Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2026-27 in the Lok Sabha, unveiling a significant boost to capital expenditure. The government has set an ambitious target of Rs 12.2 lakh crore for capital expenditure in FY27, marking a substantial increase from previous allocations.
Key Highlights of Union Budget 2026-27
In her budget speech, Sitharaman emphasized the government's commitment to accelerating infrastructure development across the country. The raised capex target reflects a strategic focus on enhancing public investment to stimulate economic growth and create employment opportunities.
Infrastructure Push for Tier-2 and Tier-3 Cities
A major component of the budget announcement is the continued emphasis on developing infrastructure in Tier-2 and Tier-3 cities. Sitharaman stated that the government will prioritize projects in these urban centers to promote balanced regional development and improve connectivity.
This initiative aims to:
- Boost economic activities in smaller cities
- Reduce migration pressure on metropolitan areas
- Enhance quality of life through better amenities
Economic Implications of Increased Capex
The Rs 12.2 lakh crore capital expenditure target represents a significant portion of the government's spending plan for FY27. This move is expected to have multiple positive effects on the economy:
- Stimulating private investment through multiplier effects
- Creating direct and indirect employment in construction and related sectors
- Improving India's overall infrastructure competitiveness
Presenting the budget on February 1, 2026, Sitharaman outlined how this increased allocation will fund critical projects in transportation, urban development, and digital infrastructure. The focus on Tier-2 and Tier-3 cities aligns with the government's vision of creating growth centers beyond major metropolitan areas.
The Union Budget 2026-27 thus positions infrastructure development as a cornerstone of India's economic strategy, with the raised capex target serving as a catalyst for broader development objectives across urban and regional landscapes.
