Union finance minister Nirmala Sitharaman on Sunday announced a nearly 9 per cent increase in capital expenditure, raising the allocation to Rs 12.2 lakh crore for FY 2026-27, as the government doubled down on infrastructure-led growth under its “future-ready Bharat” push.Presenting the Union Budget in Parliament, Sitharaman said the higher allocation was aimed at sustaining momentum in infrastructure creation and supporting long-term economic growth. The capex outlay stood at Rs 11.21 lakh crore in FY 2025-26.“Public capital expenditure has increased manifold from 2 lakh crore in 2014-15 to an allocation of 11.2 lakh crore in 2025-26. In this coming year, that is, financial year 2026-27, I propose to increase it to 12.2 lakh crores to continue the momentum,” she said.
Tier-2, Tier-3 cities remain focus
The finance minister said infrastructure development would continue to prioritise cities with populations above five lakh, including Tier-2 and Tier-3 centres, which have emerged as key growth hubs. She noted that public investment over the past decade has been supported by financing mechanisms such as InvITs and REITs, along with institutions like the National Investment and Infrastructure Fund (NIIF) and NaBFID.As part of the new proposals, the government will also allocate Rs 5,000 crore per City Economic Region (CER) over five years, aimed at strengthening regional growth clusters.
Risk guarantee fund to boost private participation
To address concerns of private developers, Sitharaman announced the creation of an Infrastructure Risk Guarantee Fund. The fund will offer prudentially calibrated partial credit guarantees to lenders to reduce risks during construction and early project phases, encouraging greater private sector participation.
Transport, logistics and manufacturing push
The Budget also outlined several infrastructure initiatives, including:
- Dedicated REITs to unlock and recycle real estate assets of CPSEs
- A Coastal Cargo Promotion Scheme to raise the share of inland waterways and coastal shipping from 6% to 12% by 2047
- 20 new National Waterways over the next five years
- Seven high-speed rail corridors as inter-city growth connectors
- New Dedicated Freight Corridors linking Dankuni in the east to Surat in the west
- A seaplane VGF scheme to support operations
To strengthen domestic capacity, Sitharaman said a scheme for enhancement of construction and infrastructure equipment manufacturing would be introduced, along with setting up training institutes as regional centres of excellence to develop skilled manpower.The finance minister said the combined measures reflect the government’s intent to build infrastructure that supports growth, urbanisation and industrial competitiveness in the coming years.
