

municipal bonds? These are the debt

instruments which are issued by

municipalities.

For what purpose? They want to borrow

from the market, use it for certain

objective. For example, maintenance and

repairs of existing infrastructure,

development of new infrastructure. And

just to give you a connection, just to

give you a connection, a lot of these

particular cities which were identified

under the smart cities project, they

were able to raise the funds in the

market through the idea for municipal

bonds itself. And very recently, that is

lasted in the month of October and

November, the government of India has

made one more very important change that

is specifically RBI. What is the change?

Municipal bonds now are eligible for

repo and reverse repo. Please remember

this. Municipal bonds now are eligible

for repo and reverse repo transaction.

And these are certain important current

affairs points that you need to

remember. Now what is the announcement

done by the finance minister? The

finance minister basically states we

want to incentivize issuance of

municipal bonds. How? So there is an

incentive scheme that is announced

earlier also under Amrit scheme it is

there now it will be a new initiative

where certain bonds which will be issued

by the municipalities if it is 1,000 cr

rupees that is the issue value is more

than 1,000 cr rupes incentives will be

paid by the government to the

municipality and because the government

will incentivize municipalities will be

more interested in issuing more bonds

collecting more funds which will help

them raise revenues or raise money for

taking care of multiple projects and

like I like I said there is already an

initiative remember this under Amrut

there is already an initiative under

which incentivization is done but that

is done for a small issuance government

of India now says we are going to target

large issuance that is you want to get

incentives under the new initiative

issue municipal bonds which are more

10,000 crores. Done. Right. So this is

one more important announcement. Next

one restructuring power finance

corporation and rural electrification

corporation. What is [snorts] the

importance of announcement? What is the

important announcement right or

importance of this announcement? Listen

carefully.

RC and PFC earlier these were two

different entities. Why do I say two

different entities? Earlier both were

owned by government of India. They were

owned by government of India, Power

Finance Corporation, Rural

Electrification Corporation. And why

these are important? These are important

because they will promote certain

projects. They will promote long-term

projects specifically under power

sector. For example, you will very often

come across Udjala Yojana

Pradhanamantriala Yojana. It is

basically the nodal agency RC which is

responsible for the implementation of

this. So argument is earlier like I said

rural electrification corporation was

owned by government of India. So in the

year 2019 I'll write it separately here.

In the year 2019 the government of India

sold majority of the stake in the rural

electrification corporation to power

finance corporation to power finance

corporation. And in the year 2020 there

was a proposal to basically merge the

power finance corporation as well as

rural electrification corporation but

this was not implemented. Now the

government of India simply says I want

to restructure. I want to revamp both of

them. Right? Basically they might try

merging both of them or they might try

to restructure both of them because

again I repeat this both of them which

work under the ministry of power are

important in terms of promoting

long-term infrastructure that is power

projects. So this is essentially the

importance of the announcement here.

Everybody's able to follow the

discussion. Now somebody's saying Nav

kindly provide the unanotated PPD. My

dear I'll give you both annotated as

well as unanotated. Right? Use both of

them. Whichever you want to download.

Focus on the discussion. Next one,

comprehensive comprehensive review of

foreign exchange management for debt

non-debt instrument rules. On paper,

this looks very difficult, very

technical. But what is the basic idea?

In recent times, there has been a lot of

concern regarding attracting investments

specifically the foreign institutional

investments in the domestic market.

According to one data set since January

since January 2025

more than 22 billion more than 22

billion worth of funds have flown out of

India. Foreign investors have taken out

this particular money. It's not that

fundamentally something is wrong with

the Indian market. No, they are worried

about uncertaintity. They are worried

about volatility. In addition to that,

they are worried about regulations in

the domestic market etc. So what has the

government of India now stated? We will

review the F fe f M A FEMA. We will

review the FEMA framework. And once you

review the frame, FEMA framework for

what? Non-debt instruments. Please have

a look at this. They're saying we're

going to review the framework for the

non-debt instrument. Non-debt means

what? For let's say uh the uh mutual

funds in the equity market or for that

matter the shares itself. These are

non-debt instrument. So, FEMA framework

for the non-debt instruments will be

reviewed by the government will be made

much more right let's say compatible

with the current situation in the global

market which will help attract a lot of

investments in the domestic market. Next

one introduction of market making

framework and total return swaps on

corporate bonds.

Very technical in nature but basic idea.

Let me explain this. Please listen

carefully. Focus on the concept. What is

this idea of a total return swaps? What

is this idea of a total return swap?

Let's assume I am a bank. Listen

carefully. Let's assume I am a bank.

I'll explain by writing here. Now I have

issued certain bonds, collected these

particular bonds and right basically the

money has been used in providing for the

loans for infrastructure projects in

providing the loans for infra projects.

So there are certain bonds with me now.

Okay, there are certain bonds. Now you

are a investor in the market. Let's say

a mutual fund company, insurance

company, etc. You want to invest in

these bonds. You want to invest in these

bonds. You want to get the exposure, but

listen to me, but you do not want to

literally purchase the bonds. You want

to get the exposure to the returns on

the bonds. If the bond prices increases,

you want the benefit, right? Upon

maturity the principal amount is paid.

You want that benefit. Annually coupon

rate is paid. You want that benefit. But

you do not want to literally purchase

the bond. Is it possible? Yes. There is

a tool called as right. Have a look at

the name of the tool. Total return swap.

There is a tool in the market which is

called as a total return swap. What is

basically the idea of a total return

swap? Let me continue the same example.

You are the investor. You will basically

right look at the statement. You will

basically give the money. You will give

the money but you will not take the

delivery of the bonds. You will not take

the delivery. You will take the exposure

to the bonds. You will not take the

delivery of the bonds. But if the market

price of the bonds increases upon mature

sorry market price increases, you will

get the benefit annually. I'll give you

the copen also. Now some of you will be

thinking sir why will a bank do this?

Why will the bank do this? The bank will

do this because I'm providing this

service not as a charity. I will charge

a certain rate of interest to you. I

will charge a certain rate of interest.

So basic idea is this. Getting exposure

into certain bonds without actually

purchasing the bonds.

Is my statement clear? I'll repeat it

again. getting exposure to certain bonds

here the corporate bonds without without

actually purchasing the bonds but you

will get the returns on it you will get

the right coupon payment on this this is

called as the actual look at the name

the total return swaps so government of

India simply says I'm going to promote

the market for total right return

written swaps I'll promote the market

for total return swaps right which will

help in the promotion of corporate bonds

in the market. Okay, let's go forward.

