Union Budget 2026: Nirmala Sitharaman proposes to boost Centre’s capex to Rs 12.2 lakh crore in FY27

Finance Minister announces a number of initiatives to strengthen infrastructure, especially in tier 2 and tier 3 cities

New Delhi: Union Finance Minister Nirmala Sitharaman on Sunday proposed to increase the Central government’s capital expenditure (capex) for the financial year 2026-27 to Rs 12.2 lakh crore, which is around 9% over the current year’s budgetary proposal of Rs 11.2 lakh crore.

In the Union Budget 2026-27, the Finance Minister announced a number of initiatives to strengthen infrastructure, especially in tier 2 and tier 3 cities.  

“During this past decade our 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,” Sitharaman said.

“We shall continue to focus on developing infrastructure in cities with over 5 lakh population (tier 2 and tier 3), which have expanded to become growth centres,” she added.

The Finance Minister claimed that public capital expenditure has increased manifold in the past one decade, rising from Rs 2 lakh crore in 2014-15 to Rs 11.2 lakh crore in the current financial year.

To strengthen the confidence of private developers regarding risks during infrastructure development and construction phase, the Finance Minister proposed to set up an Infrastructure Risk Guarantee Fund to provide prudently calibrated partial credit guarantees to lenders.

One of the key focus areas of the 2026-27 Union Budget is boosting manufacturing through ease of doing business and providing better infrastructure.

The Finance Minister announced a proposal to scale up manufacturing in seven strategic and frontier sectors.

She proposed to increase the outlay for Electronics Components Manufacturing Scheme to Rs 40,000 crore from Rs 22,919 crore announced in April last year.

To develop India as a global biopharma manufacturing hub, the Central government has come up with Biopharma SHAKTI initiative with an outlay of Rs 10,000 crore over the next five years.

“This will build the ecosystem for domestic production of biologics and biosimilars. The strategy will include a biopharma-focused network with three new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading seven existing ones,” the Finance Minister said.

It will also create a network of over 1,000 accredited India Clinical Trials sites. We propose to strengthen the Central Drugs Standard Control Organisation to meet global standards and approval timeframes through a dedicated scientific review cadre and specialists, she added.

The Finance Minister claimed that in the past 12 years, India’s economic trajectory has been marked by stability, fiscal discipline, sustained growth and moderate inflation.

“This is the result of conscious choices we have made, even in times of heightened uncertainty and disruption,” she said.