Centre to fast-track fund deployment in FY26 to boost growth

The money will be provided in the first half of FY26, the people said, adding that since some of the funds will be run in partnership with the private sector, infusing money early will also encourage greater participation. The ₹25,000 crore Maritime Development Fund (MDF), for instance, will have 49% government contribution and 51% private.

The Union budget also announced a new ₹10,000 crore fund of funds (FoFs) for startups, and a ₹1 trillion Urban Challenge Fund with ₹10,000 crore allocated for FY26 to support city redevelopment. The government is also planning another FoF for deep tech companies

"About ₹40,000 crore has been allocated to the department of economic affairs budget for this purpose," one of the two people cited above said under the condition of anonymity. "These will be disbursed when the funds are ready," the person added.

The MDF, modelled on the National Investment and Infrastructure Fund (NIIF) with 49% government and 51% private sector funding, is expected to attract investments from private ports and corporations.

Also read | Mint Primer | Finance minister Nirmala Sitharaman's eighth budget in eight points

The government’s first FoF, launched in 2016 with a ₹10,000 crore commitment, has mobilized around ₹91,000 crore in private capital through various Alternate Investment Funds (AIFs), said the second person mentioned above, adding that of the government’s pledged amount, ₹6,800 crore has been disbursed, driving nearly ₹27,000 crore in startup investments. "With the fund (first FoF) nearing three-fourths of its deployment, the government announced a new Fund of Funds in the latest budget to sustain momentum and further support emerging startups," the person said, requesting anonymity.

"The timely deployment of these funds will drive investments, enhance sectoral development, and strengthen overall economic momentum," the person said.

A finance ministry spokesperson did not respond to emailed queries.

Boosting economy

Experts said that while the budget is focused on growth, ensuring efficient and swift fund deployment will play a key role in providing an impetus to the economy.

Also read | Struggling PSU insurers may get a helping hand from the finance minister

"While the impact of deploying the funds quickly is evident, quantifying it remains challenging. Private sector involvement will drive a multiplier effect, similar to the Centre's capital expenditure program with backward linkages coming in from the private sector," said Madan Sabnavis, chief economist at Bank of Baroda. "But whether this is a one-time push or a sustained effort remains to be seen," he said, adding the key is to channel the momentum toward private sector investment.

"One can't be overly dependent on the government, and make sure the impetus goes to the private sector as well," he added.

The MDF for long-term indigenous manufacturing and the Shipbuilding Subsidy (SBS) Policy will enhance the ecosystem, fostering self-reliance and global competitiveness, said Vivek Merchant, director, Swan Defence and Heavy Industries Ltd (formerly Reliance Naval and Engineering Limited or RNEL).

Also read | Budget push: India Post’s 150,000-office overhaul to unlock logistics partnerships

At present, India leases ships worth $75 billion annually, while owning just 2% of global tonnage and holding under 1% of the shipbuilding market, which is dominated by China, South Korea, and Japan.

"These efforts, coupled with infrastructure improvements such as better connectivity to major trade routes and enhanced port facilities, would create more opportunities for local shipyards to compete on the global stage," Merchant added.