The union budget for Financial Year 2026–27 proposed an allocation of Rs 21,030 mn to the Ministry of Civil Aviation, representing the conversion of Rs 2,103 crore. The proposal allocates Rs 20,580 mn for revenue expenditure and Rs 450 mn for capital expenditure. The allocation reflects the ministry's identified spending priorities within the civil aviation sector for the coming year.

A provision of Rs 8,900 mn has been identified for liabilities and commitments associated with Air India following its sale to the Tata Group. The allocation for those obligations forms a significant portion of the ministry's planned revenue expenditure and is intended to cover outstanding commitments arising from the airline's prior public sector status. The budgetary treatment signals the continued fiscal management of legacy liabilities.

A sum of Rs 7,583.9 mn is proposed for Air India Asset Holding Limited (AIAHL), the special purpose vehicle set up to assume and service Air India debt incurred during its time as a public sector company, and will be used to service those liabilities. AIAHL is designated to manage residual debt and related obligations transferred from the airline. The allocation to AIAHL forms part of a broader approach to disentangle legacy financial burdens from operational aviation entities.

The budget proposal therefore channels resources to address legacy obligations while maintaining funding for ongoing civil aviation functions. The balance between revenue provisioning for liabilities and modest capital spending underscores a prioritisation of debt management over fresh infrastructure investment in the current cycle. Observers note that the distribution of funds may affect near term operational planning within the sector and shape subsequent policy decisions on airline restructuring and public asset management.