Union Budget 2026: Capital Expenditure Hiked by 9% to ₹12.2 Lakh Crore, Big Push for Infrastructure, Announces Infra Risk Guarantee Fund

Union Budget Live: Finance Minister Nirmala Sitharaman on Sunday announced a nearly 9 per cent rise in capital expenditure for the next financial year, taking the allocation to Rs 12.2 lakh crore in the Union Budget 2026. Presenting the Budget in Parliament, she said the higher outlay is intended to sustain the pace of infrastructure development and bolster economic growth. 

Union Budget 2026: Capital Expenditure Hiked by 9% to ₹12.2 Lakh Crore

The capital expenditure has been increased to Rs 11.21 lakh crore, up from the Rs 11.21 lakh crore allocated in the last Union Budget for FY25-26. For FY26, the government had set a capex allocation of Rs 11.21 lakh crore.

In her budget speech, Sitharaman highlighted the sharp rise in public capital spending over the past decade.

“Public capital expenditure has increased manifold from 2 lakh crore in 2014-15 to an allocation of 11.2 lakh crore in 2025-26. In this coming year, that is, financial year 2026-27, I propose to increase it to 12.2 lakh crores to continue the momentum,” she said.

The Finance Minister said that infrastructure development has remained a key focus area for the government over the last ten years. She noted that several initiatives have been undertaken for large-scale enhancement of public infrastructure, including the introduction of new financing instruments such as Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

NIIF, NaBFID Key to Infra Financing

She also referred to the role of institutions such as the National Investment and Infrastructure Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NaBFID), which have supported infrastructure financing during this period.

Sitharaman said the government will continue to focus on developing infrastructure in cities with populations over 5 lakh. These include tier-2 and tier-3 cities, which she said have expanded over time and have emerged as important growth centres.

What is Infra Risk Guarantee Fund Proposal? 

To address concerns facing private players, the Finance Minister announced a new proposal to strengthen confidence among private developers. She said risks during the infrastructure development and construction phases often pose challenges to private participation.

To mitigate these risks, Sitharaman proposed setting up an infrastructure risk guarantee fund. The fund will provide prudentially calibrated partial credit guarantees to lenders, helping to reduce risk perception and support financing for infrastructure projects.

The Finance Minister said the higher capital expenditure, continued focus on urban infrastructure, and measures to support private participation reflect the government’s commitment to sustaining infrastructure-led growth in the coming years. 

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