February 2, 2026: Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 in the parliament on February 1, 2026. This is the first Budget prepared in Kartavya Bhawan, inspired by 3 kartavyas: to accelerate and sustain economic growth, to fulfil the aspirations of our people and build their capacity, and the third kartavya, aligned with the vision of Sabka Sath, Sabka Vikas.
In her speech, Sitharaman said that the public capex has increased manifold from Rs 2 lakh crore in FY2014-15 to an allocation of Rs 11.2 lakh crore in 2025-26. Focusing on infrastructure-led development and long-term economic growth, the public capital expenditure has been proposed to increase to Rs 12.2 lakh crore in the Financial Year 2026-27, to continue the momentum.
Infra push in Tier-2 and Tier-3 cities
The finance minister highlighted the government’s efforts towards large-scale enhancement of public infrastructure, including through new financing instruments like Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions like NIIF and NABFID. The government will continue to focus on developing infrastructure in cities with over 5 lakh population (Tier-2 and Tier-3), which have expanded to become growth centres, she said.
Referring to cities as India’s engines of growth, innovation, and opportunity, the government will now focus on Tier-2 and Tier-3 cities, as well as temple towns, which need modern infrastructure and basic amenities.
The Budget 2026 aims to amplify cities’ potential to deliver the economic power of agglomerations by mapping city economic regions (CERs) based on their specific growth drivers, she added. A budget of Rs 5000 crore per CER over 5 years has been allocated for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism.
Govt to set up Infrastructure Risk Guarantee Fund and dedicated REITs
An Infrastructure Risk Guarantee Fund will be set up to provide prudently calibrated partial credit guarantees to lenders, aimed at strengthening the confidence of private developers regarding risks during the infrastructure development and construction phases.
Emphasising the role of REITs as a successful instrument for asset monetisation, the finance minister has proposed accelerating the recycling of significant real estate assets of CPSEs by setting up dedicated REITs.
Measures to boost the logistics sector
The government, with its intention to promote environmentally sustainable cargo movement, has announced a few measures. These include:
- Establishing new Dedicated Freight Corridors connecting Dankuni in the East, to Surat in the West
- Operationalising 20 new national waterways over the next five years, starting with NW-5 in Odisha to connect mineral-rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra
- Setting up training institutes as Regional Centres of Excellence for the development of the required manpower
- Establishing a ship repair ecosystem at Varanasi and Patna, catering to the inland waterways
- Launching a Coastal Cargo Promotion Scheme for incentivising a modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6% to 12% by 2047
High-speed rail corridors proposed for key cities
The government has proposed to develop seven High-Speed Rail corridors between cities as ‘growth connectors’, which include corridors linking Mumbai to Pune, Pune to Hyderabad, Hyderabad to Bengaluru, Hyderabad to Chennai, Chennai to Bengaluru, Delhi to Varanasi and Varanasi to Siliguri.
Industry reactions on Union Budget 2026-27
According to several industry experts, the Union Budget 2026-27 highlights the government’s commitment to ensuring sustained economic growth, with a focus on attracting global business and investment and a major push for technology and AI. While there are no major announcements directly impacting the real estate sector, key proposals to boost infrastructure, such as proposed high-speed rail corridors, will help drive real estate development across key cities.
Rohit Gupta, CEO, Mantra Properties, said, “the Union Budget 2026 presents a definitive roadmap for a ‘Viksit Bharat’ by placing urban transformation at the core of national growth. The allocation of ₹5,000 crore per City Economic Region (CER) is a landmark move that will allow major economic hubs, including Mumbai, to deliver the true power of agglomeration. This focus on mapping and developing regions based on their specific growth drivers ensures that infrastructure keeps pace with the rapid residential expansion we are seeing across the country. Furthermore, the introduction of seven High-Speed Rail corridors—including the critical Mumbai-Pune link—as ‘growth connectors’ will fundamentally reshape the real estate landscape, turning transit hubs into high-value investment destinations.”
Shaishav Dharia, director, Lodha Green Digital Infrastructure, CEO – Extended Eastern Suburbs & Rental Assets, said “We strongly commend the government’s clear, long-term vision to position India as a global hub for data centres and cloud services. The tax holiday extended till 2047 for global cloud players using Indian data centres, together with safe-harbour clarity, sends an unambiguous signal to global investors that India is open, competitive, and stable for long-term digital infrastructure capital.
This policy framework, combined with India’s scale, deep talent pool, and steadily improving power and connectivity infrastructure, will accelerate hyperscaler investments, create high-quality jobs, and firmly place India on the global data centre map.”
Prashant Sharma, president, NAREDCO Maharashtra, said, “The Union Budget 2026–27 strongly reinforces the government’s long-term commitment to inclusive and sustainable growth, with infrastructure-led development emerging as a central pillar. The significant increase in capital expenditure to Rs 12.2 lakh crore, coupled with continued focus on Tier II and Tier III cities, will act as a powerful demand catalyst for real estate beyond metros. These emerging growth centres are witnessing rising urbanization, aspirational housing demand, and increasing commercial activity, making them the next engines of India’s real estate expansion. For Maharashtra in particular, improved connectivity, urban infrastructure funding and the emphasis on growth corridors will significantly enhance housing demand and accelerate redevelopment in urban centres.”
“Equally encouraging is the Government’s balanced approach towards fiscal consolidation while maintaining momentum in infrastructure investment. Measures such as the expansion of REITs, asset monetization by CPSEs and reforms aimed at improving ease of doing business will strengthen investor confidence and attract long-term capital into the real estate sector. Simplification of tax processes, especially for NRIs, and a more investor-friendly framework for foreign capital will further boost confidence. We believe this Budget lays a strong foundation for inclusive urban growth and urges state governments to align policies to ensure faster project execution and improved housing supply.”
Pradeep Aggarwal, founder & chairman, Signature Global (India) Ltd. says on Union Budget 2026-27, “The Union Budget 2026 provides a strong and credible roadmap for India’s next phase of growth, led by a sharp focus on infrastructure, urban development, and financial reforms. The government’s decision to raise public capital expenditure to ₹12.2 lakh crore in FY27, a 9% increase over FY26, will play a critical role in accelerating project execution and crowding in private investment.
The creation of the Infrastructure Risk Guarantee Fund, along with the rollout of seven high-speed rail corridors and the operationalisation of 20 new national waterways over the next five years, will significantly enhance connectivity, reduce logistics costs, and improve the overall efficiency of the real estate and infrastructure ecosystem.
Urban development receives a sustained boost with an allocation of ₹5,000 crore per year for five years for City Economic Regions, alongside a continued focus on Tier-2 and Tier-3 cities as emerging growth centres. These measures will enable planned urbanisation, support civic infrastructure, and unlock housing demand across new geographies.
Further, accelerated recycling of CPSE real estate assets through dedicated REITs and continued emphasis on InvITs will deepen capital markets, improve liquidity, and strengthen investor confidence across the sector.
On the consumption side, income tax reforms— including no tax liability up to ₹12 lakh under the new tax regime, rationalised TDS and TCS rates, and reduced TCS on overseas tour packages to 2%—will enhance disposable incomes and ease compliance, providing indirect yet meaningful support to housing demand.
Overall, the Budget aligns strongly with the long-term vision of Viksit Bharat by 2047 and lays the foundation for sustainable, inclusive, and future-ready economic growth.”
