EXCLUSIVE: Union Budget 2026-27 Unveils Strategic Municipal Finance Overhaul with ₹100 Crore Bond Incentive Program

In a decisive move to bolster urban infrastructure financing, Finance Minister Nirmala Sitharaman's Union Budget 2026-27 has introduced a targeted ₹100 crore incentive scheme for municipal corporations undertaking single bond issuances. This initiative represents a calculated effort to deepen India's municipal debt market, providing local bodies with enhanced access to capital for critical development projects. Concurrently, the budget outlines a comprehensive restructuring of key public sector financial institutions—REC Limited and Power Finance Corporation (PFC)—as part of a broader strategy to fortify the nation's financial architecture. This dual-pronged approach signals the government's commitment to both decentralizing fiscal empowerment and strengthening systemic financial resilience. The municipal bond incentive is poised to catalyze urban infrastructure investment, while the REC and PFC overhaul aims to optimize their operational efficacy and risk management frameworks. These measures collectively underscore a strategic pivot towards sustainable, market-driven financing mechanisms, aligning with long-term economic growth objectives and reinforcing India's evolving financial ecosystem.