Union Budget 2026: Key Infrastructure Measures to Boost Real Estate Growth

Finance Minister Presents Union Budget 2026-27

On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 in Parliament. This is the first budget prepared in the Kartavya Bhawan, inspired by three key principles: accelerating and sustaining economic growth, fulfilling the aspirations of the people, and aligning with the vision of Sabka Sath, Sabka Vikas.

Infra Push in Tier-2 and Tier-3 Cities

Sitharaman highlighted the government's efforts towards large-scale enhancement of public infrastructure, including the use of new financing instruments like Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs). The government will focus on developing infrastructure in cities with a population over 5 lakh, which have emerged as significant growth centers. These cities, including temple towns, need modern infrastructure and basic amenities.

The Budget 2026 aims to amplify the potential of these cities by mapping city economic regions (CERs) based on specific growth drivers. A budget of Rs 5000 crore per CER over five 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 established to provide partial credit guarantees to lenders, aimed at strengthening private developers' confidence regarding risks during the infrastructure development and construction phases. The finance minister also proposed accelerating the recycling of significant real estate assets of Central Public Sector Enterprises (CPSEs) by setting up dedicated REITs.

Measures to Boost the Logistics Sector

The government announced several measures to promote environmentally sustainable cargo movement, including:

- 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 to industrial centers like Kalinga Nagar and 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 inland waterways. - Launching a Coastal Cargo Promotion Scheme to incentivize a modal shift from rail and road, aiming 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 key cities as ‘growth connectors’. These corridors include:

- Mumbai to Pune - Pune to Hyderabad - Hyderabad to Bengaluru - Hyderabad to Chennai - Chennai to Bengaluru - Delhi to Varanasi - Varanasi to Siliguri

Industry Reactions on Union Budget 2026-27

Industry experts have praised the Union Budget 2026-27 for its focus on sustained economic growth and infrastructure development. While there are no major announcements directly impacting the real estate sector, key proposals to boost infrastructure are expected to drive real estate development across key cities.

Rohit Gupta, CEO of 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 of Lodha Green Digital Infrastructure and CEO of Extended Eastern Suburbs & Rental Assets, commented, “We strongly commend the government’s clear, long-term vision to position India as a global hub for data centers and cloud services. The tax holiday extended till 2047 for global cloud players using Indian data centers, together with safe-harbor 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 center map.”

Prashant Sharma, President of NAREDCO Maharashtra, noted, “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 centers 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 centers.”

Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd., added, “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.”

Conclusion

The Union Budget 2026-27 lays a strong foundation for sustainable, inclusive, and future-ready economic growth by focusing on infrastructure-led development, particularly in Tier-2 and Tier-3 cities. The proposed measures are expected to drive real estate development and enhance the overall quality of life in these urban centers.