Tax [clears throat] proposal for

financial sector. Tax proposal for

financial sector. Focus on this

carefully. Question can be asked in the

preliminary examination. The finance

minister has announced increase on

securities transaction tax. The finance

minister has announced increase in the

security transaction tax. What is the

basic idea of a security transaction

tax? You purchase the securities, sell

the securities, shares, right? You

purchase and sell them in the right

recognized stock market. So, government

of India back in the year 2004,

back in the year 2004 under the finance

act introduced the concept of a

securities, a transaction tax. The basic

idea was a lot of people they will earn

profits by buying by selling etc the

instruments in the market but they do

not report it correctly to the

government. They do not report it

correctly to the government. There is

always a concern associated with tax

evasion there. So government simply said

whenever you transact using the

securities transact means what? Buy and

sell. Now I'm going to impose certain

types of taxes and those will be

collected in the market itself and that

is called as securities transaction tax.

This was introduced in the finance act

of 2004 has come into force from the 1st

October 2004. Is it applicable in India

right now? Yes, it is applicable on the

equity right instruments in the market.

But please understand from one type of

instrument to another type of instrument

the rate will vary. Is it okay? It will

vary. Who will pay varies. So please

don't worry about the complete box. Just

focus on the basic idea. So why this has

created certain problem in the market.

Now it has created problem in the market

because finance minister has announced

increase in the ST. Increase in the ST

which is applicable to FNO futures and

options. Right? So option premium the ST

has been increased the futures right ST

has been increased which will

essentially means those investors who

are involved in the FNO will have to pay

more tax to the government. They will

have to pay more tax to the government

and that is the reason lot of investors

are not happy with the securities

transaction tax. Everybody is okay with

the securities transaction tax. Can I

move on to the next area? Right. Right.

So we have taken care of financial

market. Let's look at agriculture.

What are the important announcements in

the agriculture? Let's go one by one.

The government of India wants to promote

production and export of high value

products. High value agriculture

products. So what do you mean by high

value agriculture products? The

sandalwood,

cashew, cocoa, right? Or many other

commodities like this. So government of

India wants to basically promote

production right and supply of high

value products and whenever this kind of

a high value product is produced by the

farmer and sold it will add to higher

incomes for the farmers. Simple

everybody is able to understand it will

contribute to higher incomes of the

farmers. So that is the reason certain

initiatives have been focused on right

have a list have a look at the list here

certain initiatives have been focused on

promotion of sandalwood right promotion

of right coconut coconut is also high

value product by the way right promotion

of cashew production promotion of cocoa

etc so some of these high value

agriculture products have been

identified by the government now

promotion of the production will be done

farmers will be able to produce and not

just in any part of India they have

identified certain commodities from the

northeastern part certain commodities

from the right coastal states etc. So

production of these will be promoted and

right basically now the farmers will be

able to earn better returns by selling

the high value products in the market.

This is one very important announcement.

Second very important announcement is

the bhatat vistar.

Bhat vistar. Bhatat vistar. What is this

bhat vistar? The government of India

earlier had promoted a model. Right?

Basically the model called as agree

stack. Agree stack. I'm pretty sure all

of you heard of the term agree stack.

What is the basic idea of agree stack?

Different types of technologies which

are associated with agriculture sector

are stacked are connected are basically

arranged right in the form of layers.

That's the reason this is called as a

agree stack right it is a type of a uh

the uh digital public infrastructure

that has been promoted by the government

of India along with many other types of

DPIs. So now government of India simply

says there will be an AI that will be

developed. There will be an AI that will

be developed and this particular AI name

of this is called as Bat Wistar. So what

is the function of this particular AI?

Please have a look at this. Bhat Vistar

essentially stands for virtually

integrated system to access agricultural

resources.

This particular AI tool will provide

information to the farmers. It will

provide information. It has collected

lot of information including agree

stack. Now it has collected the

information. Now in multiple languages

this information will be delivered or

will be provided to the farmers. For

example, let's say a farmer wants to

find out what kind of loans are provided

by the banks for agriculture

commodities. The far the farmer wants to

understand what is right basically the

uh the the rainfall estimation in the

current cycle of monsoon. The farmer

wants to understand right what kind of

initiatives are being implemented in

that specific region. Farmer wants to

understand what kind of crops are

eligible for the kind of soil which is

present in the land that is cultivated

or used by the farmer. All of this

information you can easily access as a

farmer using this particular AI tool.

Right? So government of India now says

we are going to develop bat wistar.

Everybody is okay. Now if you have any

doubts please hold on I'll address your

doubts at the end of the session. Do not

panic right now. The government in order

to promote women empowerment in order to

promote women empowerment also has

announced shemart. Yes s e she basically

stands for selfhelp entrepreneur.

Self-help entrepreneur. Earlier the

government of India had announced one

more initiative Lakpati did where the

objective was to ensure that the women

identified and covered under the

initiative will be able to earn at least

one lak rupees peranom. Now in addition

to that and just like that there is one

more initiative shemart. What is

basically the idea for a shemart? These

will be basically the retail units

retailing units communityowned

retail units which are led by women

which are owned by the woman

entrepreneurs.

This will help a promotion of women

empowerment. This will add to the income

sources for the women. Right? So that is

basically the idea of a right shei m

this is targeting women in the rural

part of India right so these are some of

the areas that have been covered under

the agriculture sector can I move on to

the next one infrastructure

uh sir we need economic survey budget in

mains point my dear economic survey I'm

repeating this again for the benefit of

those who have joined late starting this

week I'll be taking special classes

where I'm going to discuss chapter by

chapter in a comprehensive manner all

the chapters relevant for Indian economy

for both prims and means from the survey

but that will happen on the platform

that will happen on the platform when is

the class what is the time where is the

link of the class all of that detail

will be provided in the UN anacademic is

English official telegram channel let's

go forward infrastructure

Right. In infrastructure, what are the

important announcements? Have a look at

the first one here. Setting up

infrastructure risk guarantee fund. Risk

guarantee fund.

Just like we have discussed earlier,

credit guarantee fund. What is the basic

idea of a risk guarantee fund?

Let's say a infrastructure developer

wants to take a loan from a bank. There

is always a very high amount of risk

that the project may not be completed.

The borrower that is the developer might

default on the payment. Correct? Might

default on the payment. It might become

an NPA for the banking sector. And in

the last one decade the government of

India as well as RBI have taken lot of

measures have gone through a very

painful process which has helped reduce

the NPA.

Now there is a problem that we want

infrastructure to be promoted. But if

the borrowers take loan and start

defaulting, these will add to NPS and

the banks will be very much worried

about giving loans for infrastructure.

