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Budget 2026: Modi government announces ₹5,000cr per City Economic Region
01 Feb 2026

Finance Minister Nirmala Sitharaman has announced a major initiative to boost regional urban development in India.

The plan, unveiled during her Union Budget speech today, involves an allocation of ₹5,000 crore per City Economic Region over five years.

The move is aimed at accelerating economic growth beyond metropolitan centers and focuses primarily on the Tier-2 and Tier-3 cities as well as temple towns.

Funding to boost local economies and urban facilities
Funding details

Under the proposed plan, each identified City Economic Region will get ₹5,000 crore over five years.

The funding is expected to support infrastructure creation, economic activity, as well as regional integration.

This initiative is likely to boost local economies, improve urban facilities, and create new job opportunities in emerging cities that have traditionally seen less public investment than large metros.

Emphasis on balanced and inclusive growth
Growth strategy

Sitharaman emphasized that the focus on City Economic Regions reflects the government's intent to promote balanced and inclusive growth.

The move seeks to unlock the potential of smaller cities and culturally significant towns.

By directing resources toward the Tier-2 and Tier-3 cities, the government hopes to ease pressure on major urban centers while enabling sustainable development in fast-growing regions.

Upgrading infrastructure in temple towns
Cultural significance

The program also includes temple towns, given their economic and cultural significance. The funding is expected to support upgrades in urban infrastructure, connectivity, and services in these towns. These improvements would not only benefit domestic tourism but also support local livelihoods.