Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
Finance Minister Nirmala Sitharaman has proposed the creation of an Infrastructure Risk Guarantee Fund in the Union Budget 2026-27 to provide calibrated partial credit guarantees to lenders and strengthen private sector confidence during the development and construction phases of infrastructure projects. Presenting the Budget in Parliament, she highlighted the government's decade-long push to scale up public infrastructure through new financing instruments such as InVITs and REITs, along with institutions like NIIF and NABFID. The Budget also places renewed emphasis on urban development, particularly in Tier-II and Tier-III cities and temple towns. To unlock the economic potential of urban agglomerations, the government plans to map city economic regions and allocate dedicated funding to support targeted, reform-linked infrastructure development.
Finance Minister Nirmala Sitharaman on Sunday proposed the establishment of an Infrastructure Risk Guarantee Fund in the Union Budget for 2026-27, aimed at providing calibrated partial credit guarantees to lenders and addressing risk concerns faced by private developers during the infrastructure development and construction phases. Advertisement
In her Budget speech in Parliament, Sitharaman said that over the past decade, the government has undertaken multiple initiatives to significantly enhance public infrastructure across the country. These efforts, she noted, have been supported by the introduction of new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs), as well as the creation of dedicated institutions including the National Investment and Infrastructure Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NABFID).
According to the finance minister, while these measures have helped expand the scale and scope of infrastructure financing, risks associated with the development and construction stages continue to affect private sector participation. To address this challenge, she proposed setting up the Infrastructure Risk Guarantee Fund, which would offer prudently calibrated partial credit guarantees to lenders. The objective, she said, is to strengthen lender confidence and encourage greater private investment in infrastructure projects.
Sitharaman emphasised that the proposed fund is intended to mitigate risk rather than replace market mechanisms, thereby creating a more balanced and sustainable financing environment. By sharing a portion of the project risk, the government aims to facilitate smoother financial closure for projects and improve the overall flow of long-term capital into the sector.
Turning to urban development, the finance minister described cities as India's engines of growth, innovation and opportunity. She said the government would now sharpen its focus on Tier-II and Tier-III cities, as well as temple towns, many of which require modern infrastructure and access to basic civic amenities to support economic activity and improve quality of life.
The Budget, she said, seeks to further amplify the economic potential of urban centres by leveraging the power of agglomeration. As part of this strategy, the government plans to map city economic regions (CERs) based on their specific growth drivers, industrial strengths and regional characteristics. This approach is intended to enable more targeted planning and investment, aligned with local economic realities.
To support the implementation of these plans, Sitharaman proposed an allocation of INR 5,000 crore per city economic region over a five-year period. The funding would be deployed through a challenge mode, linked to a reform-cum-results-based financing mechanism, encouraging cities to undertake structural reforms while delivering measurable outcomes.
Overall, the proposals outlined in the Budget underscore the government's intent to deepen private participation in infrastructure development while simultaneously strengthening urban growth frameworks, particularly beyond major metropolitan centres.
Source - PTI
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
