Chandigarh budget cut by ₹437.6 crore after drop in energy sector funding

Chandigarh has received a smaller budget allocation in the Union Budget 2026–27, mainly due to a major reduction in funding for the energy sector. Finance Minister Nirmala Sitharaman presented the Union Budget on Sunday, allocating ₹6,545 crore to the Union Territory. This is ₹437.66 crore less than the ₹6,983.18 crore given to Chandigarh in 2025–26.

The cut comes as a disappointment for the Chandigarh administration, which had requested nearly ₹7,500 crore for the coming financial year. Officials say the reduced allocation will affect several areas, even though some sectors like education and urban development continue to receive strong support.

Why the budget has been reduced

The main reason for the lower budget is the sharp fall in funding for the energy sector following the privatisation of the Chandigarh electricity department. In the 2025–26 budget, the energy sector had received ₹877.39 crore. For 2026–27, this amount has been reduced to ₹156.95 crore, a cut of ₹720.44 crore.

Officials explained that this reduction reflects a structural change rather than a direct cut in development spending. Since the electricity department is no longer fully under government control, the need for large budgetary support has reduced. Taking this adjustment into account, the effective budget for Chandigarh has actually increased by ₹282.28 crore, or 4.63 per cent, officials said.

Looking at the broader picture, the previous year’s budget had ₹6,185.18 crore set aside for revenue expenditure. This included salaries, pensions, and other recurring operational costs. Another ₹798 crore was allocated for capital expenditure, which covers development projects and asset creation.

For 2026–27, revenue expenditure has been fixed at ₹5,939.52 crore, while capital expenditure has been reduced to ₹606 crore. This lower capital allocation could impact the pace of new infrastructure projects and long-term development works in the city.

Another factor behind the reduced allocation is the underutilisation of funds in the previous year. Revised estimates show that Chandigarh utilised only ₹5,556 crore in 2025–26. This gap between allocated and spent funds has played a role in the Centre’s decision to lower the budget this year.

Chandigarh Member of Parliament Manish Tewari criticised this trend, saying that unutilised funds have now resulted in a reduced allocation. He argued that this reflects poor planning and execution and warned that residents may suffer due to cuts in urban infrastructure, healthcare, and essential public services.

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Sector-wise allocation and reactions

Despite the overall cut, several key sectors continue to receive significant funding. Education has emerged as the top priority, with an allocation of ₹1,295.38 crore. This money will be used to modernise schools, upgrade facilities for National Cadet Corps programmes, and establish new polytechnics.

The budget also focuses on improving government institutions for women, including women’s polytechnics, and upgrading Industrial Training Institutes. Officials say these steps aim to improve skill development and prepare young people for employment.

Housing and urban development has received ₹1,127.95 crore. This allocation will fund land acquisition, road construction, stormwater drainage, electrification projects, and development in the IT Park. It also includes major civic initiatives such as building a dam across Sukhna Lake and ensuring round-the-clock water supply across the city.

The health sector, however, has seen a small decline. Its allocation has fallen by around 3 per cent, from ₹987 crore in 2025–26 to ₹955.41 crore in 2026–27. The health budget will be used to upgrade a 50-bed community health centre into a 250-bed hospital, strengthen polyclinics, and improve subsidiary health centres. It will also support schemes like the Employees’ State Insurance.

The police department has been allotted ₹970.53 crore. This funding will go towards modernising the force, improving operational capacity, and upgrading equipment. Transport services have received ₹459.51 crore for buying new buses, replacing old vehicles, improving bus stands, and computerising the Chandigarh Transport Undertaking.

Other sectors, including welfare, environment, forests, and government housing, will share ₹1,547.07 crore. This includes programmes for women, children, senior citizens, and persons with disabilities. Plans include homes for the elderly and destitute, child protection centres, crèches for working mothers, and support for national social assistance and disability rehabilitation schemes.

For the energy sector, a separate allocation of ₹189.67 crore has been made for renewable energy projects and model solar city initiatives, showing a shift towards clean and sustainable energy.

Political reactions to the budget have been mixed. BJP Chandigarh unit president Jatinder Pal Malhotra said the allocations show the Centre’s commitment to balanced and long-term development. He added that the focus on infrastructure and IT will help Chandigarh attract investment and emerge as a digital and knowledge hub in North India.

On the other hand, AAP Chandigarh unit president Vijaypal Singh criticised the budget, saying it places an extra burden on common people while favouring corporate interests. He called it people-unfriendly and said ordinary citizens, traders, employees, and pensioners would suffer.

Industry bodies have welcomed the budget. Rajneesh Bansal of the PHD Chamber of Commerce and Industry said it would boost investor confidence and support inclusive growth. Puneet Kaura of CII Northern Region also praised the focus on MSMEs, saying it would help businesses grow and integrate better into supply chains.

Overall, while Chandigarh’s budget has been reduced on paper, officials say structural changes explain much of the cut. Still, how effectively the funds are used this year will be crucial in shaping the city’s growth and public services.