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Finance Minister Nirmala Sitharaman on February 1, 2026, presented her ninth consecutive Union Budget. While allocations rose across key energy ministries, the scale of increases varied sharply.
A ministry-wise breakdown of Budget outlays shows coal, power and renewables drawing more share, even as petroleum spending inched up only marginally.
Ministry of Coal
The Union Budget for 2026-27 has provided for a Budgetary allocation of ₹3,635 crore for the Ministry of Coal, a whopping 641 per cent increase over the ₹490 crore Revised Estimate (RE) 2025-26 provided in the Expenditure Budget document for 2026-27.The Economic Survey, tabled in Parliament on 28 January 2026, by Finance Minister Nirmala Sitharaman, noted that with the fifth-largest coal reserves and as the second-largest consumer, coal remains crucial, contributing 55 per cent to the national energy mix and fuelling over 74 per cent of total power generation.
Ministry of Power
The Budgetary allocation for the power ministry for 2026-27 BE stood at of ₹29,996.85 crore, a 38.95 per cent increase over the ₹21,587.66 crore Revised Estimate (RE) 2025-26 provided in the Expenditure Budget document for 2026-27.
“Allocation towards the ‘Reformed Linked Distribution Scheme’, under The Ministry of Power, increased 15 per cent to ₹18,000 crore vis-a-vis ₹15,670 crore as per the revised estimates (RE) for this fiscal. This scheme targets improving operational efficiency through infrastructural upgrades for electrical equipment and rolling out smart metering across consumer categories,” Sehul Bhatt, Director, Crisil Intelligence told ETEnergyWorld.
He, however, added that the implementation has been slow given its large scale, which has led to the sunset date being extended from March 2026 to March 2028; hence, the high allocations in fiscal 2027.
“As of December 2025, total central grant released under the scheme was ₹37,000 crore, accounting for about 38 per cent of the total sanctioned gross Budgetary support,” said Bhatt.
Ministry of New and Renewable Energy
The Union Budget for 2026–27 has allocated ₹32,914 crore to the Ministry of New and Renewable Energy (MNRE), registering a notable 30.09 per cent rise over the ₹25,301 crore Revised Estimate (RE) for 2025–26, as per the Expenditure Budget document.Noted in the Economic Survey, India maintains a dominant global presence, ranking third in overall RE capacity and installed solar capacity and fourth in installed wind capacity. Total RE capacity witnessed a more than threefold increase over the last decade, surging from 76.38 GW in March 2014 to 253.96 GW by November 2025.
It also mentions large-scale integration of Battery Energy Storage Systems and Pumped Storage Hydropower can address the inherent variability of renewables, ensure grid stability and peak-load management, and enable reliable, large-scale adoption of renewables to support the transition to a clean, secure, and resilient power system.
Ministry of Petroleum and Natural Gas
The Union Budget for 2026–27 has provided ₹30,443 crore for the Ministry of Petroleum and Natural Gas, representing a 2.15 per cent increase over the ₹29,800 crore Revised Estimate (RE) for 2025–26, according to the Expenditure Budget document.
Sehul Bhatt said, “A grant of ₹17,500 crore has been provided to public sector oil marketing companies in fiscal 2027 BE to compensate for under-recoveries on domestic LPG that arose from the gap between elevated international LPG prices and regulated domestic retail prices”.
He said that this follows Cabinet approval of a ₹30,000 crore compensation package, of which ₹12,500 crore was provided in fiscal 2026 RE, with the balance now provisioned, reducing the carry-over of LPG-related losses on the balance sheets of public sector oil marketing companies.
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