The next five years are seen as a unique opportunity to achieve ‘Sabka Vikas’, fostering balanced growth across all regions. Emphasizing reforms as a means to achieve effective governance of both people and the economy, the budget introduces transformative changes in six key sectors, including the infrastructure, power, urban development, and financial sector. Highlights for the infrastructure sector include:
Sustainable Development: The Budget supports the continued commitment of the government to sustainable development. In line with this commitment, the manufacturing mission is set to support clean technology manufacturing, which aims to enhance domestic value addition and strengthen the ecosystem for key technologies such as solar photovoltaic (PV) cells, electric vehicle (EV) infrastructure, wind turbines, high voltage transmission equipment, and grid-scale batteries.
Micro, Small, and Medium Enterprises (MSMEs) and Start-ups: The Budget has introduced several measures to improve access to credit, particularly for MSMEs and start-ups. For Micro and Small Enterprises, the credit cover has been doubled, unlocking significant additional funding over the next five years. Start-ups will also benefit from a higher credit limit, along with a reduced guarantee fee for loans in key sectors vital to the Atmanirbhar Bharat initiative. Furthermore, well-managed exporter MSMEs will have access to increased coverage for term loans, while micro enterprises registered on the Udyam portal will be able to access customized credit cards with a generous limit, with millions of such cards to be issued in the coming year. These steps aim to provide better access to credit and foster growth among MSMEs and start-ups.
Fund of Funds: Furthermore, Alternate Investment Funds (AIFs) for start-ups that have already secured commitments exceeding ₹91,000 crore are supported by a Fund of Funds with an initial government contribution of ₹10,000 crore. To further promote this initiative, a new Fund of Funds has been established with an expanded scope and an additional contribution of ₹10,000 crore.
Credit Enhancement: As part of its focus on financial reforms, the National Bank for Financing Infrastructure and Development (NaBFID) will establish a ‘Partial Credit Enhancement Facility’ for corporate bonds related to infrastructure.
PM Gati Shakti: The government has introduced key developments to enhance India’s infrastructure landscape through the PM Gati Shakti initiative. As part of these efforts, PM Gati Shakti data will be made accessible to the private sector, fostering improved collaboration and efficiency in infrastructure projects. Launched by Prime Minister Narendra Modi on October 13, 2021, PM Gati Shakti aims to streamline and accelerate infrastructure development in the country. By integrating 16 ministries and several national schemes including Bharatmala, Sagarmala, UDAN, and various industrial corridors into a unified framework, the initiative seeks to enhance coordination across transportation, energy, logistics, and other sectors.
Asset Monetization Plan: Building on the success of the first Asset Monetization Plan, the Budget launches the second plan for 2025-30, aiming to generate ₹10 lakh crore for new projects through capital recycling. Regulatory and fiscal measures will be adjusted to support this plan.
Jal Jeevan Mission: The mission has been focused on improving the quality of infrastructure and the Operation and Maintenance (O&M) of rural piped water supply schemes through community participation (“Jan Bhagidhari“). Additionally, urban sector reforms in governance, municipal services, urban land, and planning are set to be incentivized.
Urban Challenge Fund: The government has introduced the fund with a corpus of ₹1 lakh crore to finance up to 25% of the cost of bankable projects. The fund stipulates that at least 50% of the cost of the project must be covered through bonds, bank loans, or PPPs. An allocation of ₹10,000 crore is proposed for the 2025–26 fiscal year.
Nuclear Energy Mission: In a significant move towards clean energy transition, the government has announced the launch of this mission aimed at developing 100 gigawatts (GW) of nuclear energy by 2047, in line with India’s ‘Viksit Bharat; vision. To support this, the government has planned to amend key laws, including the Atomic Energy Act, 1962, and the Civil Liability for Nuclear Damage Act, 2010, to facilitate greater private sector participation. An allocation of ₹20,000 crore has been earmarked for research and development in Small Modular Reactors (SMRs), a promising technology to meet India’s growing energy demands with safety and efficiency. At least five indigenously developed SMRs are expected to be operational by the year 2033.
Incentivize Electricity Distribution: The Budget proposes to incentivize electricity distribution reforms and the augmentation of intra-state transmission capacity by states. These measures aim to improve the financial health and capacity of electricity companies. States implementing these reforms will be allowed additional borrowing of 0.5% of their Gross State Domestic Product (GSDP), contingent on the successful implementation of the reforms.
Ude Desh Ka Aam Nagarik (UDAN): The UDAN scheme has enabled 1.5 crore middle-class people to fulfill their aspirations for faster travel, connecting 88 airports and operationalizing 619 routes. Building on this success, a modified UDAN scheme has been launched to enhance regional connectivity to 120 new destinations and serve 4 crore passengers over the next 10 years. The scheme will also support the development of helipads and smaller airports in hilly, aspirational, and northeastern districts of the country. To meet future needs, Greenfield airports are set to be developed in the state of Bihar, alongside the expansion of Patna airport and the construction of a brownfield airport at Bihta, Bihar.
Tourism Infrastructure: The top fifty tourist destinations in the country will be developed in collaboration with states through a challenge-based approach or open competitive bidding, with states required to provide land for key infrastructure. Hotels at these destinations would be included in the Harmonized Master List (HML) of Infrastructure, issued by the Ministry of Finance.
Shipping Infrastructure: The Budget has announced that large ships above a specified size will be included in the Infrastructure Harmonized Master List. By being included in the aforementioned list, lenders will have more favourable access to infrastructure loans, External Commercial Borrowings (ECB) limits, access to funds with longer repayment periods from insurance and pension funds, and the eligibility to avail loans from the India Infrastructure Financing Company Limited (IIFCL). Shipbuilding clusters will also be supported to expand the variety, types, and capacity of ships. This will involve enhancing infrastructure, providing skill development, and integrating advanced technology to strengthen the entire ecosystem.
Additionally, each infrastructure-related ministry will create a 3-year pipeline of projects for implementation in Public-Private Partnership (PPP) mode, seeking support from the India Infrastructure Project Development Fund (IIPDF) to prepare PPP proposals. An outlay of ₹1.5 lakh crore has been proposed for 50-year interest-free loans to states for capital expenditure and reforms.
The Union Budget 2025-2026 reinforces the government’s commitment to accelerating India’s infrastructure development, aligning with the government’s vision of ‘Viksit Bharat’ by 2047. Through strategic reforms, enhanced financing mechanisms, and a strong focus on clean energy, the budget aims to foster inclusive and sustainable growth. Key initiatives such as the PM Gati Shakti, the revamped UDAN scheme, interest-free loans for a period of 50 years, inclusion of ships and major tourist hotels to the Infrastructure Master Harmonized list, and encouragement of increased PPP collaboration reflect the government’s commitment to strengthening India’s infrastructure across sectors. Although there was an expectation for an increase in the overall capital expenditure outlay for the infrastructure sector, similar to the previous budget, the continued allocation of funds towards key infrastructure sectors such as roads and railways remains a positive and encouraging aspect of the budget.
Additionally, the focus on MSMEs, start-ups, and asset monetization demonstrates a balanced approach to fostering innovation, private sector participation, and fiscal sustainability. By prioritizing green technology, streamlining approvals, and incentivizing capital inflows, the budget aims to position India as a global leader in infrastructure and clean energy. The significant investments and reforms in the Budget 2025-2026 outline a clear path towards building a modern, resilient, and globally competitive economy.
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