They might simply stay away from lending

to infrastructure. And by the way,

infrastructure lending is required right

now. We require a lot of infrastructure

lending. So what is the government

proposal here? There will be a fund

setup. Infrastructure risk guarantee

fund. What is the basic idea? A bank

will provide a loan. There will be a

guarantee provided up to certain extent

on the loans given by the banks to the

infrastructure developer and because the

guarantees are provided obviously the

banks or the lenders now are not so much

worried the risk associated with the

project will go down. The banks or the

lenders will be more open to lend for

infrastructure projects. By the way, is

this the only type of initiative that

has been taken by the government in

recent times? Absolutely no. The uh

market regulator is promoting

infrastructure bonds where you can issue

bonds of a longer tenure, borrow from

the market. Now we are promoting

corporate bonds. Earlier the government

of India set up NABFID which is mainly

involved in the promotion of right let's

say infrastructure lending. So multiple

types of reforms have been implemented.

This is one more such reform. Next one,

recycling of real estate assets of CPSCs

through setting up dedicated RITs. What

is a RIT? Real estate infrastructure

trust. There are two types of investment

models. There are two types of

investment models, new type of models by

the way. One is INVIT, infrastructure

investment trust, and the other one is

RIT, real estate investment trust. Real

estate investment trust. RIT and Invit.

So now there are certain real estates

which are simply falling idle with the

CPS. There are lot of real estate

assets. You must have seen lot of these

CPSCs will be owning the real estate

projects or real estate assets without

utilizing them properly. So can we

monetize them? Monetize in the sense can

we get certain value from these

particular projects? Yes, there is a

model. There is a model right? That

particular model is called as real

estate investment trust wherein a

sponsor will be there right basic model

of RIT by the way a sponsor will be

there they will invest a certain amount

of money they will take all these real

estate assets they will try to develop

certain projects use the real estate for

certain purposes and thereby generate

money generate revenue from the real

estate that they have utilized. But

please understand this model essentially

is useful for what purpose? Whatever

real estate assets are falling idle you

can get money for it. In addition to

this you can attract other investors who

will be investing and purchasing RIT

units that is REIT real estate

investment trust units will be purchased

by other investors. We are doing the

same model same model in case of

national highways as well but there it

will be called as invit. Everybody is

reading everybody has read the basics.

Please do let me know in the chat

section. The n uh the national highways

authority of India NHI national highways

authority of India has monetized a lot

of national highways using this

particular model of invit. Now we want

to use the model but for real estate

assets which are falling idle with

central public sector enterprises. Third

one dedicated freight corridors. There

are multiple freight corridors which are

already developed. And what is the use

of the dedicated freight corridors?

These are essentially done or developed

maintained in order to promote

industrialization.

The whole idea is you need very good

infrastructure for transportation.

Transportation. The government of India

has been promoting waterways that is

also there. One of the announcement is

associated with waterways. But earlier

even before we started promoting

waterways in recent times we have

developed multiple dedicated freight

corridors which are essentially used for

the transportation transportation of raw

materials transportation of finished

goods etc. Right? So these are called as

DFCs dedicated freight corridors.

Government of India now has announced

two additional dedicated freight

corridors. These are the places which

will be connected. Next one. 20 20 20

new national waterways would be right

operation operational. Now 20 more

national waterways would be made

operational. Please understand earlier

there were only around five national

waterways. The government of India

introduced the national waterways act

and they identified more than 100

waterways including the existing five

and they basically said all of these

waterways would be declared as national

waterways and the government basically

set up the national waterways authority

of India and using that authority we are

basically promoting now we are promoting

transportation through waterways

and promoting the transportation through

waterways and what is the use Promotion

of waterways. In terms of emissions,

waterways are very efficient. These will

have lowest emissions. In terms of land

acquisition, there is no problem with

this. In terms of cost of

transportation, this mode of

transportation is the cheapest

and that's the reason the government of

India is actually promoting national

waterways. So to the existing waterways,

20 more waterways will be

operationalized.

That is one more announcement. Next one

in terms of shipping. In terms of

shipping last year there was a lot of

discussion because mind you whenever you

talk about shipping shipping as well as

containers because one announcement is

on shipping another in is another one is

on containers. When you talk about

shipping and containers, India doesn't

account for a large fleet of the ships

in the global market. Again, I'm talking

for talking about the civil fleet, not

about the army. I'm sorry, not about the

naval ships, right? Civil ships that is

used for commercial ships to be very

precise. We do not have sufficient

number of commercial ships. We do not

account for the large percentage of

container manufacturing also. And which

countries account for majority of this?

Topmost is China. Be it commercial

shipping or be it in terms of production

of containers and during pandemic as

well as the post pandemic we have

experienced problems because we do not

have sufficient fleet number as well as

container number. So government of India

has been promoting production of the

shipping in India as well as promotion

of container manufacturing in India. So

the new announcement is ship repair

ecosystem. Ship repair ecosystem will be

developed along the inland waterways in

India. Launch of coastal cargo promotion

scheme. What is the importance of this

particular scheme? The government wants

you that is basically a company which is

using the road as a mode of

transportation. They want you to shift

from the road to let's say waterways.

They don't want you to use roadways.

They want you to use waterways. How do

they ask you to shift? Provide

incentives. Simple provide incentives.

Once incentives are provided to you in

order to get that particular incentive

which will reduce the cost of

transportation further for you, you will

automatically make a movement from road

movement of or road mode of

transportation to inland mode of

transportation.

Everybody's okay right? So launch of

coastal cargo promotion scheme. This is

one more important announcement. Cplane

VGF scheme also has been announced. What

is a VGF? VGF stands for viability gap

funding. Viability gap funding. Under

this essentially to promote investment

in these kind of projects, certain

assistance will be provided by the

government. VGF essentially means

certain assistance not essentially a

loan certain assistance will be provided

by the government which will essentially

reduce the amount of investment that you

are expected to or you must do that

investment requirement will

automatically go down and automatically

because of that the project becomes more

attractive project becomes more

financially attractive to you that is

basically the idea of a VGF scheme next

two lakh cr support for the states under

SI

scheme. What is this particular scheme?

This initiative was announced by the

government of India during pandemic.

Object was very simple. The government

was worried that the state governments

will not be investing sufficient amount

of money in the infrastructure projects.

