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India's 2026 Budget fast-tracks urban air regions and bullet train expansion

Seven new urban air regions get a ₹25,000 crore boost—but can they transform India's smaller cities? Plus, a bullet train update that slashes travel time.

,   and  Administrator
2 min read
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The image shows an old map of a city with a lot of roads and text written on it. The map is detailed and shows the various roads and highways that make up the city. The text on the map provides additional information about the city, such as the names of the streets, buildings, and other landmarks.

India's 2026 Budget fast-tracks urban air regions and bullet train expansion

The Union Budget for 2026-27 has unveiled a series of measures to boost urban development and high-speed rail connectivity. Key announcements include financial incentives for urban projects, a new challenge-based funding method for smaller cities, and progress on the Mumbai-Ahmedabad bullet train. The government is also focusing on recycling real estate assets and expanding infrastructure in Tier II and Tier III cities.

A major highlight is the ₹100 crore incentive for bond issuances exceeding ₹1,000 crore, aimed at financing urban infrastructure. This move seeks to encourage larger investments in city projects through market-based borrowing.

The Budget also introduces a challenge-based approach for developing smaller cities. Under this system, funds will be tied to specific reforms and measurable outcomes, ensuring accountability in spending. Meanwhile, the Smart Cities programme has been phased out, leaving metropolitan governance primarily under State control.

For high-speed rail, the government is pushing ahead with corridors designed to cut travel time between major cities. The Mumbai-Ahmedabad bullet train, capable of reaching 320 kmph, remains under construction, with a partial stretch set to open in 2027. Success of these corridors hinges on upgrading existing railway infrastructure to maintain average speeds of at least 150 kmph.

To support urban growth, seven Urban Air Regions (UARs) have been identified as pilot locations: Bengaluru, Bhubaneswar-Puri-Cuttack, Coimbatore-Erode-Tiruppur, Pune, Surat, Varanasi, and Visakhapatnam. Each UAR will receive ₹5,000 crore over five years to develop infrastructure in Tier II, Tier III cities, and temple towns.

Additionally, the government plans to recycle real estate assets of Central Public Sector Enterprises (CPSEs) through dedicated Real Estate Investment Trusts (REITs). Infrastructure Investment Trusts (InVITs) will also play a role in funding the expansion of smaller cities.

The Budget's urban and rail initiatives aim to accelerate infrastructure development while linking funding to performance. The ₹1.08 lakh crore Mumbai-Ahmedabad bullet train remains a flagship project, with partial operations expected by 2027. Meanwhile, the focus on Tier II and Tier III cities through UARs and investment trusts signals a shift toward decentralised urban growth.

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