Union Budget 2026-27 Delivers Major Blow to Chandigarh's Development Plans
In a significant setback for the Chandigarh administration's ambitious development agenda, the Union Budget for the fiscal year 2026-27 has imposed a drastic reduction in capital outlay for the Union Territory. The capital expenditure component, which is critical for funding infrastructure projects, urban development initiatives, and major public works, has been slashed by nearly 24% compared to the previous fiscal year.
Sharp Decline in Capital Expenditure
The capital outlay for Chandigarh in FY 2026-27 stands at Rs 606 crore, a sharp decline from Rs 798 crore allocated in FY 2025-26. This reduction of approximately 24% marks a reversal from the previous year's trend, where capital outlay saw a 21.83% increase. Historical data reveals that capital outlay was Rs 722 crore in FY 2023-24 and Rs 655 crore in FY 2024-25, following a 9.2% cut in the 2024 Union Budget.
The impact of these cuts is widespread across most departments:
- Public Works: Reduced from Rs 66 crore to Rs 52 crore.
- Education: Marginal dip from Rs 158 crore to Rs 142 crore.
- Medical and Health: Significant cut from Rs 170 crore to Rs 109 crore.
- New and Renewable Energy: Steepest reduction, plummeting from Rs 80 crore to just Rs 13 crore.
However, a few sectors have received increased allocations, providing some relief. Housing capital outlay has risen from Rs 25 crore to Rs 36 crore, while power projects have seen an increase from Rs 4 crore to Rs 10 crore.
Overall Budgetary Allocation Trends
The total outlay for Chandigarh in FY 2026-27 is Rs 6,545.52 crore, representing a decrease of around 6% (Rs 437 crore) from Rs 6,983.18 crore in FY 2025-26. This allocation falls significantly short of the administration's request of approximately Rs 8,300 crore from the central government, highlighting a substantial gap between expectations and actual grants.
For context, the total outlay in FY 2025-26 saw a 7.21% increase, while FY 2024-25 experienced a 7% growth. The current allocation is marginally higher than the revised estimates for the outgoing fiscal year (Rs 6,465.77 crore) but remains lower than the actual allocation of Rs 6,598.19 crore made two years ago in FY 2024-25.
Revenue Expenditure Also Trimmed
Revenue expenditure, which covers operational costs such as salaries, maintenance, and other recurring expenses, has also been reduced by about 4%. It drops to Rs 5,939 crore from Rs 6,185 crore in FY 2025-26, reversing a trend of consistent increases—around 5% in FY 2025-26 and 9% in FY 2024-25.
Despite the overall reduction, some key sectors have seen modest hikes in revenue expenditure:
- Administration of Justice: Increased from Rs 692 crore to Rs 731 crore.
- Police: Allocation rose from Rs 872 crore to Rs 892 crore.
- General Education (salaries and liabilities): Increased to Rs 948 crore.
- Health Sector: Revenue expenditure allocation up from Rs 813 crore to Rs 844 crore.
Administration's Response and Structural Adjustments
A UT spokesperson commented on the budgetary changes, stating, "In the power sector, the budget provision of Rs 877.39 crore in budget estimates (revenue expenditure) has been rationalised to Rs 156.95 crore, reflecting an adjustment of Rs 720.44 crore on account of privatisation of power. Keeping this structural change in view, the budget estimates for 2026-2027 reflect an effective increase of Rs 282.78 crore (4.63%)."
In a positive development, grants-in-aid to the Chandigarh Municipal Corporation have been enhanced from Rs 625 crore in budget estimates for 2025-2026 to Rs 850 crore in 2026-2027, representing a substantial increase of 36%.
Key Projects Affected by Capital Expenditure Cuts
The reduction in capital outlay will impact several critical projects across sectors:
- Health Services: Includes provisions for health services, upgrading a 50-bedded community health centre to a 250-bedded hospital, and strengthening a 50-bedded polyclinic.
- Education: Covers amenities and services, graduate courses, and modernisation and construction of new polytechnics and industrial training institutes.
- Art, Culture, and Museum: Involves construction and renovation of the Government College of Art, administrative blocks, international hostels, and auditoriums.
- Police Housing and Allied Works: Includes infrastructure development, building construction, and renovation of existing residential houses.
- Road and Transport: Provisions for purchasing new buses, replacing condemned buses, upgrading bus stands, computerising the Chandigarh Transport Undertaking, and constructing link roads.
- Government Housing: Covers construction and renovation of residential and non-residential government buildings.
This budgetary shift underscores the challenges facing Chandigarh's development trajectory, as the administration navigates reduced central funding while striving to maintain progress on key infrastructure and public service initiatives.
