Union Budget 2026-27: Focus on developing economic regions in tier-2, tier-3 cities

Delivering her ninth budget speech for 2026-27, Sitharaman identified the development of CERs and infrastructure as one of six priority areas of intervention. The urban push includes a ₹100 crore incentive for municipal bonds issued over ₹1,000 crore and the high-speed intercity rail networks that will link Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri.

Sitharaman identified the development of CERs and infrastructure as one of six priority intervention areas. The seven proposed CERs are Bengaluru, the Bhubaneswar-Puri-Cuttack tricities, Coimbatore-Erode-Tiruppur, Pune, Surat, Varanasi, and Visakhapatnam.

“We shall now focus on tier-2, tier-3 cities and even temple towns which need modern infrastructure and basic amenities,” the finance minister said. “This budget aims to further amplify the potential of cities to deliver the economic power of agglomerations by mapping city economic regions based on their specific growth drivers. An allocation of ₹5,000 crore per CER over five years is proposed for implementing their plans through a challenge mode with a reform-cum-result-based financing mechanism.”