Union Budget 2026 | Government proposes Rs 5,000 crore allocation for city economic regions

New Delhi: Union Finance Minister Nirmala Sitharaman on Sunday announced a major push to strengthen urban growth by focusing on the development of city economic regions (CERs), with a proposed allocation of Rs 5,000 crore per region over five years to implement their plans through a "challenge mode."

Presenting the Union Budget in the Lok Sabha, the minister described cities as India's engines of growth, innovation and opportunity, adding that the new initiative would focus on Tier II and Tier III cities, as well as temple towns, which require modern infrastructure and improved basic amenities.

She said that the Budget aims to further amplify the potential of cities to deliver the economic power of agglomerations by mapping CER, based on their specific growth drivers.

"An allocation of Rs 5,000 crore per CER over 5 years is proposed for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism," Sitharaman said.

She said that during the past decade, her government has undertaken several initiatives for large-scale enhancement of public infrastructure, including through new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions like NIIF and NABFID.

The government will continue to focus on developing infrastructure in cities with over 5 lakh population (Tier II and Tier III), which have expanded to become growth centres.