So government introduced this particular

scheme under which 50year 50-year

interestfree loans are provided

50-year interestfree loans are provided

by the government right so that is

essentially right introduced during the

pandemic over a period of time the

amount has been increased this year in

the budget which will be implemented

from the 1st April 2026 this amount will

be increased to 2 lakh cr rupes

Next there will be certain initiatives

in the form of development of corridors

which will be focused on Purwanchal

states as well done or Purwanchal region

as well. So these are some of the

important announcements in the context

of infrastructure. Couple of more

announcements associated with right

let's say the areas that we have covered

so far. Mahatma Gandhi Graaswaraj

initiative. Mahatma Gandhi Graaswaraj

initiative. What is the importance of

this? The government of India will be

announcing or implementing this

particular scheme which will be focused

on promotion of Kadi industries.

It will be focused on promotion of Kadi

industries and what is the importance of

this? Khadi has been a part and parcel

of right let's say India's ecosystem or

India's system as of now earlier the

right let's say the contribution was

much higher participation of kadi

industries was bit higher over a period

of time it has taken a hit because of

negligence by the stakeholders even by

the consumers etc now simply says there

is a very large potential for kadi

potential is there what kind of

potential there is a demand rising

demand in the domestic market there is

also rising demand in the global market.

So now the area or the objective of the

government of India is this initiative

will be implemented. This will be

implemented and once this particular

initiative will be implemented right

certain funding has been allocated for

the next 5 years the focus will be on

promotion of training promotion of right

let's say infrastructure building right

promotion of production exports etc. And

the government has stated that this will

be one of the initiatives that the

government will now focus under one

district one product. All of you heard

of this one district one product. ODOP.

Under the idea of ODOP, the government

of India simply says every district in

India will have one or the other product

which has very high export potential,

market potential. That particular

product will be identified. any issues,

any barriers that the stakeholders are

facing will be addressed and we are

going to promote export of this in the

international market which will help the

districts earn huge amount of revenues

and this is important for a simple

reason historically if you see there are

very few districts in India which have

been able to generate huge amount of

income or contribution to GDP or

manufacturing or even exports. There are

very few states and these particular

states and within the states districts

are generally located along the coastal

region. But the idea is there are other

regions in India, there are other

products in India, there are other

districts in India. We need to ensure

the promotion of exports is done from

these regions as well which will help

ensuring the population in this region

generate certain economic activity.

Ensure revenues are generated. ensure

exports are done to the external market

from these districts and that is

essentially one district one product. So

now kadi right which will be promoted

under this initiative will be targeted

under odop. Next one biofarma shaky

shaky simply stands for strategy for

healthcare advancement through knowledge

technology and innovation. Right? What

is this shaky bioarma shaky? The

government simply states in recent times

there is a lot of concern associated

with non-com I'm sorry uh non-communic

communicable diseases non-communicable

diseases for example the diseases

associated with the sedentary lifestyle

that is followed in India diabetes

and India has one of the largest let's

say number of people suffering from

diabetes and again and again we come

across this particular problem that the

non-communicable diseases will have a

higher burden in the total right

population in India and that will hurt

economic growth prospect that will

basically hurt even the household

incomes it will have an impact on the

productivity of the population as well

in fact during the uh the independence

day speech I don't know how many of you

heard of the speech during the

independence day speech the prime

minister flagged this particular issue

the prime minister simply stated per

capita oil edible oil consumption ion in

India is very very high per capita

correct or not how many of you heard of

this do let me know in the chat section

the per capita edible oil consumption is

very high in India we should be cutting

it by 10% we should target the reduction

of the oil consumption right so please

be very careful UPC can ask a question

about it now right so we are now

promoting one more initiative biioarma

shaky funds will be allocated 10,000 cr

for 5 years objective is we are going to

promote an ecosystem where right let's

say investment R&D associated with

biofarma will be promoted under this

initiative done next one buyback tax

this has created a lot of discussion now

listen carefully buyback tax what is

basically idea of a buyback tax let's

say there is a company is listed one it

has issued certain shares Now if the

company will purchase the shares back

this is called as a buyback everybody is

okay right the company again please

understand the company can be listed or

unlisted because if it is listed the

shares are available in the market for

trading can there be a buyback by

unlisted company yes promoters are there

right from the promoters the company can

go for a buyback so listed as well as

unlisted but what is the basic idea in

the year 2024 the government of India

made certain changes to the buyback tax.

What changes? The government of India

simply stated that the buyback tax that

is once the company will purchase the

shares, the company will pay money to

the shareholder including promoters.

Company will pay money to the

shareholder. Now this money which will

be paid to the shareholder will be

treated as a dividend.

So for so good will be treated as a

dividend and accordingly the taxes will

be imposed and collected accordingly

because dividend means it will be one of

the sources of income and once it

becomes source of income there will be a

tax treatment on it. So government of

India went a step ahead. They introduced

the idea of a TDS here. In this context

they introduced TDS tax deduction at

source which means the company when they

will pay money to you. When they

purchase the shares they will pay money

to you. They will hold the amount TDS

they will give it to the government.

Right? And basically this was the

methodology that was introduced by the

government. Now some of you will be

thinking why sir what is the logic?

Logic of the government of India was lot

of these particular companies were

basically going for the concept of a

buyback rather than paying dividends. So

government of India introduced this. Now

this particular policy has been changed.

This has been changed. Government of

India now said that is in today's budget

announcement whenever the company will

go for a buyback it will be treated as a

capital gains.

Correct. Everybody is okay with this.

Now the money that you will collect,

right? That is, let's say you're a

shareholder. I'm the company. I'll pay

the money to you. I'll purchase the

shares back. Buy back. The money that I

pay will be treated as capital gains.

And whatever is the capital gains tax

that will be imposed and collected from

you. This is basically the new

announcement. What is a benefit? Some of

you will be thinking what is a benefit?

Capital gains tax rate is much lower.

The capital gains tax rate is much

lower. But now there is a danger that

lot of the promoters they will also pay

lesser amount of tax because it will be

treated as capital gains tax. The

government has made certain change. If

you are a promoter there will be

additional buyback tax. I'll repeat if

you are the promoter of the company

there will be an additional buyback tax.

Not like a normal shareholder. There

will be additional buyback tax that the

promoter has to pay. That is the burden

of taxation on the promoters will be

higher even under the new right or let's

say new system or under the change

system. Next container manufacturing the

government of India essentially has

stated that they will promote container

manufacturing. Again the argument is

simple. Uh certain amount of funds have

been allocated for 5 year duration. Idea

is to promote as much as possible the

containers right in the domestic market

rather than being import dependent. Next

one. Carbon capture utilization and

storage. Just a second. Carbon capture

utilization and storage. CC us. CCU US.

