Mumbai: Infrastructure and real estate leaders have broadly welcomed the Union Budget 2026–27, describing it as a credibility-building budget that addresses long-standing bottlenecks around project risk, capital availability and urban expansion beyond metros. Key measures such as the sharp rise in public capital expenditure to ₹12.2 lakh crore, the creation of an Infrastructure Risk Guarantee Fund (IRGF), targeted support for Tier-II and Tier-III cities, and accelerated asset monetisation through CPSE-backed REITs are being seen as decisive enablers for the next phase of growth.
Executives say the combination of higher capex, risk mitigation and capital market reforms improves project viability, boosts lender confidence and unlocks private capital—particularly for emerging cities, pilgrimage corridors, temple towns and leisure destinations where housing demand is rising rapidly.
Risk Mitigation Unlocks Private Capital
A key highlight for the sector is the Infrastructure Risk Guarantee Fund, aimed at de-risking the construction phase and addressing lender apprehensions.
Shiv Garg, Director at Forteasia Realty Pvt. Ltd., says the partial credit guarantee mechanism could release billions of rupees locked in dormant assets. According to him, developers have long been cautious about Tier-II and Tier-III projects due to construction risks, and the new framework materially improves investment appetite while complementing CPSE REIT-led asset monetisation.
Similarly, Aman Gupta of RPS Group believes the Risk Guarantee Fund can transform infrastructure financing by enabling lenders to fund projects in cities with populations above five lakh more confidently. He adds that CPSE REITs will inject liquidity by unlocking government-owned assets, positioning real estate as a central driver of urban transformation beyond metros.
Anurag Goel echoes this view, noting that the fund directly tackles lender risk aversion while CPSE REITs create benchmark assets that improve overall market confidence.
Tier-II/III Cities and Urban Expansion
Market trends indicate that the strongest growth momentum is shifting toward Tier-II and Tier-III cities. Vijay Raundal, Managing Director of Teerth Realties, says the budget addresses core sector challenges around risk assessment and capital reallocation, validating the infrastructure-led development model for sustainable urban expansion.
The government’s commitment of ₹5,000 crore annually for five years to City Economic Regions is being viewed as a structural move toward planned urbanisation, civic infrastructure development and housing demand creation in new geographies.
Capex, Connectivity and Consumption Support
Welcoming the budget’s broader framework, Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd, says the 9% rise in public capex to ₹12.2 lakh crore will crowd in private investment and accelerate execution. He highlights the Infrastructure Risk Guarantee Fund, seven high-speed rail corridors and 20 new national waterways as connectivity boosters that will lower logistics costs and improve ecosystem efficiency.
Aggarwal also points to income-tax reforms—such as no tax liability up to ₹12 lakh under the new regime, rationalised TDS/TCS rates and lower TCS on overseas tour packages—as indirect but meaningful support for housing demand through higher disposable incomes.
Metro Stability, Peripheral Growth
From a city-market perspective, Vikas Bhasin believes sustained infrastructure investment will keep Tier-I city prices largely range-bound while driving residential growth in suburbs and satellite towns. Improved connectivity, he says, will allow homebuyers to access more affordable housing without compromising on access to employment hubs.
In Mumbai, multiple developers see the budget reinforcing long-term fundamentals. Anuj Mehta notes that the City Economic Regions framework, risk guarantees and REIT-led asset monetisation will deepen infrastructure across the MMR and improve access to financing. Clarifications around NRI taxation and TDS are also expected to ease global investor participation.
Cyrus Mody and Aakash Patel add that the long-term certainty created by sustained capex growth—from ₹2 lakh crore in FY15 to a proposed ₹12.2 lakh crore in FY27—strengthens Mumbai’s positioning as a stable, fundamentals-driven real estate market, supported by maturing capital markets through REITs and InvITs.
Capital Markets, Interiors and Asset Recycling
The accelerated recycling of CPSE-owned real estate assets through dedicated REITs has been widely welcomed. Ashok Kapur says this move improves capital efficiency while strengthening the institutional framework for asset monetisation, which is critical for both infrastructure and real estate.
For allied sectors, the impact is equally positive. Sammeer Pakvasa notes that incentives for affordable and rental housing will drive construction activity and demand for efficient, human-centric interior solutions across residential and commercial developments.
Outlook
Taken together, industry leaders view Union Budget 2026–27 as a structurally supportive budget—one that moves beyond short-term stimulus toward long-term execution certainty. With higher capex, risk-sharing mechanisms, deeper capital markets and a clear push toward Tier-II and Tier-III cities, the infrastructure and real estate sector believes the budget lays a solid foundation for sustainable urbanisation, rising housing demand and stronger private sector participation, aligned with the Viksit Bharat by 2047 vision.
