Making of Budget 2026: How plans and demands make it to FM Sitharaman's Bahikhata?

Union finance minister Nirmala Sitharaman is set to present Budget 2026 for the ninth consecutive time and everyone is wondering what her red bahikhata might just be holding for the public. Expectations are high among taxpayers, businesses and other stakeholders, but many are not aware of what goes in making a Budget. The basic groundwork remains out of sight, with months of consultations, calculations and policy fine-tuning underway before the FM rises to speak in Parliament.

The groundwork for the Budget, set to be presented on February 1, 2026, began months back.

From plans to Bahikhata: Making of a Budget

The process for Union Budget 2026–27 stretches over several months and brings together multiple ministries, states and stakeholders. Far more than a financial statement, the Union Budget reflects the country’s economic performance over the previous year and sets out the government’s aspirations for the coming fiscal year.





Covering the period from April 1 to March 31, it lays out expected expenditures, revenue projections and policy priorities for the year ahead.

In simple terms, a budget plan is an estimate of costs and revenues over a specific period. However, its preparation is an intricate and carefully sequenced process that typically begins around August or September, nearly six months before Budget Day.

• The first formal step involves the budget division of the ministry of finance issuing a circular to ministries, departments, state governments, Union Territories and public-sector bodies.
• These guidelines ask departments to submit their projected revenue estimates and expenditure demands for the upcoming financial year, along with an analysis of past spending and receipts.
• Then, officials from different departments compile the detailed projections, to help determine the likely fiscal deficit. At this stage, the Chief Economic Advisor plays a key role by guiding the government on the broader economic outlook and fiscal policy decisions.
• After this, the proposals are reviewed carefully, followed by intense discussions to ensure that they are in line with the government’s overall fiscal plan.
• Once the figures are examined and approved, they are forwarded to the ministry of finance, which allocates resources across ministries and sectors. If any disagreement arises over fund allocation, the matter is referred to the Union Cabinet or the Prime Minister for resolution.
• The process also includes extensive consultations with a wide range of stakeholders. Through the Department of Economic Affairs and the Department of Revenue, discussions are held with business owners, farmers, economists, foreign institutional investors and other interest groups to factor in the diverse needs of the economy.
• A key part of this exercise is the series of pre-Budget meetings led by the finance minister. These include consultations with state finance ministers, industry bodies such as FICCI, CII, ASSOCHAM and NASSCOM, startups, farmers’ organisations, trade unions, NGOs, top economists and think-tanks.
• The feedback gathered during these meetings helps shape spending priorities and policy measures.
• By January, following these consultations, expenditure ceilings for each ministry are locked in by the finance minister in consultation with the Prime Minister’s Office. The Revenue Secretary then presents the final fiscal deficit calculations, after which the Union Cabinet gives its approval.

The Budget moves into its final phase with the traditional halwa ceremony, marking the start of printing the Budget papers. From then on, officials involved remain under strict confidentiality until the Budget is presented in Parliament.

Prepared under Article 112 of the Constitution, the Union Budget is the government’s yearly statement of expected income and spending. On February 1, the finance minister will table it in the Lok Sabha, laying out revenue plans, spending priorities and key reforms for 2026–27.