Right. What is this idea for carbon

capture utilization and storage? There

is there are two terms in the context of

ecology and environment. Specifically

the Paris climate agreement. You must

have heard of two terms adaptation and

mitigation. Correct. Adaptation and

mitigation. This is that is the CCUs

essentially is a type of a mitigation

technique. It is a type of a mitigation

technique. What is done under this? The

carbon that is emitted will be captured.

Right? There is a particular process a

three-stage process like this developing

kind of a technology where the carbon

capturing will happen and this will

reduce the emissions. It is a type of a

mit mitigation technology. Now for this

the government of India has allocated

20,000 cr rupes. It has allocated 20,000

cr rupes. Done. So this one is a

announcement. Okay. Next one certain

important pointers. Tourism in case of

tourism the government has stated that

it is an important source of employment

generation. It is an important source to

attract foreigners into India. Within

the domestic market also a lot of

tourism activity is conducted by the

residents of India. You must have seen

what is happening in different tourist

places right now. So argument is let's

focus on tourism. Let's promote right

let's say contribution higher

contribution to the economic activity

employment generation. So for this what

are the announcements? There will be one

entity that will be set up National

Institute of Hospitality.

A new entity will be set up which will

basically provide a lot of right

personal training etc. Second one, there

will be an initiative that will be

implemented to provide upskilling to

10,000 guides. Upskilling to 10,000,

right? 10,000 guides in multiple places,

historical places. Guides are there a

lot of times, right? They are not

properly skilled. They do not have

correct let's say skill sets to explain,

right? Which will basically hamper the

amount of revenue they can generate. At

the same point of time, it will also

hamper the experience of the tourist.

The tourist is unhappy with the kind of

let's say services provided. They will

recommend other tourists not to go there

or else go there but don't use a guide

etc. So in order to promote right let's

say the tourism places in 20 iconic

tourist sites there will be 10,000

guides who will be provided upskilling

by the government. Next there will also

be a data or grid database which will be

developed national grid database which

will be developed which will have all

the data sets that is associated with

the tourist places in India. The name of

that national destination digital

knowledge grid right this is one more

very important data set and if you're

wondering sir what is the use of all of

this think of it foreign tourists will

come to India or you want to go to

another state specifically right visit a

particular historical monument a lot of

times you do not get accurate

information

you do not get accurate information

information associated with location of

the site or information associated with

which day it is open, which day it is

closed, information associated with how

do you reach that particular place,

right? Or once you reach there, what

you're supposed to visit etc. So there

will be a national destination digital

knowledge grid database that will be

developed which will digitally document

all the places of significance. But

again before I go forward here is a

point.

These are announcements. I hope you

understand the right. Let's say the uh

the devil's advocate idea. These are

announcements. The devil will always be

in one details and second you'll have to

wait and see how these will be

implemented.

How these would be implemented. You'll

have to wait and see. Right? So a lot of

these are announced but the

implementation might be delayed.

Implementation might be shelled by the

government because the project is not

feasible once the right implementation

stage is arrived. Implementation for

that funds would be allocated but there

is no proper manpower. No ministry is

going to implement it or ministry is

least bothered about it. Right? So under

utilization the funds might also happen.

But anyways, these are the announcements

which you need to understand for the UPC

examination to develop ecologically s

sustainable mountain trails, turtle

trails and bird watching trails. The

government will be targeting and

developing this. In addition to this now

nowadays there is a lot of focus on

tracking activity. Nowadays there is a

lot of focus on the tracking activities.

So government simply said yes we will

focus on right let's say the trekking

activities as well we will develop

certain regions there are certain states

in India places in these states where

lot of trekking is conducted or people

are interested in trekking why not

develop the trekking trails by thereby

providing proper services right let's

say staying services drinking water

facility or transportation to and fro

etc develop these particular regions s

which will be attracting lot of let's

say the human activities there India to

host the first ever global cat summit in

fact this was announced last year as

well it was announced last year also uh

this year we'll be hosting the global

big cat summit we're expecting the heads

of multiple countries to participate in

this next 15 sites into vibrant

experimental cultural destinations

certain historically important sites

have been identified Right? Again what

will be final 15 list? Don't worry 15

sites will be identified. Now in these

particular 15 sites they will develop

these in terms of let's say providing

better services to the tourist. For

example let's say I go to this

particular site lot of digging has been

done by the archaeological survey of

India.

Right now we are not allowed to enter

into these particular places. But now

government of India simply says why

can't we provide the services where we

can right basically appoint personnel

they will take the people even in these

particular areas right guided walking

paths can be established right so this

will enhance the tourism experience it

will essentially increase the experience

right when you go you are not simply

looking at it and coming back you are in

fact going into those particular

trenches or let's Okay, the areas where

the digging has happened etc. All of

this will be undertaken by the

government. And finally, Buddhist

circuit in the north northeastern

region. Certain areas have been

identified. A Buddhist circuit

essentially a connection to promote

tourism. Connected network to promote

tourism within the northeast region will

also be done. These are some of the

announcements in the context of tourism.

Next services sector. Services sector

services are important for Indian

economy for a simple reason. The

economic survey itself says services

contribute more than 54% to India's GDP.

Services contribute more than 54% to

India's GDP and more than 60% to India's

GVA. GDP and GVA, right? That is the

importance of services. What are the

reforms or what are the important points

in terms of announcement done by the

government of India? First one, the

government has stated that they will set

up a high powered committee. High

powered standing committee will be set

up. What is the role of it? We are

trying to promote the idea of education

to employment and enterprise.

Education to employment and enterprise.

What is the basic idea? What is the

potential of services sector?

To what extent jobs can be generated?

What kind of jobs can be generated? What

is the impact of artificial intelligence

on the services sector? The committee

will evaluate all of it. Give

suggestions, give recommendations to

government of India, give

recommendations to government of India.

That is one. Second one, there will be

five hubs for medical value tourism.

Private sector will be participating in

this. It's a joint venture. Five hubs

will be developed for medical tourism

and within this the government is

integrating the idea of Aayush as well.

Right? Aayush that is Ayurvedic, Yunani

etc. The integration of Aayush will also

take place. What is the basic model

here? There will be right let's say a

complete ecosystem developed at five

places. complete ecosystem in the sense

you want to get the treatment done right

Indian foreigner because medical tourism

is booming in India you want to get the

complete treatment done rehabilitation

done you want to get access to let's say

the alternative right the treatments as

well the other streams of treatment such

as ayurvedic etc right now you do not

get all of these at one place these

ecosystems or the hubs will be developed

which will provide all of these

services. So these will be developed in

how many places? Five places. In

addition to this, the government also

stated that there is a rising demand for

Ayurvedic products. There is a rising

demand for Ayurvedic products not only

in India but also in the global market.

