Finance Minister Nirmala Sitharaman unveiled a significant proposal during her Budget 2026-27 presentation in the Lok Sabha on Sunday, aiming to bolster India's infrastructure development landscape. The announcement centered on establishing an Infrastructure Risk Guarantee Fund specifically designed to mitigate concerns among private developers regarding risks that emerge during the construction phase of projects.
Addressing Private Sector Concerns
During her comprehensive 85-minute speech, Sitharaman emphasized the government's decade-long commitment to enhancing public infrastructure through innovative financing instruments. She highlighted previous initiatives such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs), along with institutions like the National Investment and Infrastructure Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NABFID).
The newly proposed Infrastructure Risk Guarantee Fund represents a strategic move to strengthen private developers' confidence. Sitharaman explained that this fund will provide prudently calibrated partial credit guarantees to lenders, thereby addressing the financial uncertainties that often accompany infrastructure projects during their development and construction stages.
Focus on Tier-II and Tier-III Cities
In her address, the finance minister described cities as India's engines of growth, innovation, and opportunity. She announced a renewed focus on Tier-II and Tier-III cities, including temple towns, which require modern infrastructure and basic amenities to unlock their economic potential.
The Budget aims to amplify the economic power of urban agglomerations by mapping city economic regions (CER) based on their specific growth drivers. Sitharaman proposed an allocation of Rs 5,000 crore per CER over five years to implement development plans through a challenge mode with a reform-cum-results based financing mechanism.
Historic Budget Presentation
This Budget 2026-27 presentation marks Sitharaman's ninth consecutive Budget speech, making her India's longest-serving finance minister. She has held the position since May 2019 and remains the first full-time woman finance minister in the country's history.
The announcement comes alongside other key Budget 2026-27 provisions, including a capital expenditure target of Rs 12.2 lakh crore for FY27, revised income tax slabs for the 2026-27 financial year, and various changes in commodity pricing that affect consumer expenses.
