Budget 2026–27: Towards the Development of the North-East India under Purvodaya and Viksit Bharat
Introduction
Budget 2026–27 is framed against a decade-long macroeconomic trajectory marked by stability, fiscal discipline, sustained growth of around 7 per cent, and moderate inflation. As defined in the Finance Minister’s opening speech this performance is the outcome of conscious policy choices that prioritise reform over rhetoric, fiscal prudence over populism, and people-centric outcomes over short-term expediency and even amid global uncertainty, disrupted supply chains and technological transitions, India has pursued structural reforms, public investment-led growth, and Atmanirbharta to build domestic manufacturing capacity, energy security, and employment opportunities.
This year it marks a subtle yet significant shift in India’s regional development strategy as instead of viewing the North-Eastern Region (NER) merely as a peripheral or compensatory recipient of central transfers, the Budget places it within the twin national visions of Viksit Bharat and Purvodaya. This identifies that the North-East’s future lies not in replicating the heavy industrialisation models of mainland India, but in leveraging its distinctive strengths like human capital, cultural capital, biodiversity, and strategic geography through a services-led, livelihood-centric and technology-enabled development pathway.
The Budget’s North-East focus is thus not concentrated in one headline scheme but spread across agriculture, livelihoods, MSMEs, services, health, education, culture, and fiscal federalism and together, these measures seek to address the region’s structural constraints of remoteness, fragile ecology, limited market access, and human development gaps, while aligning the North-East with India’s broader growth narrative.
Conceptual Framework:
The Budget draws inspiration from the Viksit Bharat Young Leaders Dialogue 2026 showcasing a strong Yuva Shakti–driven orientation as here, Youth are viewed not just as beneficiaries, but as active partners in transforming aspiration into achievement and potential into performance. This perspective is particularly relevant for the North-East as it is a region with a young demographic profile but persistent challenges of unemployment and outmigration.
The Finance Minister sets up the Budget around three Kartavyas, which together provide the analytical lens to understand North-East–focused measures:
● First Kartavya: Accelerate and sustain economic growth by enhancing productivity, competitiveness, and resilience to volatile global dynamics.
● Second Kartavya: Fulfil aspirations and build the capacity of people, enabling them to become strong partners in India’s growth journey.
● Third Kartavya: Sabka Sath, Sabka Vikas ensuring that every family, community, region, and sector including the North-East, has access to opportunities and resources for meaningful participation.
The North-East–related provisions in Budget 2026–27 can be systematically mapped into these three Kartavyas, showcasing a coherent rather than fragmented regional strategy.
Institutional and Budgetary Support: Ministry of DoNER
A direct and explicit reflection of the Union Budget’s commitment to the North-East is the allocation of ₹6,812 crore to the Ministry of Development of North Eastern Region (DoNER) in Budget 2026–27. This allocation will strengthen the institutional mechanism dedicated exclusively to addressing the region’s developmental and implementation challenges.
The funding primarily supports two flagship instruments:
1. Prime Minister’s Development Initiative for North East Region (PM-DevINE)
PM-DevINE will focus on gap-filling infrastructure and social development projects that are not adequately covered under existing central schemes. Its emphasis on health, education, connectivity, and livelihood infrastructure aligns closely with the Budget’s objectives of human capital formation, services-led growth, and regional inclusion under Viksit Bharat.
2. North East Special Infrastructure Development Scheme (NESIDS)
NESIDS will target critical infrastructure deficits in physical and social sectors particularly in remote and difficult terrain and by supporting roads, water supply, power, health, and education infrastructure, NESIDS will enhance the absorptive capacity of the region to implement sectoral initiatives in agriculture, fisheries, animal husbandry, tourism, and MSMEs.
Together, PM-DevINE and NESIDS will function as delivery platforms, translating national policy priorities such as Purvodaya, the three Kartavyas, and Yuva Shakti into region-specific outcomes. Thus, the DoNER allocation therefore complements Finance Commission transfers by providing targeted, flexible, and region-sensitive funding, ensuring that the North-East is not limited by one-size-fits-all implementation models.