So how do you basically satisfy? How do

you ensure that the demand will be met?

We will scale up testing facilities. We

are going to scale up the testing

facilities. So three new all India

institutes of Ayurveda upgrading

Aayusharmacies and drug testing labs

will be done by the government. And the

logical outcome of this or the expected

outcome of this is that with these kind

of infrastructure facilities developed

we will be able to produce more of

Ayurvedic medicines. testing will be

done, certification will be done and the

recognition will be there in the

international market. We will be able to

right catered to the demand for these

particular products not only the

domestic market but also in the

international market. Everybody is okay

right? In addition to this there is now

focus on orange economy. Orange economy

last year even the prime minister spoke

about this. Orange economy basically

focuses on the creator market creators

economy right so for example in case of

India the YouTube videos through the

YouTube videos according to the

government data more than 21,000 cr

rupees worth of revenues have been

generated right the creators market the

overall creators market employs millions

of people in India it is expected to

become worth $50 billion over a period

of time today it is around $30 billion

So we will be promoting the orange

economy now. We'll be promoting orange

economy by setting up AVGC content

creator labs at 15,000 second secondary

schools as well as 500 colleges. ABCG

essentially stands right for animation,

animation,

visual effects,

visual effects, comics

and gaming

right so these particular right let's

say the labs will be set up amongst or

across multiple states in India done can

we go forward now do let me know I'm

entering into the la later part of the

budget. Now the taxation part right what

are the important tax proposals

everybody is okay please do let me know

in the chat section

[clears throat]

okay let's go forward taxation

first one there are certain changes that

have been announced in the context of

TCS what is TCS tax collection at source

you'll come across two terms one is TCS

and the other one is TDS TDS tax

deducted at source, tax collection at

source. What is the difference between

both of them? TDS is imposed on income.

TDS is imposed on income. TCS is imposed

on sales.

Simple. TCS is imposed on sales. Let's

go forward. So reduce TCS rate on the

sale of overseas tour programs. Earlier

if you purchase a tour programs the

government of India had imposed a TCS of

right 20%. Now this has been reduced to

2%. Logical argument is it will reduce

the cost that the right let's say

tourist will have to pay when you book a

package when you book a foreign trip

like this. Right? That is the first one.

Reduce the TCS rate to 20% on the LRS

remittances. What is the basic idea for

a LR's remittance here? There is a

initiative of Reserve Bank of India

liberalized remittances scheme.

liberalized remittances scheme.

Under the liberalized liberalized

remittances scheme, annually every

individual in India is allowed to take

out $250,000

from India. Individual $250,000

perom without any approval of RBI

without any approval of RBI. If you want

to take out more than two and a half

lakh, you'll have to take the approval

of Reserve Bank of India. So far so

good. Now the TCS earlier if you take

out this particular money let's say you

pay for tuition fees in USA you pay for

medical fees for a treatment that you're

getting done in Australia or for that

matter Germany or Britain example there

was a TCS applicable on the remittances

that you're taking out now this

particular rate which was right 5% it

has been reduced to 2% it has been

reduced to 2% % next one a uniform

customs duty lot of changes have been

announced under the customs duty as well

but before I tell you the changes under

customs duty expectation expectation was

that the government will announce a

complete overhaul I repeat a complete

overhaul under the customs duty as well

as capital gains tax complete overhaul

under the customs duty as well as

capital gains tax has it happened. No.

Right. No complete overhaul, right? Was

expected has not been announced. Let's

go forward. [clears throat] A uniform

customs duty for all the personal

imports, right? The for the personal

usage, whatever you import into India,

the customs duty on that has been

reduced. According to the announcement

done by the finance minister on the

floor of the parliament, it will be

reduced from 20% to 10%. Next one, duty

will be exempted on critical as well as

cost intensive right cost inensive

components for microwave ovens. If you

reduce the duty, if you exempt the duty

essentially this will help right in

cheaper imports and in production of the

final good in the domestic market the

cost of it will be lower. Next one duty

will be exempted on cancer drugs as

well. Many of these particular cancer

drugs or the drugs which are very costly

which will be used for the treatment of

certain diseases. The government of

India has announced exemption on customs

duty and by the way this is not the

first time that the announcement has

been done. Earlier also similar

announcements in the form of customs

duty exemption has been done by the

government. The personal imports for

drugs or medicines and food for seven

more rare diseases. It has been

exempted. Exemption on the parts or

components engines for manufacturing

aircrafts capital good production if you

import a part spare part to produce this

in India the customs duty you don't have

to pay right it will be exempted and

finally exemption for goods for nuclear

power projects nuclear power projects

that is for development of the nuclear

power projects in India if you import

anything if you import anything customs

duty will not be implied or customs duty

will not be imposed. There is an

exemption provided and this is

applicable for any nuclear capacity any

project of any nuclear capacity. Done.

Next under taxation exemption on capital

goods for manufacturing of lithium ion

cells of battery energy storage system.

The government of India earlier

announced an initiative BESS

battery energy storage system. What was

the importance of the BESS

in the context of solar energy? A lot of

times you'll come across the problem of

duck curve. Duck curve problem that is

intermittency problem supply and demand

mismatch is there in the context of

renewable energy in India. In order to

address that the government has been

promoting an initiative by the name of

BESS.

Now under that you're going to develop

batteries. To produce the batteries

you're going to import lithium into

India, lithium ion batteries into India.

The customs duty on that now will be

exempted. It will be exempted. Next the

Matt regime rationalization. What is

basic idea for Matt here? Matt stands

for minimum alternate tax. minimum

alternate tax. The basic idea of minimum

alternate tax is there are certain

companies which will earn book profits.

Book profits means total expenditure

minus right let's say sorry total

revenue minus total expenditure that is

called as book profits. From the book

profits the company will claim lot of

deduction exemption etc. Then we'll

arrive at taxable profit. Now the

taxable profit is so low. I repeat the

taxable profit is so low so negligible

the government will end up collecting

zero rupee corporate tax or very

negligible corporate tax.

Everybody is able to follow the sequence

here. Please do let me know. Everybody's

able to follow the sequence. I'll repeat

it again. What is the basic idea for

minimum alternate tax? Companies will

report the total revenue and total

expenditure. The difference between that

is called as a book profit. Companies

earlier did not pay taxes on the book

profit. They rather now from the book

profits used a lot of deduction

exemption arrived at taxable profit. On

the taxable profit they paid taxes to

the government and that taxable profit

would be negligible or zero. These

companies were called as zero tax

companies. Zero tax companies. In order

to address the problem of zero tax right

that is basically companies not paying

any tax or negligible tax the government

earlier right three decades ago when Mr.

