The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman on Sunday, February 1, 2026, has signaled a continued and strengthened focus on infrastructure development, with a proposed capital expenditure (capex) increase for FY27 to ₹12.2 lakh crore. This marks an increase of approximately 9% from the ₹11.21 lakh crore allocated in the previous budget for FY26.
The increased allocation underscores the government's commitment to infrastructure-led economic growth. Sitharaman highlighted the manifold increase in public capital expenditure over the past decade, rising from ₹2 lakh crore in 2014-15 to ₹11.2 lakh crore in 2025-26. The Finance Minister emphasized that infrastructure development has been a key priority for the government, leading to various initiatives aimed at enhancing public infrastructure on a large scale. These initiatives include the introduction of new financing instruments like Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), as well as the support of institutions such as the National Investment and Infrastructure Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NaBFID).
The government aims to continue developing infrastructure in cities with populations exceeding 5 lakh, including Tier-2 and Tier-3 cities, which have become important growth centers. The sustained capex push is intended to attract private investment, strengthen urban infrastructure, and support employment while maintaining fiscal consolidation. The government is also proposing to set up a risk guarantee fund for the infrastructure sector to strengthen the confidence of private developers regarding risks during the infrastructure development and construction phase.
In addition to increased capital expenditure, the Union Budget 2026 includes plans for developing new dedicated freight corridors connecting Dankuni in eastern India to Surat in the west. The budget also proposes to operationalize 20 new national waterways over the next 5 years to support environmentally sustainable cargo transportation. Furthermore, the government plans to develop seven high-speed rail corridors across key regions of the country, including Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Bengaluru–Varanasi, and Varanasi–Siliguri.
To boost manufacturing in strategic and frontier sectors, the Finance Minister proposed the launch of Biopharma SHAKTI, India Semiconductor Mission (ISM) 2.0, and the Electronics Components Manufacturing Scheme. Dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu were also announced, building on the rare earth permanent magnets scheme launched in November 2025.
Overall, Union Budget 2026 demonstrates a commitment to infrastructure development as a key driver for economic growth and job creation, with a substantial increase in capital expenditure and several policy initiatives aimed at boosting investment and efficiency in the sector.