Reform Express and Structural Transformation
The Budget is supported by the pace of the Government’s ‘Reform Express’ with over 350 reforms rolled out since 2025 including GST simplification, labour code notifications, deregulation, and reduced compliance burdens. These reforms create an enabling ecosystem for regional growth by improving ease of doing business, mobilising private investment, and strengthening state capacity.
The North-East needs new systems and better infrastructure because the main things holding it back are physical and logical hurdles not a lack of government interest and thus, the emphasis on MSMEs, legacy cluster rejuvenation, and services-led development reflects an attempt to align reform momentum with regional realities.
Purvodaya and the North-East Development Strategy
Purvodaya represents India’s eastward re-balancing of development and recognising that future growth must be structurally more even. While Purvodaya primarily targets eastern coastal states, the North-East is an integral part of this vision through livelihood creation, cultural tourism, and connectivity spillovers.
Initiatives like the development of Buddhist circuits in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura position the North-East as a cultural and civilisational bridge between India and Southeast Asia. This strengthens tourism, employment, and India’s soft power, aligning closely with the Purvodaya framework.
Linking Manufacturing and Traditional Sectors with the North-East
Under the first Kartavya, the Budget proposes scaling up manufacturing in strategic, labour-intensive sectors such as textiles, handlooms, handicrafts, and sports goods. Initiatives like the Integrated Textile Programme, Mega Textile Parks, and the Mahatma Gandhi Gram Swaraj Initiative have particular significance for the North-East as here traditional textile and handloom clusters are deeply embedded in local economies.
The National Handloom and Handicraft Programme, fibre self-reliance initiatives, skilling under Samarth 2.0, and global branding support collectively strengthen the artisan economy of the North-East and rather than displacing traditional livelihoods, the Budget seeks to modernise them through technology, quality certification, and market integration, aligning cultural heritage with productivity enhancement.
The proposed initiative to promote India as a global hub for high-quality sports goods, while not region-specific, opens ancillary opportunities for North-East MSMEs in manufacturing and material-based crafts, provided connectivity and skilling constraints are addressed.
1.Digital Agriculture and Livelihood Security
A key intervention with high importance for the North-East is Bharat-VISTAAR(Virtually Integrated System to Access Agricultural Resources) a multilingual, AI-based agricultural advisory platform integrating AgriStack portals with ICAR packages on agricultural practices. Agriculture in the North-East is characterised by small and fragmented landholdings, rain-fed and hill farming, and limited access to conventional extension services. Thus, Bharat-VISTAAR addresses these issues by enabling customised, crop-specific advisories and real-time decision support.
For the North-East, this digital intervention holds particular promise in horticulture, spices, plantation crops, and diversified farming systems. By reducing climate-related risks and delivering last-mile information in local languages, Bharat-VISTAAR strengthens farm productivity while lowering vulnerability as an essential requirement for inclusive growth in ecologically sensitive regions.
2. Women-Led Rural Economy and Enterprise Creation
The Budget places strong stress on women-led livelihoods through the establishment of SHE-Marts (Self-Help Entrepreneur Marts) which is built on the foundation of the Lakhpati Didi programme thus these community-owned retail outlets are designed to move women from credit-led livelihoods to enterprise ownership.
This initiative has exceptional importance for the North-East as here women’s participation in economic activities and Self-Help Groups (SHGs) is comparatively high. SHE-Marts provide structured market access for handloom products, local food processing, and forest-based produce, enabling women to integrate into formal value chains and by combining finance, aggregation, and marketing, the scheme strengthens economic agency while reinforcing social capital at the community level.
3. Revitalising Traditional Livelihoods and MSMEs
Mahatma Gandhi Gram Swaraj Initiative
The Mahatma Gandhi Gram Swaraj Initiative seeks to strengthen khadi, handloom, handicrafts, and village industries through global market linkage, branding, skilling, and quality upgradation. These sectors form the backbone of the North-East’s traditional economy, particularly in states such as Assam, Manipur, Nagaland, and Mizoram.
By aligning artisan livelihoods with the One District–One Product (ODOP) framework and rural youth skilling, the initiative enhances income generation while also preserving cultural heritage. This approach reinforces the idea that cultural capital can be an engine of economic growth rather than a constraint.
