Union Budget 2026-27 Unveils Major Infrastructure Push with Enhanced Capex Target
Finance Minister Nirmala Sitharaman presented a forward-looking Union Budget for the fiscal year 2026-27 in the Lok Sabha on Sunday, announcing substantial increases in capital expenditure allocations and comprehensive measures to strengthen India's infrastructure ecosystem.
Significant Capex Enhancement for Infrastructure Development
In her budget speech, Sitharaman revealed that the government has set an ambitious capital expenditure target of ₹12.2 lakh crore for FY27, marking a substantial increase from the ₹11.2 lakh crore allocated for the current fiscal year. This represents a significant commitment to infrastructure development as a key driver of economic growth.
The Finance Minister emphasized that the government will maintain its focus on expanding infrastructure networks in Tier-2 and Tier-3 cities, recognizing their crucial role in balanced regional development and economic decentralization.
Comprehensive Infrastructure Support Measures
Sitharaman announced several strategic initiatives to bolster the infrastructure sector:
- Risk Guarantee Fund Establishment: The government proposes to create a dedicated risk guarantee fund specifically for the infrastructure sector, aimed at mitigating investment risks and encouraging private participation.
- Domestic Manufacturing Enhancement: A specialized scheme will be introduced to strengthen domestic manufacturing of construction and infrastructure equipment, reducing import dependence and boosting the Make in India initiative.
- Professional Skill Development: The government plans to support professional institutions like the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI) in designing short-term modular courses to develop specialized skills for infrastructure projects.
16th Finance Commission Report Tabled
During the budget session, Sitharaman laid the 16th Finance Commission report in the Lok Sabha, which outlines the framework for tax revenue devolution between the Centre and states for the period 2026-2031.
The Finance Commission, established under constitutional provisions, provides the formula for distributing tax revenues between the central government and state governments. It's important to note that cesses and surcharges levied by the Centre remain outside the divisible pool of taxes.
This constitutional body, headed by former Niti Aayog Vice-Chairman Arvind Panagariya, was constituted on December 31, 2023, and offers crucial recommendations on Centre-state financial relations as part of its periodic mandate.
The budget announcements reflect the government's comprehensive approach to infrastructure development, combining increased financial allocations with structural reforms and institutional support mechanisms to accelerate India's economic transformation.
