Budget 2026-27: Govt bets big on green cargo, Tier II-III city infrastructure; top 7 announcements

Finance Minister Nirmala Sitharaman on Sunday proposed a series of measures to boost infrastructure development, including a hike in public capital expenditure to ₹12.2 lakh crore in 2026-27.

Presenting the Union Budget 2026-27 in Parliament, Sitharaman said the government will continue its focus on building infrastructure in Tier II and Tier III cities with populations of over five lakh, which have emerged as new growth centres.

Public capital expenditure has risen sharply over the past decade from ₹2 lakh crore in 2014-15 to ₹11.2 lakh crore in the current fiscal.

“In FY2026-27, I propose to increase it to ₹12.2 lakh crore to continue the momentum,” she said.

New infrastructure-related proposals?

• The finance minister announced the setting up of an Infrastructure Risk Guarantee Fund to address risks faced by developers during the construction phase. It will provide prudently calibrated partial credit guarantees to lenders and help crowd in private investment.

• Sitharaman said real estate investment trusts (REITs) have emerged as a successful instrument and proposed to accelerate recycling of significant real estate assets of central public sector enterprises through dedicated REITs.

• The budget also proposes establishing a new Dedicated Freight Corridor connecting Dankuni in the east to Surat in the west.

• The government will operationalise 20 new National Waterways over the next five years, beginning with National Waterway-5 in Odisha, to link mineral-rich regions of Talcher and Angul and industrial centres such as Kalinga Nagar with the ports of Paradeep and Dhamra.

• Training institutes will be developed as regional centres of excellence to build skilled manpower along the waterways, while a ship repair ecosystem for inland waterways will be set up at Varanasi and Patna.

• A Coastal Cargo Promotion Scheme will be launched to encourage a shift from road and rail to coastal shipping and inland waterways, with the aim of increasing their share in freight movement from 6% to 12% by 2047.

• Sitharaman announced incentives for indigenisation of seaplane manufacturing and the introduction of a seaplane viability gap funding (VGF) scheme to support operations.