Budget 2026 Charts India’s Next Growth Cycle Through Infrastructure, Cities and Manufacturing Key Highlights
- Record Capex Push: Capital expenditure maintained at a historic ₹12.2 lakh crore, reinforcing long-term commitment to infrastructure, transport, metros, airports, and urban development as the backbone of Viksit Bharat.
- Tier-2 & Tier-3 Cities as Growth Engines: Formal recognition of Tier-2 and Tier-3 cities (population 5 lakh+) as growth centres, with ₹5,000 crore per City Economic Region over five years to drive balanced urbanisation and decongest metros.
- Economic & Freight Corridors: Announcement of new Economic and Dedicated Freight Corridors to strengthen logistics, improve regional connectivity, lower transport costs, and unlock real estate and industrial growth across emerging hubs.
- Real Estate Reforms & REITs: Proposal for dedicated CPSE REITs to monetise under-utilised government land and assets, unlocking institutional capital and boosting office, commercial, and mixed-use development—especially in Delhi-NCR.
- Infrastructure Risk Guarantee Fund: Introduction of an Infrastructure Risk Guarantee Fund to ease financing bottlenecks, improve credit flow, and crowd in private investment for large-scale housing and infrastructure projects.
- Manufacturing & Building Materials Boost: Strong push for strategic domestic manufacturing, PMAY-Urban 2.0, SME Growth Fund (₹10,000 crore), and logistics upgrades, driving demand for building materials, construction equipment, and MSME-led industrial expansion.
Industry Leaders have hailed the 2026 Union Budget as a transformative change for the nation, defining a new direction for India's economy through Finance Minister Nirmala Sitharaman's focus on Capital Expenditure (Capex), Connectivity, and Strategic Manufacturing. The Budget's primary objective was to support infrastructure development to create a “Viksit Bharat” (Developed India) through investments in Tier-2 and Tier-3 cities, which serve as the country's primary economic drivers.
The Union Budget's Capital Expenditure has received a record increase from ₹ 12.2 Lakh Crore to ₹ 12.2 Lakh Crore, driving ongoing momentum in infrastructure investment in India. The GOI also announced the creation of new Economic and Freight Corridors, as well as the National Manufacturing Mission’s focus on scaling and developing strategic sectors within India, providing a clear vision of how the GOI plans to manage the nation's economy over the coming financial year. Corporations in the Real Estate, Building Materials, and Renewable Energy sectors are also seeing significant opportunities from these developments. Anticipating integration of the “City Economic Regions,” they anticipate strong logistical infrastructure, new employment opportunities and unlocking value.
Though the overall emphasis of the Budget is on the connectivity of India as a nation with these initiatives, the individual sector leaders also describe how the announcement of these initiatives will result in measurable amounts of economic activity across the country.
Real Estate & Urban Development
The Government of India's commitment to urbanisation is still strong, and has been defined for the first time with recognition of the Tier-2 and Tier-3 cities as "growth centres". The government is placing increased emphasis on creating infrastructure in cities of 5 lakh and above, as well as decreasing overcrowding in the cities through creating new residential areas to accommodate this growth in urbanisation.
Mr Ravi Saund, Founder Director, Emperium Group, believes that this will have a transformative effect on the organised real estate industry. “We wholeheartedly applaud the Finance Minister's announcement to increase the Capital Expenditure to ₹12.2 lakh crore for FY27. This continued momentum, alongside the strategic interventions in developing city economic regions and delivering a powerful push for infrastructure, is a clear signal of the Government's intent to build a Viksit Bharat.
We are particularly excited by the specific focus on developing infrastructure in Tier 2 and Tier 3 cities with populations over 5 lakh, explicitly recognising them as the new growth centres of India. The addition of new Economic and Freight Corridors will act as the critical connectivity layer for these regions, unlocking massive potential for organised real estate. This visionary move will not only de-congest metros but also create thriving new urban ecosystems where aspirational India can live and work,” he said.
Budget 2026: Real Estate Gets a Confidence Boost with REITs, Capex Push and Urban Growth Focus
Mr. Manish Agarwal, Managing Director, Satya Group, President, CREDAI Haryana says, “Ahead of the Union Budget 2026, the real estate sector was expecting a mix of demand-side stimulus, tax incentives and execution-friendly reforms. While some expectations remain unaddressed, the Budget’s strong emphasis on infrastructure-led growth, a reforms-over-rhetoric approach, and sustained focus on Tier-1 and Tier-2 cities provides a solid foundation for long-term sector stability. The industry continues to seek sharper support for affordable housing through rationalised transaction costs and easier access to finance to sustain mass demand. The move to monetise CPSE-owned land is a pragmatic step that can unlock urban supply, support planned densification, and attract institutional capital, enabling more balanced and productive urban development.”
A standout policy for real estate was the proposal to establish dedicated Real Estate Investment Trusts (REITs) aimed at monetising and “recycling” under-utilised real estate assets of Central Public Sector Enterprises (CPSEs). This is expected to unlock fresh capital and create new investment avenues for developers and institutional investors alike - a potential game changer for Delhi-NCR office and commercial markets where idle assets are awaiting redevelopment.
Mr. Amar Sarin- MD & CEO, TARC Limited says , “The Union Budget’s proposal to introduce an Infrastructure Risk Guarantee Fund is a significant structural step that can ease access to capital, improve credit flow, and address financing bottlenecks for large-scale housing and infrastructure developments. The government’s intent to crowd in private investment, rather than rely solely on public expenditure, sends a strong and positive signal to the real estate sector. The introduction of dedicated CPSE REITs is a landmark reform that deepens capital markets and accelerates asset monetisation to support future growth. Measures to promote domestic manufacturing of construction equipment can further help reduce costs and improve execution efficiency. Additionally, the planned allocation of ₹5,000 crore per city-economic region over five years for Tier-II and Tier-III cities, including temple towns, creates a strong runway for mid-market housing, while sustained investments in freight corridors, national waterways, and infrastructure will create enduring value for high-end residential developments across Tier-I cities.”