MSME and Micro-Enterprise Support
The Budget’s MSME strategy supported by a ₹10,000 crore SME Growth Fund and a ₹2,000 crore top-up to the Self-Reliant India Fund that addresses one of the North-East’s most persistent challenges: access to risk capital, it is also complemented by compliance and capacity support through ‘Corporate Mitras’ in Tier-II and Tier-III towns, these measures help bridge professional and regulatory gaps faced by small enterprises.
In addition, the rejuvenation of 200 legacy industrial clusters through infrastructure and technology upgradation offers indirect but important benefits to North-East clusters in handloom, bamboo, cane, and agro-processing, thus,integration into national value chains enhances competitiveness while retaining local economic character.
4. Social Inclusion, Health, and Human Security
Divyangjan Empowerment
The Budget advances inclusive growth through the Divyangjan Kaushal Yojana and Divyang Sahara Yojana which focus on task-oriented skill training, assistive devices, and accessible retail outlets. For the North-East, where remoteness often limits access to specialised institutions, these initiatives support dignified livelihoods and social participation. However, their effectiveness will depend on decentralised outreach and region-specific implementation.
5.Mental Health and Trauma Care
One of the most region-sensitive interventions is the upgradation of the Tezpur Mental Health Institute as a Regional Apex Institution, alongside the strengthening of trauma care centres at district hospitals. The North-East’s history of conflict, high disaster exposure, migration stress, and livelihood insecurity makes mental health infrastructure a critical component of human development and by recognising mental health as a public good, the Budget reinforces a people-centred development paradigm.
6. Tourism, Culture, and Soft Power
The proposed Buddhist Circuit Development Scheme in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura leverages the North-East’s civilisational heritage. Investments in monastery preservation, interpretation centres, connectivity, and pilgrim amenities position the region as a hub of cultural tourism.
Beyond employment in hospitality and transport, the Buddhist circuits also strengthen India’s soft power and cross-border cultural linkages, particularly with Southeast and East Asia. This aligns closely with the Purvodaya vision of eastward engagement and regional integration and also India’s Act East policy.
7. Connectivity and Regional Integration
While the seven proposed High-Speed Rail corridors do not directly affect the North-East, the Varanasi–Siliguri corridor holds strategic significance as Siliguri functions as the primary gateway to the region and enhanced connectivity also improves passenger mobility, tourism inflows, and economic integration.
At the same time the absence of intra-North-East high-speed or region-specific rail solutions highlights a continuing infrastructure gap, underscoring the need for context-sensitive connectivity models suited to mountainous terrain and ecological constraints.
8. Agriculture, Fisheries, and Animal Husbandry: Core Livelihood Pillars
Another important feature of Budget 2026–27 is its stress on livelihood-centric growth in the North-East. The explicit support for agarwood cultivation shows a strategic shift towards high-value and export-oriented agriculture suited to the region’s agro-climatic conditions. Agarwood promotes income diversification, agro-forestry and sustainable land use while also creating entrepreneurial opportunities for rural youth.
In fisheries, the focus on integrated development of reservoirs and Amrit Sarovars coupled with support for Fish Farmer Producer Organisations, women-led groups, and start-ups aligns with the North-East’s abundant inland water resources as fisheries emerge as a scalable livelihood option that complements agriculture and enhances nutritional security.
Animal husbandry is also strengthened through proposals to expand veterinary and para-veterinary education, diagnostic facilities, and breeding infrastructure. Given the region’s dependence on mixed farming systems, livestock serves as a critical livelihood buffer, especially for small and marginal farmers in remote areas.
9. Education, Skills and Human Capital: The North-East Dimension
Education emerges as a central pillar in Budget 2026–27’s strategy to align the North-East with the long-term vision of Viksit Bharat mostly under the second Kartavya of fulfilling aspirations and capacity building. Recognising that demographic advantage can be interpreted as growth only through skills and employability, the Budget adopts a strong education-to-employment progression.
