Budget 2026 Unveils Rs 5,000 Crore Plan for City Economic Regions
In a significant move to boost urban development, Union Finance Minister Nirmala Sitharaman announced the establishment of City Economic Regions (CERs) with a substantial allocation of Rs 5,000 crore per region over the next five years. This initiative was highlighted as one of the six key areas in her Budget 2026-2027 speech, delivered on Sunday.
Focus on Tier-2 and Tier-3 Cities
Sitharaman emphasized that cities serve as engines of growth, innovation, and opportunities. The government will now concentrate on Tier-2, Tier-3 cities, and even temple towns, which require modern infrastructure and basic amenities to unlock their full potential. This strategic shift aims to decentralize economic development and foster regional prosperity.
Mapping Growth Drivers and Implementation
The Finance Minister detailed that CERs would be mapped based on their specific growth drivers, ensuring tailored interventions for each region. The allocation of Rs 5,000 crore per CER will be implemented through a challenge mode, encouraging competitive and efficient project execution. This approach is designed to accelerate and sustain economic growth across the country.
Six Key Areas for Economic Acceleration
In her speech, Sitharaman outlined six critical areas for intervention:
- Scaling up manufacturing in seven strategic sectors
- Rejuvenating legacy industrial sectors
- Creating champion MSMEs
- Delivering a push for infrastructure
- Ensuring long-term security and stability
- Developing city economic regions
This comprehensive framework underscores the government's commitment to holistic economic development.
Continuity from Previous Budget Initiatives
This announcement builds on last year's Budget, where Sitharaman proposed an Urban Challenge Fund of Rs 1 crore for projects focused on cities as growth hubs, creative redevelopment, and water and sanitation. An allocation of Rs 10,000 crore was earmarked for 2025-2026. However, sources indicate that the fund has yet to be operationalized, with rules for the challenge pending Cabinet approval. The new CER initiative aims to address these delays and provide a more structured approach to urban development.
The Budget 2026 proposals reflect a forward-looking strategy to enhance India's urban landscape, driving economic growth from the grassroots level. With a clear focus on Tier-2 and Tier-3 cities, the government seeks to create sustainable and vibrant economic regions that contribute significantly to the nation's progress.
