Union Budget 2026: Infrastructure and Real Estate Drive the Next Growth Phase

The Union Budget 2026–2027 places infrastructure and Real Estate at the heart of India’s long-term growth strategy, aligning them closely with the vision of a Viksit Bharat. Through higher public capital expenditure, targeted urban development, and new risk-mitigation mechanisms, the government aims to attract private investment and modernise the country’s physical and urban landscape.

A sustained push to infrastructure spending remains a key feature of the budget. Public capital expenditure for FY2026–27 has been proposed at ₹12.2 lakh crore, up from ₹11.2 lakh crore in the previous year, ensuring continuity in infrastructure-led growth. To encourage private sector participation, the government has announced the creation of an Infrastructure Risk Guarantee Fund that will provide partial credit guarantees to lenders, particularly during the high-risk Construction phase of projects. In parallel, a dedicated scheme for Construction and Infrastructure Equipment has been introduced to promote domestic manufacturing of advanced equipment, ranging from metro tunnelling machines to lifts used in high-rise residential buildings.

Urban development receives renewed attention, with a clear shift toward expanding growth beyond major metropolitan centres. Infrastructure investments will prioritise Tier II and Tier III cities with populations exceeding five lakh. The budget also proposes the creation of City Economic Regions, mapped around region-specific growth drivers. Each identified region will receive ₹5,000 crore over five years through a competitive challenge-based framework. Additionally, five integrated university townships are planned along major industrial and Logistics corridors, combining education, research, and residential infrastructure to create new urban clusters.

Connectivity continues to be a major pillar of the infrastructure roadmap. The government has proposed seven new high-speed rail corridors, including routes such as Mumbai–Pune, Delhi–Varanasi, and Hyderabad–Bengaluru, positioning them as economic growth connectors. Logistics efficiency will be further strengthened through new dedicated freight corridors and the operationalisation of 20 additional national waterways over the next five years. Coastal shipping and inland waterways are targeted to double their share in overall cargo movement by 2047.

The real estate sector also benefits from targeted reforms aimed at improving liquidity and asset utilisation. Real Estate Investment Trusts have been identified as a key vehicle for asset monetisation, with plans to accelerate the recycling of surplus real estate assets held by central public sector enterprises through dedicated REIT structures. To support urban infrastructure financing, large cities issuing single municipal bonds exceeding ₹1,000 crore will receive a ₹100 crore incentive from the central government.

For investors, these measures open up new opportunities while simplifying compliance. CPSE-backed REITs and municipal bonds provide access to relatively stable, long-term investment avenues linked to infrastructure and urban development. Property transactions have been eased for resident buyers purchasing from non-residents, as TDS can now be deposited using a PAN-based challan instead of requiring a TAN. The budget also provides income Tax exemption for individuals and HUFs on compensation received from compulsory land acquisition under the RFCTLARR Act, subject to specified conditions. Over the longer term, focused infrastructure development in Tier II and Tier III cities and along high-speed rail corridors is expected to support sustained appreciation in real estate values.

Overall, the Budget 2026–27 reinforces infrastructure and real estate as foundational pillars of India’s economic transformation, combining higher public spending with private capital participation and greater regulatory clarity.

Disclaimer: The article is for informational purposes only and not investment advice.