In a change from previous Budgets, Finance Minister Nirmala Sitharaman did not even once mention two key physical infrastructure sectors—rail and road in her speech on Saturday. The reason seemingly also reflected in the expenditure budget for FY26 with almost flat capex allocation to the two sectors.
The budgetary allocation to Ministry of Railways for FY26 has been pegged at Rs 255,445 as against Rs 255,393 in FY25. The roads and highways budget saw a 3% increase with allocation of Rs 287,333 crore for FY26 against Rs 278,000 crore in FY25.
This comes as a dampener for the industry as it was expecting a boost of 10-15%, keeping in mind the country’s need to expand its physical infrastructure at a fast pace to achieve Viksit Bharat 2047 goal.
In the overall infrastructure segment, the finance minister focussed on asset monetisation and public-private participation revival in the Budget.
Sandeep Upadhyay, Managing Director—Infrastructure, Centrum Capital, says Budget 2025 has focussed to attract more private sector investments.
“A key highlight is the specific asset monetisation plan for 2025-30, aimed at infusing Rs 10 lakh crore into new projects. This initiative is expected to enhance much-needed equity investments, boosting overall sectoral growth. While roads and highways have led the way in successful PPP (Public-Private Partnership) execution, the sector has witnessed a 60% expansion in the national highway network over the past decade, drawing investments from leading sovereign and pension funds,” he said.
The finance minister also emphasised on encouraging states to leverage the India Infrastructure Project Development Fund (IIPDF) to develop PPP proposals.
Mohammad Athar, Partner and Leader Capital Projects and Infrastructure Development, PwC India says there is significant focus on cities as engines for economic growth with Rs 1 lakh crore Urban Challenge Fund will support urban development projects by financing 25% of the cost for bankable projects.