The Union Budget 2025-26 underscores the Government’s unwavering commitment to infrastructure and economic development through a substantial increase in capital expenditure (CapEx). With a total allocation of ₹10.18 lakh crore, the budget seeks to accelerate economic growth, enhance employment opportunities, and fortify connectivity across various sectors.
Key CapEx Highlights & Strategic Initiatives
Strengthened Infrastructure Investment
The budget prioritizes robust funding for infrastructure, highways, and urban development. The focus on long-term capital investment is designed to drive job creation and catalyze sustainable economic expansion.
Interest-Free Loans to States for CapEx
- ₹1.5 lakh crore allocated as interest-free loans to states for infrastructure projects.
- Funding is contingent upon reforms in power, transport, and digital infrastructure, encouraging states to undertake progressive development initiatives.
Asset Monetization Plan 2025-30
- The government has unveiled a ₹10 lakh crore asset monetization roadmap.
- Key assets, including railways, highways, and airports, will be leased to private enterprises to mobilize capital for new infrastructure projects.
Urban Challenge Fund for Smart Cities & Urban Development
- A ₹1 lakh crore Urban Challenge Fund has been established to support urban redevelopment, water & sanitation projects, and transport infrastructure.
- The government will finance 25% of project costs, with the remaining 50% to be sourced from bonds, banks, and public-private partnerships (PPPs).
Jal Jeevan Mission Extended Until 2028
- The initiative aims to achieve 100% tap water coverage in rural India.
- Over 15 crore households have already gained access to potable water.
Enhancing Warehousing & Air Cargo Infrastructure
- Strategic investments will be made in high-value perishable cargo warehousing.
- Upgraded customs processing and air cargo facilities to enhance trade efficiency.
Public-Private Partnership (PPP) in Infrastructure Development
- All infrastructure ministries are mandated to release a three-year pipeline of PPP projects.
- States can leverage support from the India Infrastructure Project Development Fund (IIPDF) for project planning and execution.
National Manufacturing Mission
- A structured framework to bolster MSMEs and large industries, fostering domestic manufacturing growth.
- Policy incentives and supply chain integration to reduce import dependency and strengthen local production.
Sector-Wise CapEx Allocation & Impact
Roads & Highways
- Extensive funding for highway expansion and expressway development.
- Strengthening of rural road networks under the Pradhan Mantri Gram Sadak Yojana (PMGSY).
Real Estate & Urban Infrastructure
- ₹1 lakh crore allocated to the Urban Challenge Fund for city redevelopment.
- Government-backed affordable housing and smart city initiatives to encourage private sector participation.
Energy & Power Infrastructure
- Investments in power distribution and renewable energy projects.
- Incentives for states to reform power distribution mechanisms.
- Focus on Nuclear Energy Mission and EV battery manufacturing incentives to reinforce India's energy security.
Railways & Metro Expansion
- Large-scale investments in railway electrification and high-speed corridors
. - Expansion of metro rail networks in Tier-2 cities to enhance urban mobility and decongestion.
Digital & Telecom Infrastructure
- Accelerated expansion of 5G networks and rural broadband connectivity.
- Public-private partnerships to extend the nationwide fiber optic network.
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