Raju Gandhi was a prime minister

introduced a minimum corporate tax

wherein the tax was imposed on the right

book profits and collected if it was

higher compared to taxable profits. So

that idea was implemented. Later it was

uh renamed. It was rebranded as minimum

alternate tax. Until now the minimum

alternate tax rate is 15%.

Government now says going forward it

will be reduced to 14%.

It will be reduced to 14%. In addition

to this no more matt credits carry

forward. Matt credits will not be

allowed to be carried forward from the

next year. That is essentially imagine

you have calculated taxes on the book

profit as well as as well as the taxable

profits. If the book profits on this the

tax amount was higher, you were supposed

to pay the tax to the government. The

difference was given to you as a credit

which you were allowed to claim later.

So these particular concepts of Matt

credits will not be allowed to be

carried forward anymore after next year.

But in addition to that the MAT rate

will be reduced from 15% to 14%.

Next one taxation of buyback being

aligned with capital gains buyback I've

already covered tax holiday for any

company which will provide cloud

services. A lot of these particular

companies are setting up cloudvicing

agency or cloud servicing companies and

that is global centers. Now these

particular companies foreign companies

if they set up cloud servicing company

in India and provide the cloud services

to Indian clients using Indian supplier

then there will be a tax holiday tax

holiday essentially means let them earn

profits they don't have to pay taxes to

the government right the tax holiday

till 2047 will be provided to them next

important fiscal measures or fiscal

matters

Please make a note of these particular

points. And when I say note, when you

download the PPT, please look at these.

Point number one, the government of

India until now, until recently used to

focus on fiscal deficit. It used to

focus on fiscal deficit. That was the

main policy anchor for the government.

Starting next financial year, remember

this, starting next financial year,

fiscal deficit will not be the policy

anchor. Rather, the debt to GDP ratio.

The debt to GDP ratio will be the policy

anchor. Meaning what? Government will be

now more focused on reduction of debt to

GDP ratio. It will be more focused on

debt to GDP ratio reduction. According

to the government policy which was

announced last year now will come into

force from the next financial year by

financial year 31 financial year 31 the

government of India has stated that they

want to reduce the debt to GDP ratio to

50%age of GDP 50% of course with a

flexibility of this side that side plus

or minus 1%. Right now the debt to GDP

ratio is around 55.6% 6% that is

budgeted for financial year 26 and 27

for the current financial year that is

for the financial year 26

financial year 26 for the financial year

25 and 26 the debt to GDP ratio is right

basically 56.1%.

So it is budgeted at 56.1% for this year

next year it will be further reduced to

55.6% 6% and by the financial year 31

you you want to drag it down to 50%.

This is one. Second important one the

16th finance commission report. The

finance minister stated the 16th finance

commission which was set up earlier by

the government has submitted the report

to the government. The government has

accepted the report and according to the

article 281 280 is regarding finance

commission. 281 states that the finance

commission report along with right let's

say the memorandum of right let's say

acceptance basically what has been done

by the government that memorandum has to

be submitted on the floor of the

parliament under article 281 and that

has been done by the government the

government has stated the 16th finance

commission has recommended a vertical

devolution of 41%.

same as the 15th FC. 15th FC also says

41. 16th FC also has given the

recommendation of 41. So that particular

recommendation has been put in place. In

addition to that, there will be grants

which will be provided by the center to

the states based on the finance

commission recommendation itself. And

the amount of grants which will be

transferred in the next financial year

from the center to the state will be 1.4

lakh cr.

Right? So these are some of the

important points. Now let's look at

certain data. Please have a look at the

graphical representation. Please look at

the graphical representation. The

capital expenditure you will see that

since pandemic since pandemic the

capital expenditure has kept on

increasing. The pace of increase right

during pandemic as well as post pandemic

has been very very high. Observe that.

This is important for a simple reason.

The government again and again has been

stating the same. It is committed to the

investment in infrastructure. It is

committed to invest under the capital

head which will help create assets which

will promote confidence of the private

sector in the market which will attract

companies to invest in the domestic

market. So capital expenditure the

budgeted budgeted for the next financial

year the central government will be

investing or spending 12.2 lakh cr rupes

the center will be spending 12.2 2 lakh

cr in addition to that right the amount

that is the grant in aid centered to the

state grant in aid the grant in aid will

be 4.9 lakh cr rupes so put together the

total effective capex effective capex

effective capex will be 17.1 lakh cr

rupes not a small amount very very large

amount 17.1 lakh cr and as a percentage

of GDP V as a percentage of GDP the

effective capital expenditure will

become 4.4%.

4.4%.

That's a very very high amount of

expenditure which the center as well as

the states will be investing in the next

financial year. Next important set of

data the deficit trends.

Deficit trends. What has happened to the

fiscal deficit, revenue deficit etc.

Please look at the data set. The fiscal

deficit for the current financial year

is basically revised is revised at 4.4%.

And for the next financial year is

budgeted at 4.3%.

In addition to this, the revenue deficit

is 1.5% for this year as well as

budgeted next year. Right? In addition

to that, primary deficit.8%

budgeted this year or revised this year.

Next year budgeted at 7%. Now if you ask

me sir should I remember all of this

data? Should I remember all of these

data? My suggestion focus on fiscal

deficit. Just focus on fiscal deficit.

You don't have to remember all the types

of deficit numbers. Concept wise yes

remember all the concepts associated

with deficits. But number-wise my

suggestion debt to GDP ratio as well as

right let's say the fiscal deficit.

These are the two most important

indicators. Questions can be asked in

the prelims as well as mains

examination. Right? So what about the

debt? What about the debt of the union

government? What about the total debt in

India? Whenever you talk about the debt

that is the public debt of the

government of India, there has been a

concern in recent times that is during

pandemic the government of India's debt

as well as the state's debt increased.

The debt of center as well as the states

increased. But the central government in

the last two to three years has been

implementing multiple policies such as

rationalization of subsidies such as

eliminating cross subsidization or

controlling cross subsidization under

certain schemes such as just in time

which is being which has been

implemented which will basically

moderate the amount of funds which are

going to the states at what time etc.

