Union Budget 2026: Pre-Budget Expectations for Urban Transport and Metro Systems in India

Cities occupy barely 3% of India’s land area but generate nearly 60% of GDP. For a rapidly urbanising country, large-scale and well-planned investment in urban transport is not optional—it is an economic necessity. At the same time, cities face mounting challenges: pollution, congestion, safety concerns, ageing populations, hygiene issues, and rising expectations for convenience and reliability.

By 2030, India is expected to have at least seven megacities with populations above 10 million and over 60 cities with more than 1 million residents. Each of these cities will require affordable, fast, clean, and reliable public transport, even as fiscal space tightens. While urban development is constitutionally a state subject, the Union Government plays a decisive role in enabling metro systems, electric buses, and mass transit investments.

The key question for Union Budget 2026 is not whether the Centre should support urban transport, but how it can accelerate sustainable, citizen-centric mobility. Five priorities stand out.

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Mandating Integrated Transport and Land-Use Models for Million-Plus Cities

Congestion in Indian cities is not just a transport problem—it is equally a land-use and demand-management problem. To address this structurally, the budget should mandate dynamic, city-wide integrated transport and land-use models for all cities projected to become million-plus by 2030.

Access to major urban transport funding should be contingent on:

• Establishing and regularly updating integrated transport and land-use models.
• Using these models to appraise major projects such as metros, BRT corridors, elevated roads, and large-scale road widening.
• Periodically reviewing and updating comprehensive mobility plans based on real-world performance, rather than treating them as one-time documents.

Such models enable cities to test project impacts, simulate policy changes, prioritise investments based on measurable outcomes, and make evidence-based decisions.

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Creating a Central Nudge Unit for Urban Behaviour and Street Design

Infrastructure alone does not guarantee safer or more efficient mobility—how people use streets and public spaces matters equally. The Centre should establish a dedicated urban “nudge unit” focused on behavioural insights, street design, and civic discipline.

This unit should:

• Study how citizens actually use streets, junctions, footpaths, and public transport.
• Identify design elements that improve safety and compliance, such as traffic calming, lane-use nudges, and safer pedestrian crossings.
• Develop model design guidelines and low-cost interventions that cities can easily adopt.
• Evaluate existing assets such as overpasses, subways, and crossings for usability and redesign them where necessary.

Embedding behavioural insights into standards, funding conditions, and capacity-building programmes will ensure infrastructure is used as intended.

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Five-Year Rolling Capital Commitments Through Non-Lapsable Funds

Large urban transport projects—metros, BRT corridors, depots, and multimodal hubs—require long-term capital visibility. The current annual, stop–go budgeting approach creates uncertainty, raises contractor risk, and ultimately inflates project costs.

To address this, the Centre should:

• Create a non-lapsable urban transport fund under the Ministry of Housing and Urban Affairs (MoHUA) with five-year rolling capital commitments.
• Issue multi-year sanction letters for approved projects, clearly outlining expected central disbursements.
• Enable faster and more predictable fund flows directly to city governments or metro rail corporations, linked to milestones and governance standards.

Predictable capital commitments lower execution risk, improve pricing, and accelerate project delivery.

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Establishing an Operations and Maintenance (O&M) Challenge Fund

Indian cities invest heavily in creating new urban transport assets but far less in operating and maintaining them well. This leads to a “build–neglect–rebuild” or “buy–neglect–repurchase” cycle that erodes value and public trust.

Union Budget 2026 should create an Urban Transport O&M Challenge Fund, with features such as:

• Annual allocations linked to a standardised asset management index.
• Eligibility based on transparent metrics including asset condition, preventive maintenance practices, safety outcomes, and financial sustainability.
• Incentives for cities that ring-fence O&M budgets, adopt robust asset management systems, and meet performance benchmarks.

This would signal that maintaining existing assets is as important as building new ones.

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A Common Technology Framework and Skilling Ecosystem

Urban transport systems increasingly rely on advanced technologies such as ATMS, ITS, digital fare collection, fleet management platforms, and ADAS. While these technologies offer efficiency gains, they also pose risks of vendor lock-in, fragmentation, and rapid obsolescence.

The Centre should promote a common urban transport technology framework that:

• Defines reference architectures and standards for data, interfaces, and cybersecurity.
• Encourages open, interoperable systems instead of proprietary silos.
• Includes guidelines for lifecycle costing, upgrades, and integration with emerging platforms such as mobility-as-a-service and open-loop payments.

In parallel, MoHUA should support regional skilling centres focused on the installation, operation, and maintenance of urban transport technologies. This will enable cities to act as informed clients or manage systems in-house, rather than remaining fully dependent on vendors.

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Conclusion: Making Urban Mobility Sustainable, Predictable, and Citizen-Centric

As India’s cities expand, urban transport will determine productivity, quality of life, and environmental outcomes. Union Budget 2026 must therefore focus on:

• Evidence-based planning through integrated models.
• Predictable, multi-year capital commitments.
• Strong incentives for operations and maintenance.
• Behaviour-aware design and technology standardisation.

A shift from asset creation alone to systems thinking and lifecycle management will be critical to delivering affordable, reliable, and sustainable urban mobility at scale.