Budget 2026: Sitharaman backs private developers with new Infrastructure Risk Guarantee Fund

Finance Minister Nirmala Sitharaman on Sunday proposed the creation of an Infrastructure Risk Guarantee Fund aimed at providing partial credit guarantees to lenders, a move designed to strengthen risk management for private infrastructure developers.

Speaking in her Budget speech, Sitharaman highlighted the government’s efforts over the past decade to enhance public infrastructure through innovative financing channels. “To strengthen the confidence of private developers regarding risks during infrastructure development and construction phase, I propose to set up an Infrastructure Risk Guarantee Fund to provide prudently calibrated partial credit guarantees to lenders,” she said.

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The Finance Minister pointed out that cities are pivotal to India’s growth, serving as hubs of innovation and opportunity. She added that the government will now extend its focus to Tier-II and Tier-III cities, as well as temple towns, which require modern infrastructure and basic amenities.

Sitharaman further detailed plans to unlock the economic potential of urban regions by mapping city economic regions (CERs) tailored to their unique growth drivers. “An allocation of Rs 5,000 crore per CER over five years is proposed for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism,” she said.

The fund and city-focused initiatives signal the government’s push to encourage private participation in infrastructure while fostering balanced urban growth beyond major metropolitan centers.