Because of these kind of reforms, the

overall debt, the debt that is of the

central government, public debt, it has

been brought down. It has been brought

down. Right? So this is a very good

indicator and that is where the the

central government debt is much lower

now compared to what it was during

pandemic. The state debt has been higher

and that is what the economic survey

also states. The states must control

their debt. Reason being when you look

at the credit ratings when they rate the

countries they do not focus only on the

central government debt they will also

look at the state government debts. So

on one side the central government debt

has reduced by more than 7 percentage

points but the state debts remain

elevated that might hurt the sovereign

credit rating of India. That's the

reason the economic survey argues that

the states must control their debt. And

finally,

please look at where does the government

get one rupee and where does the

government spend one rupee. Right? Have

a look at this. Where does the

government get one rupee and where does

the government spend one rupee? Right?

So government if you look at this the

first uh pie chart, the first pie chart

will provide you information regarding

the receipts or incomes.

The receipts or incomes. And what you

will see is the government is earning

very high amount of very high amount of

receipts in the form of taxes that that

is corporate tax, income tax, customs,

union excise and GST. A large chunk of

the total amount of income generated is

because of right let's say the tax

receipts itself. In addition to this,

there is borrowings that will be done by

the government. There are non- tax

receipts which are collected by the

government. Right? So these are certain

pointers. What can UPC do with this kind

of a pointer? They might ask you in the

prelims examination according to the

recent budget estimates for the year 26

and 27. Arrange the following in

increasing order of contribution.

Arrange the following in decreasing

order of contribution. This kind of

question can be asked in the prelims.

Please make a note of it. Now out of the

total money collected where does the

government spend money for what purpose

does the government spend money these

are the right let's say expenditures the

share of the states right that is the

tax devolution vertical devolution will

be 22%.

22% that is out of 100 rupees the center

will pay 22 states 22 rupees to all the

states put together. In addition to this

there are grants also which are

recommended by the finance commission

that will be 7%. There are schemes that

is the centrally sponsored schemes and

central sector schemes that put together

will become 25%.

There are also interest payments defense

right interest payment is 20% and

defense is 11%. So this is the right

major source of expenditure for the

government right. So this will provide

you information regarding where does the

government earn where does the

government spend

right so this is the comprehensive

analysis of the announcements done by

the finance minister today in the union

budget that would come into force from

the 1st April 2026.

Before I wind up and start taking the

questions from your side, I'm

reiterating this. Whatever PPT, [snorts]

whatever PPT I've used here, you will be

able to download the PPT. Please don't

worry. Second, I'll be taking right

let's say the chapter wise discussion of

economic survey but that will happen on

the platform. Join our official UNAC

Academy is English telegram channel from

there right the information you can get

it regarding the schedule regarding the

class link etc use it to join the

session right that is special classes on

economic survey

okay now any questions

and the third and the most important

part third and most important part an

academy has scheduled right it will be

conducting the All India test on the

budget as well as economic survey right

it is basically for all the aspirants

who are going to write the civil

services 2026 the test will be held on

February 8th timing is 11:00 a.m. The

link is pinned in the comment section,

use the link to register for the test,

appear for the test. And if you're

watching a recorded section, recorded uh

session or recorded video, the link will

be provided in the description box. Use

it to register and appear. Okay, let's

go forward. [snorts]

Matt regime point in a little detail, my

dear. For that, please go through the

basics first. You should know how the

profit and loss statement is prepared.

Please go through that. You will record

your expenditure. Your income income is

greater than the expenditure. This is

called as book profit. Let's say your

income is 100 crores.

Your income is 100 crores. Your

expenditure is 80 crores. Book profit

will be 20 cr. Now from the book profit

there will be deductions.

What you get is taxable profit. what you

get is taxable profit. Now if you claim

lot of money here, deduction, exemption,

etc. If you claim a huge amount of

money, the taxable profit will be very

less. What if the taxable profit becomes

zero rupees, you might have 30%

corporate tax, you might have 50%

corporate tax, doesn't matter.

Government will end up collecting zer

rupee corporate taxes. These were called

as zero tax companies. In order to write

basically have a control over these kind

of companies in order to collect taxes

from these kind of companies Matt was

introduced under Matt what happens I

will calculate how much is the taxable

profit and I will also calculate earlier

15% of book profit 15% of book profit

and let's say 30% of taxable profit

whichever is greater that will be

collected as the tax now instead of 15%,

it will be made 14%. Okay, let's go

forward.

Why lots of infrastructure lending

required sir as you said because in case

of India the infrastructure

investment that has been planned by

government of India is very high.

According to national infrastructure

pipeline we have a proposal to develop

infrastructure worth 110 lakh cr rupes.

I repeat more than 110 lakh cr rupes all

the 110 lakh cr rupes not invested by

the center not invested by the states

you need private sector also but whether

it is the center state or private sector

they will borrow from the market and

specifically a lot of borrowings will be

done from the banks

okay please explain total return swap

I'll repeat it I'm a bank there are

certain bonds you will not purchase is

and get the physical delivery of the

bonds. You will not get the delivery.

You will not purchase it in the sense

you will not get the delivery of the

bonds but you will pay money to me on

these bonds. You will pay money to me.

Whatever is a coupon rate I will pay

you. If the price of the bonds goes up,

right? I will pay you money. This is

basically the model. You are not getting

the bonds. You are not literally

purchasing the bond. But what if what if

the price of the bond goes down? You

will incur a loss. Correct? But why I'm

providing this particular service to

you? Why am I providing the service? I

I'm not doing a charity here. I am going

to collect certain interest from you for

providing the services. This is

essentially the model of a bond. Okay.

Uh this kind of a bond.

[clears throat]

Sir buyback tax is a type of capital my

dear capital gains tax right until now

please understand

company will purchase the shares simple

company will purchase a share will give

money to you the government until now

would simply say the money that you have

received is dividend I'll treat this as

a dividend and on this you'll have to

pay the taxes to the government now

government says no no let's not treat it

as a dividend. Once you sell the shares

to the company and you get money, it

will be treated as capital gains. It

will be treated as capital gains and

whatever is the tax applicable to the

capital gains, you'll have to pay that

particular tax to the government. Okay.

[clears throat]

Revenue receipt, liabilities, can you

tell it which type are there? My dear,

what what do you want to know under

that? Numbers, you don't require by the

way, right? you don't require numbers

my dear the the link will be provided in

the description box regarding the PDF

etc don't worry use the link

okay done so that's it from my side in

today's particular session right if you

have liked the discussion that I've done

please hit the like button if you're yet

to join our YouTube channel kindly join

right now just a reminder again national

test will be conducted on budget as well

as economic survey link is there

register attempt it economic survey

chapter wise I'll discuss it in special

class that link will be posted in the

official telegram channel of unacademic

IAS join there using this particular

link that's it from my side take care

have a great