Budget 2026-27 shows systems thinking in developing infrastructure

It is essential for modern nations plugged into the global economic system to develop a robust, integrated infrastructure that facilitates the physical movement of goods and people and drives efficiencies through digital networks and smart systems. Finance Minister Nirmala Sitharaman has delivered a Budget that gives a fillip to India’s efforts to develop these.

 

One of the highlights of the Budget is the focus on urban centres, particularly on transforming growing Tier II and Tier III centres into city economic regions (CERs). The rapid growth and expansion of economic activity in cities such as Bengaluru, Pune and Hyderabad are testimonies to the potential urban centres hold for India to reap its demographic dividend. The allocation of Rs 5,000 crore to every CER over five years is a good start in identifying and developing new centres of accelerated activity.

 

One of the key characteristics of this Budget appears to be a focus on systems thinking. It is clear that the government wants to build infrastructure with integration across regions and sectors.

 

Take cities, for instance. Vibrant urban centres also need strong inter-city connectivity for the seamless flow of goods and people. That is why the Budget has laid out a plan to build seven high-speed rail lines, aptly nicknamed growth connectors that link Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–Siliguri. Fast connectivity helps reduce the pressure on existing travel infrastructure and aids the growth of new centres between them. To ensure that the projects are completed quickly, they have been conceived in the challenge mode, with a reform-cum-results-based financing mechanism.

 

As India strategically positions itself as an inevitable link in global value chains, it is necessary that it develops multiple modes of cross-country logistics. The existing eastern and western corridors will now be complemented with a dedicated freight corridor between Dankuni and Surat and 20 new waterways. India’s rivers have traditionally been underutilised as low-cost logistics support systems for roads and rail. Systems thinking is visible in this plan too, as the Budget envisages training centres for youth to acquire skills required to maintain and run boats and ferries. It also envisions a ship repair ecosystem specifically for inland waterways in Varanasi and Patna. The Budget has also designed schemes for coastal shipping as well as building seaplanes. Together, the government hopes to raise the share of waterways, inland and coastal, to double from 6 per cent to 12 per cent by 2047, the target year for Viksit Bharat.

 

The careful thinking reflects in the capital expenditure outlay as well. It has increased by Rs 1 trillion to touch Rs 12.2 trillion in the next fiscal year.

 

There are multiple other initiatives such as a scheme for container manufacturing, dedicated chemical parks, rare earth corridors and biopharma manufacturing hubs, which will create specialised infrastructure and support systems wherever they are set up. Rightly nurtured, these have the potential to grow into centres of excellence, attracting high-skilled workers and capital and generating multiplier effects. As these are in different parts of the country, they will also help uniformly raise economic activity across regions, reducing migration and spreading development more evenly.

 

India is engineering an integrated economic grid. That shift from assets to systems could prove to be the country’s most powerful growth multiplier.

 

The writer is Chairman, Aditya Birla Group