The proposal to establish a High-Powered “Education to Employment and Enterprise” Standing Committee signals a strategic shift towards making the services sector a core driver of growth, employment, and exports with a targeted global services share of 10 per cent by 2047. For the North-East, this approach is especially relevant as services such as health, education, tourism, digital work and care services are less land-intensive and better suited to hilly terrain and ecologically sensitive regions. The Committee’s approval to assess the impact of emerging technologies, including AI on jobs and skill requirements is also critical for preparing North-East youth for future-ready employment and reducing skill-led migration.
The Budget further strengthens health education and workforce development through the expansion of Allied Health Professional (AHP) institutions, adding 100,000 trained professionals over the next five years in disciplines like radiology, anaesthesia, applied psychology, and behavioural health. Given the chronic shortage of healthcare professionals in remote and border areas of the North-East, local capacity-building in health education directly improves service delivery while generating regionally anchored employment.
In addition, the creation of a care ecosystem, with large-scale training of caregivers in geriatric and allied care services, opens new employment avenues for women and youth. This is particularly relevant for the North-East where youth outmigration has led to a growing of elderly population dependent on community-based care.
Higher education infrastructure is reinforced through proposals for university townships near industrial and logistics corridors and the establishment of girls’ hostels in every district. For the North-East, these measures address long-standing access and gender barriers in higher education, especially in STEM disciplines, and help retain talent within the region.
The Budget also promotes knowledge and science exposure through the upgradation of national telescope and planetarium facilities. While not region-specific, such initiatives expand educational horizons for students from remote regions and open possibilities for scientific tourism and academic collaboration involving the North-East.
Finally education-reallted initiatives in the Orange Economy (AVGC) and design education support creative and knowledge-based careers that do not require heavy physical infrastructure as for the North-East, these sectors offer pathways to integrate cultural storytelling, traditional crafts, and digital creativity with modern markets, reinforcing both economic opportunity and cultural identity.
10. Fiscal Federalism and State Capacity
The acceptance of the 16th Finance Commission’s recommendation to retain 41% vertical devolution, along with ₹1.4 lakh crore in Finance Commission grants, provides the fiscal foundation for North-East Region development. With weak own-tax bases, high service delivery costs, and recurrent disaster risks, North-Eastern states rely heavily on predictable and adequate transfers.
Thus, Finance Commission grants to rural and urban local bodies, along with disaster management funds, enhance the state and local capacity to implement agriculture, fisheries, animal husbandry, health, and infrastructure initiatives. Thus, fiscal federalism acts as the enabling framework that converts Budget intent into on-ground results in the North-East.
End Note: Reimagining the North-East in Viksit Bharat
Budget 2026–27 marks an important shift in India’s approach to the North-East as from viewing it as a peripheral, transfer-dependent region to recognising it as a strategic growth partner in the journey towards Viksit Bharat. Tied up in the visions of Purvodaya, Yuva Shakti, and the three Kartavyas, the Budget adopts a region-sensitive development model that aligns national ambition with local realities.
Rather than depending on capital-intensive industrialisation alone, the Budget leverages the North-East’s comparative advantages of human capital, women-led social structures, biodiversity, cultural heritage, and strategic geography. Interventions in digital agriculture, high-value crops such as agarwood, fisheries and animal husbandry, MSMEs and traditional clusters, education and health services, and cultural tourism collectively create a diversified and resilient livelihood ecosystem. The stress on education-to-employment pathways, services-led growth, and care economy further ensures that demographic potential is converted into productive human capital.
Importantly, the 16th Finance Commission’s fiscal framework provides the financial backbone that is necessary for North-Eastern states to make policy intent into outcomes, strengthening state and local capacities in agriculture, social services, and disaster resilience. Connectivity initiatives and Buddhist circuit development embed the region more deeply into India’s eastern rebalancing under Purvodaya, enhancing economic integration and soft power.
Thus the Budget 2026–27 not only allocates resources to the North-East but also repositions the region within India’s development imagination and by integrating growth with inclusion, reform with tradition, and national vision with regional specificity, the Budget charts a pathway for the North-East to emerge as a livelihood-driven, services-oriented, and culturally anchored contributor to India’s aspiration of becoming a developed nation by 2047.
