Laying out an ambitious road map to build a “future-ready Bharat”, the government on Sunday announced a sweeping expansion of infrastructure investment and connectivity initiatives in the Budget, anchored by a sharp increase in public capital expenditure to Rs 12.2 lakh crore.
Finance Minister Nirmala Sitharaman, presenting the Budget, said public capital expenditure had increased manifold from Rs 2 lakh crore in FY2014-15 to Rs 11.2 lakh crore in the Budget Estimates for 2025-26, and she had proposed to raise it further to Rs 12.2 lakh crore in FY2026-27 to continue the momentum.
Sitharaman, who presented the Budget for the ninth time, said the government had undertaken several initiatives over the past decade for large-scale enhancement of public infrastructure, including new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs), and institutions like the National Investment and Infrastructure Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NaBFID).
Over the years, REITs had emerged as a successful instrument for asset monetisation. The Budget proposes to accelerate the recycling of significant real estate assets of Central Public Sector Enterprises (CPSEs) through the setting up of REITs.
To ease financing risks and improve the flow of credit to infrastructure projects, an Infrastructure Risk Guarantee Fund will be established to provide prudently calibrated partial credit guarantees to lenders, the Budget said.
Sitharaman also announced a major shift in the government’s urban development strategy, with a renewed focus on Tier II and Tier III cities, as well as temple towns that required modern infrastructure and basic civic amenities. She said the government would harness the economic power of urban agglomerations by identifying and developing City Economic Regions (CERs), mapped according to their specific growth drivers such as manufacturing, services, tourism or logistics. An allocation of Rs 5,000 crore per CER over a five-year period was proposed.
Further strengthening multi-model connectivity, a Seaplane Viability Gap Funding (VGF) scheme would be introduced to support seaplane operations, while 20 new national waterways be developed over the next five years.
The government also proposed seven high-speed rail corridors — Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–Siliguri — to act as growth connectors and promote an environmentally sustainable passenger transport system.
Recognising the need for skilled manpower to support this infrastructure expansion, Sitharaman announced that training institutes would be set up as Regional Centres of Excellence for the development of the required workforce. These centres would benefit the youth across the waterways network by enabling them to acquire relevant skills.
To promote environmentally sustainable movement of cargo, the Budget also proposes to establish new Dedicated Freight Corridors connecting Dankuni in the East to Surat in the West and to operationalise 20 new National Waterways over the next five years.
This initiative is envisaged to begin with National Waterway-5 in Odisha, connecting the mineral-rich areas of Talcher and Angul and industrial centres such as Kalinga Nagar to the ports of Paradip and Dhamra. To increase the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047, the Finance Minister proposed the launch of a Coastal Cargo Promotion Scheme to incentivise a model shift from rail and road transport.
She further announced that a ship repair ecosystem catering to inland waterways would be developed at Varanasi and Patna.