Union Budget 2026-27 Raises Infrastructure Capex 8.9% To ₹12.2 Trillion For FY27
Finance Minister Nirmala Sitharaman announced Union Budget 2026-27 with infrastructure capital expenditure increased by 8.9% to ₹12.2 trillion for FY27. The budget emphasizes development of seven high-speed rail corridors connecting major cities, 20 new waterways over five years, and ₹5,000 crore allocation per City Economic Region for Tier II and Tier III cities development.
*this image is generated using AI for illustrative purposes only.
Finance Minister Nirmala Sitharaman announced a significant boost to India's infrastructure development in Union Budget 2026-27, increasing infrastructure capital expenditure by 8.9% to ₹12.2 trillion for FY27. This represents a substantial increase from the ₹11.2 trillion allocated in FY26, underlining the government's sustained commitment to building urban and logistics infrastructure across India's growing cities with emphasis on freight corridors, high-speed rail, waterways, ports, and Tier II/III cities.
Infrastructure Investment Growth Trajectory
The Finance Minister highlighted the remarkable growth in public capital expenditure over the past decade, noting that it has "increased manifold, from ₹2 trillion in 2014-15 to an allocation of ₹11.2 trillion in BE 2025-26." The proposed increase seeks to "continue this momentum" through expanded infrastructure financing mechanisms.
| Investment Period: | Amount (₹ Trillion) | Growth Details |
|---|---|---|
| FY 2014-15: | 2.00 | Base year |
| FY 2025-26: | 11.20 | Budget allocation |
| FY 2026-27: | 12.20 | 8.9% increase |
Over the past decade, the government has expanded the infrastructure financing ecosystem through new instruments including Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), and institutions like the National Investment and Infrastructure Fund (NIIF) and NaBFID.
High-Speed Rail Network Expansion
The Finance Minister announced the development of seven high-speed rail corridors as growth connectors to promote sustainable passenger mobility and regional integration:
| High-Speed Rail Routes: | Details |
|---|---|
| Mumbai–Pune: | Western corridor |
| Pune–Hyderabad: | Deccan connectivity |
| Hyderabad–Bengaluru: | South India link |
| Hyderabad–Chennai: | Eastern connectivity |
| Chennai–Bengaluru: | Tamil Nadu-Karnataka link |
| Delhi–Varanasi: | Northern corridor |
| Varanasi–Siliguri: | Eastern extension |
Focus on Tier II and Tier III Cities
Sitharaman emphasized a decisive shift toward urban growth centers beyond metros, stating: "We shall continue to focus on developing infrastructure in cities with populations of over five lakh—that is, Tier II and Tier III cities—which have expanded to become important growth centres." The Budget introduced the concept of City Economic Regions (CERs), reinforcing cities as growth engines.
| CER Initiative: | Details |
|---|---|
| Allocation per CER: | ₹5,000 crore over five years |
| Target Cities: | Tier II, Tier III cities and temple towns |
| Financing Model: | Challenge-based, reform-linked |
Freight Corridors and Waterways Development
The Budget places major emphasis on greening freight movement and easing logistics bottlenecks through several key initiatives. New freight corridors include the east-west corridor connecting Dankuni in West Bengal to Surat in Gujarat, focusing on environmentally sustainable cargo transport.
| Waterways Initiative: | Details |
|---|---|
| New Waterways: | 20 over five years |
| First Project: | National Waterway-5, Odisha |
| Key Connections: | Talcher-Angul to Kalinga Nagar, Paradip, Dhamra |
| Supporting Infrastructure: | Regional training institutes, ship repair ecosystem |
The ambitious goal is to raise the share of inland waterways and coastal shipping from the current 6% to 12% by 2047, alongside converting rail-based freight to road and water-based logistics over time.
Infrastructure Risk Guarantee Fund
To address long-standing concerns of lenders and developers during infrastructure project construction phases, the Budget proposed establishing an Infrastructure Risk Guarantee Fund. "To strengthen the confidence of private developers regarding risks during infrastructure development and construction phases, I propose to set up an Infrastructure Risk Guarantee Fund," the Finance Minister announced, adding that it would provide prudentially calibrated partial credit guarantees to lenders.
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