India Budget 2026-27: Capex Raised to ₹12.2 Lakh Crore, Major Push for Infrastructure, Rail, Green Tech and MSMEs

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New Delhi: Finance Minister Nirmala Sitharaman, presenting the Union Budget 2027, announced a significant increase in capital expenditure to ₹12.2 lakh crore for FY 2026–27, underlining the government’s continued focus on infrastructure-led growth, green technologies, high-speed transport and support for MSMEs.

Public capital expenditure has seen a sharp rise over the last decade, increasing from ₹2 lakh crore in 2014–15 to ₹11.2 lakh crore in Budget Estimates 2025–26, and now further proposed at ₹12.2 lakh crore to sustain growth momentum.

Focus on Tier-2 and Tier-3 Cities

The Finance Minister said the government will continue to prioritise infrastructure development in cities with over 5 lakh population, particularly Tier-2 and Tier-3 cities, which have emerged as new growth centres. She noted that sustained investment in these cities will help decongest metros, boost regional economies and improve urban quality of life.

To finance large-scale infrastructure, Sitharaman said the government will continue leveraging Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) to attract private capital and speed up project execution.

Green Push: ₹20,000 Crore for Carbon Capture

In a major climate-focused announcement, Sitharaman said carbon capture, utilisation and storage (CCUS) technologies will be taken to higher readiness levels across five key industrial sectors—power, steel, cement, refineries and chemicals.

An outlay of ₹20,000 crore over the next five years has been proposed to support pilot projects and end-use applications, marking one of India’s largest commitments to industrial decarbonisation.

Seven High-Speed Rail Corridors Planned

The Budget also proposed the development of seven high-speed rail corridors to improve inter-city connectivity and reduce travel time. Routes announced include:

  • Mumbai–Pune

  • Pune–Hyderabad

  • Hyderabad–Chennai

  • Delhi–Varanasi

  • Varanasi–Siliguri

The corridors are expected to boost economic integration, tourism and regional development.

Boost for Seaplanes and Aviation Manufacturing

To enhance regional connectivity, the Finance Minister announced incentives for indigenised manufacturing of seaplanes. A Seaplane Viability Gap Funding (VGF) scheme will be introduced to support initial operations and make seaplane services commercially viable.

Textile Sector Expansion and Skilling

Sitharaman proposed a National Fibre Scheme for the textile sector, alongside capital support for modern machinery to improve productivity. A new initiative will also strengthen textile skilling systems, aimed at improving employment and global competitiveness of Indian textiles.

Strong Support for MSMEs

The Budget announced multiple measures to support micro, small and medium enterprises (MSMEs):

  • ₹2,000 crore fund for micro enterprises

  • ₹10,000 crore SME Growth Fund to enable scale-up and expansion

To ease liquidity stress, the Trade Receivables Discounting System (TReDS) will be mandated as a settlement platform, with pricing benchmarks to be followed by corporates, improving cash flow for MSMEs.

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