Budget 2026: Infra Sector Wins Big with ₹12.2 Lakh Crore Capex

Union Budget 2026 Reinforces Infrastructure-Led Growth

Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, has firmly placed infrastructure at the core of India's economic growth strategy. The government announced a capital expenditure (capex) outlay of ₹12.2 lakh crore for the fiscal year 2026-27, marking a significant 9% increase from the ₹11.2 lakh crore allocated for the previous year. This sustained push underscores the government's belief in public spending as a powerful multiplier for economic activity, job creation, and attracting private investment.

Sustaining the Capex Momentum

The allocation for FY27 continues a trend of aggressive public investment in infrastructure. The Finance Minister highlighted that public capex has surged dramatically over the last decade, growing from just ₹2 lakh crore in 2014-15. This consistent increase is aimed at building a modern, resilient infrastructure network capable of supporting India's ambition to become the world's third-largest economy. The government's strategy is to use public funds to create a foundation that encourages private companies to invest in related projects, a concept known as 'crowding in' private investment.

Focus Shifts to Tier-2 and Tier-3 Cities

A key theme of the budget is balanced regional development. The Finance Minister explicitly stated that the focus on infrastructure creation will extend to cities with populations exceeding five lakh, particularly Tier-2 and Tier-3 cities. These urban centres have emerged as new engines of growth, and providing them with modern infrastructure is critical for sustaining their momentum. To support this, the budget introduced a plan to map 'City Economic Regions' (CERs) based on their specific growth drivers, with an allocation of ₹5,000 crore per region over five years to implement development plans.

De-risking Projects to Attract Private Capital

To address the challenges faced by private developers, particularly regarding project risks during the initial construction phase, the budget announced the establishment of an Infrastructure Risk Guarantee Fund. This fund will provide partial credit guarantees to lenders, making it easier for private companies to secure financing for large-scale projects. By mitigating some of the financial risks, the government aims to significantly boost private sector participation in building the nation's infrastructure.

Key Infrastructure Announcements in Budget 2026

The budget laid out a clear roadmap with several new initiatives and schemes targeting specific infrastructure sub-sectors.

Initiative	Allocation / Key Detail	Primary Objective
Capital Expenditure (Capex)	₹12.2 lakh crore for FY27	Sustain infrastructure-led growth and job creation.
Infrastructure Risk Guarantee Fund	To be established	Provide partial credit guarantees to de-risk projects for private investors.
City Economic Regions (CERs)	₹5,000 crore per region over 5 years	Strengthen infrastructure and amenities in regional growth clusters.
High-Speed Rail Corridors	7 new corridors announced	Enhance inter-city passenger mobility and promote sustainable transport.
Dedicated Freight Corridors	New corridor from Dankuni to Surat	Improve freight efficiency and reduce logistics costs.
Inland Waterways & Coastal Shipping	Coastal Cargo Promotion Scheme	Increase modal share from 6% to 12% by 2047.
Construction Equipment Manufacturing	New enhancement scheme	Strengthen domestic manufacturing of high-value equipment.

A Boost for Multimodal Connectivity

The budget places a strong emphasis on creating an integrated logistics network. The announcement of a new Dedicated Freight Corridor linking Dankuni in the east to Surat in the west is a major step towards improving freight movement efficiency. This is complemented by a significant push for water-based transport. The Coastal Cargo Promotion Scheme and the plan to develop 20 new National Waterways aim to shift cargo from congested road and rail networks. The development of a ship repair ecosystem in Varanasi and Patna will further strengthen the inland waterways infrastructure.

Enhancing Transport and Domestic Manufacturing

To improve passenger transport, seven new high-speed rail corridors were announced, connecting major economic hubs like Mumbai, Pune, Hyderabad, Bengaluru, and Chennai. Furthermore, to promote tourism and last-mile connectivity, the budget introduced a Viability Gap Funding (VGF) scheme for seaplane operations and incentives to encourage their domestic manufacturing. The government also announced a scheme to upgrade the domestic manufacturing capacity for construction and infrastructure equipment, ensuring that the 'Make in India' initiative benefits from the capex boom.

Market Impact and Sectoral Beneficiaries

The budget's strong focus on infrastructure was well-received by the market, with stocks in related sectors seeing a surge. Companies in construction, heavy engineering, capital goods, cement, steel, and logistics are poised to be the primary beneficiaries. The increased spending translates directly into larger order books and sustained demand for these sectors. Analysts noted that this aggressive capex strategy supports long-term equity valuations for cyclical and capital goods stocks, fostering investor confidence in India's growth story.

Conclusion: Building a Future-Ready India

Union Budget 2026 sends a clear message: public investment in infrastructure remains the government's top priority for driving economic expansion. The ₹12.2 lakh crore allocation, coupled with strategic initiatives like the risk guarantee fund and a focus on smaller cities, lays a comprehensive foundation for growth. The successful implementation of these projects will be crucial in enhancing industrial competitiveness, creating large-scale employment, and building a truly future-ready India.