The Budget also reaffirmed a record ₹12.2 lakh crore capital expenditure, reinforcing the government’s long-term infrastructure commitment. Higher capex - including transport and urban infrastructure - traditionally boosts real estate activity through improved connectivity and land value appreciation. For regions like Delhi-NCR, where connectivity corridors and metro expansions are integral to urban sprawl, this translates to increased housing and mixed-use demand in peripheral zones.
Abhay Kumar Mishra, CEO & President, Jindal Realty said , "The Union Budget 2026 sends a strong long-term signal for India’s real estate and infrastructure ecosystem, with a clear focus on Tier-II cities such as Sonipat, which benefit from strategic proximity to the national capital(turning out as a new economic hub), alongside Tier-III markets. The proposed Infrastructure Risk Guarantee Fund and asset monetisation through dedicated REITs are expected to unlock capital and strengthen investor confidence. With capital expenditure scaled up to ₹12.2 lakh crore and targeted allocations for City Economic Regions, the emphasis on balanced urban growth is evident. Improved infrastructure, enhanced connectivity and planned urban development will significantly drive housing, commercial and mixed-use real estate demand, positioning emerging cities as the next growth engines of the sector."
Mr. Yashank Wason, Managing Director, Royal Green Realty, says, "The Union Budget 2026 is a significant moment for real estate in rising Tier-II hubs like Sonipat and Indore . By committing ₹12.2 lakh crore in capex and launching the Infrastructure Risk Guarantee Fund, the government is providing the structural 'safety net' needed for rapid urban expansion. The ₹5,000 crore City Economic Region initiative will transform these emerging cities into self-sustaining growth engines, while new REITs for CPSE assets will inject institutional liquidity. This budget officially shifts the industry’s focus toward a 'Bharat' growth story, where enhanced connectivity and urban rejuvenation will drive unprecedented value appreciation across India’s emerging skylines.
While no major tax breaks for homebuyers were announced, ongoing schemes like Pradhan Mantri Awas Yojana (PMAY) saw enhanced allocations, potentially stimulating affordable housing in both megacities and satellite towns around Delhi-NCR.
“Union Budget 2026–27 reflects a clear transition from expansion-driven growth to quality-led urban development. The emphasis on infrastructure creation, asset monetisation and regional economic strengthening will steadily unlock new real estate corridors and deepen investor confidence. While the budget does not push immediate demand-side incentives, it creates a stable and forward-looking framework for sustainable development. The growing policy focus on efficient cities, cleaner infrastructure and long-term capital formation aligns well with the evolving luxury segment, where buyers increasingly value sustainability, wellness and future-ready living over mere scale. For responsible developers, this budget sets the foundation for resilient and high-quality growth.”
Mr. E Lakshminarayana Reddy, Founder & CEO, EARA Group, said, “The Union Budget 2026 solidifies agriculture as a cornerstone of India’s economic trajectory. With a ₹1.63 lakh crore allocation and a strategic pivot toward high-value plantations (Cashew, Cocoa, Sandalwood) and agri-tech integration, the budget significantly de-risks farmland as an asset class.
Mr. Pawan Gupta, Founder, Farmlandbazaar, said, "For landowners, the emphasis on Bharat-VISTAAR AI and improved logistics directly translates to higher per-acre productivity and capital appreciation. For investors, this sustained policy tailwind transforms farmland from a traditional holding into a modern, inflation-protected asset that is now more deeply integrated into India’s global supply chain than ever before.”
Mr. Raghunath Bhattagiri, Founder and MD, Triguna Projects, said, "The Union Budget 2026 reinforces a long-term infrastructure-first approach, providing the stability and connectivity needed for sustained property value appreciation across India. For the urban buyer, the record capital expenditure and focus on digital land records create a more transparent and secure environment for long-term investments. The budget’s focus on high-value agriculture (like Sandalwood and Cocoa) and AI-driven farm management officially transforms farmland into a productive, wealth-generating asset. This shift ensures that agricultural land is no longer just a legacy holding, but a modern, high-yield investment choice"
Overall, Budget 2026 strikes a balance between market confidence, asset monetisation, and infrastructure investment - setting a stable platform for the real estate sector to grow in the coming year.
Manufacturing & Building Materials
As the Finance Minister announced the scaling up of manufacturing in strategic sectors, the announcement highlighted the Government’s favourable outlook for domestic production. The building materials industry, which sits at the intersection of real estate and infrastructure, is poised for significant gains driven by demand from new airports, metros, and the PMAY-Urban 2.0 scheme. Speaking on the same,
Mr Divyam Shah, Whole Time Director and CFO at Euro Panel Products Limited, noted that the focus on logistics would be a game-changer. “We welcome the Union Budget 2026 as a definitive boost for the building materials sector. The historic increase in Capital Expenditure, with a specific focus on airports, metros, and urban infrastructure, has created massive domestic demand for modern architectural solutions such as Aluminium Composite Panels (ACP).
We are encouraged explicitly by the PMAY-Urban 2.0 initiative and the development of City Economic Regions, which will spark a construction boom in Tier-2 and Tier-3 cities. To support this scale, the ₹10,000 Crore SME Growth Fund to create Champion MSMEs, combined with the simplification of trade tariffs, provides the structural backing we need. These measures, coupled with the new Dankuni-Surat Dedicated Freight Corridor to reduce logistics costs, create the perfect ecosystem for Indian brands to scale up globally,” he added.
