SDG 9: Industry, Innovation and Infrastructure | SDG 11: Sustainable Cities and Communities | SDG 13: Climate Action | SDG 17: Partnerships for the Goals
Ministry of Finance | NITI Aayog | Ministry of Railways | Ministry of Ports, Shipping and Waterways
During the Union Budget 2026-27 presentation on February 1, 2026, Finance Minister Nirmala Sitharaman proposed a significant increase in public capital expenditure (capex) to ₹12.2 lakh crore. This allocation marks a massive jump from ₹2 lakh crore in FY2014-15, continuing the government’s decade-long strategy of using public investment to crowd-in private capital and build national resilience. To accelerate this momentum, the budget proposes new asset monetization tools, including dedicated Real Estate Investment Trusts (REITs) for recycling the real estate assets of Central Public Sector Enterprises (CPSEs).
Sustainable Connectivity and Logistics The budget prioritizes low-carbon freight and passenger movement through several landmark initiatives:
High-Speed Rail: Seven new High-Speed Rail corridors will be developed as “growth connectors,” including Mumbai-Pune, Hyderabad-Bengaluru, and Delhi-Varanasi.
Freight and Waterways: A new Dedicated Freight Corridor (DFC) will connect Dankuni (East) to Surat (West). Additionally, 20 new National Waterways (NW) will be operationalized over the next five years, starting with NW-5 in Odisha to connect mineral-rich hubs to ports.
Inland Shipping: A Coastal Cargo Promotion Scheme will be launched to increase the share of inland waterways and coastal shipping from 6% to 12% by 2047.
Innovation in Financing and Deep Tech To de-risk infrastructure for the private sector, an Infrastructure Risk Guarantee Fund will provide credit guarantees to lenders. In the sustainability domain, the budget proposes an outlay of ₹20,000 crore over five years for Carbon Capture Utilization and Storage (CCUS) technologies across power, steel, and cement sectors. Furthermore, a Seaplane VGF Scheme will be introduced to incentivize indigenous manufacturing and enhance remote connectivity.
What is the “Infrastructure Risk Guarantee Fund” proposed in Budget 2026-27? The Infrastructure Risk Guarantee Fund is a strategic financial tool designed to boost private developer confidence. It provides prudently calibrated partial credit guarantees to lenders, covering risks specifically during the development and construction phases of infrastructure projects. This mechanism aims to lower the cost of capital and encourage private participation in high-scale projects by mitigating the uncertainty typically associated with long-gestation assets.
Policy Relevance
The ₹12.2 lakh crore capex proposal represents a transition toward agglomeration-based economic planning.
City Economic Regions (CERs): By allocating ₹5,000 crore per CER, the policy moves beyond general urban planning to focus on Tier-II and Tier-III cities as specialized economic hubs, mapping them based on specific growth drivers.
Logistics Cost Reduction: Doubling the share of coastal shipping and expanding the DFC network is a direct attempt to bring down India’s logistics cost-to-GDP ratio, making “Make in India” products globally competitive.
MRO and Maritime Skills: Establishing ship repair ecosystems at Varanasi and Patna and regional Centres of Excellence for waterway training highlights a focus on creating a specialized blue-economy workforce.
Climate Transition Financing: The ₹20,000 crore for CCUS indicates that the government is now funding “hard-to-abate” industrial sectors to meet its international climate commitments without sacrificing economic output.
Relevant Question for Policy Stakeholders: How can the Ministry of Finance ensure that the dedicated REITs for CPSE assets utilize “Dynamic Pricing” models to maximize asset recycling revenue for the ₹12.2 lakh crore capex pool?
Follow the full news here: ₹12.2 LAKH CRORE PUBLIC CAPEX PROPOSED IN FY2026-27