Union Budget 2026–27: A Record Allocation for the North East- DoNER and Beyond

On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget for 2026–27, outlining fiscal priorities for the coming year. While the budget was framed as a reform-oriented roadmap for national growth, it also carried significant but often understated implications for the North Eastern Region (NER), a geostrategically vital, culturally rich, and economically emerging part of India.

From infrastructure financing to cultural tourism, rural livelihoods to human capital, the Budget seeks to integrate the unique strengths of the North East with India’s broader development vision. Among the eight states of the region, Assam plays a pivotal role, both as its largest economy and as a gateway connecting South Asia and Southeast Asia as the budget 2026–27 aims to empower the North East and Assam with targeted allocations, structural support, and long-term growth frameworks.

DoNER Allocation, Enhanced Fiscal Support and Higher Devolution

One of the headline figures for NER in this budget is the enhanced allocation for the Ministry of Development of the North Eastern Region (DoNER). For 2026–27, DoNER has been entrusted with Rs 6,812.30 crore, up from Rs 5,915 crore in the previous year, reflecting a year-on-year growth that signals continued federal priority.

Beyond DoNER, the total dedicated investment envelope for the North East spanning central ministries, special schemes, and region-specific programmes, stands at a record Rs11,486 crore. This broader fiscal commitment dovetails infrastructure, social sectors, employment, and community development interventions that cut across traditional sectoral classifications.

Another most consequential measure for the North East in Budget 2026–27 is the increase in tax devolution to the region from 3.128% to 3.258%. This enhanced share strengthens the financial autonomy of Northeastern states, enabling them to undertake development projects tailored to local needs.

Capital Investment Support: Rs 2 Lakh Crore

Under the Special Assistance to States for Capital Investment, Assam will benefit from the Centre’s expanded envelope of approximately Rs 2 lakh crore, enabling acceleration of major infrastructure projects, urban renewal, and logistics development.
This financing window is expected to strengthen urban centres like Guwahati, improve transportation corridors, and build capacities in state institutions to execute long-term development plans.

Rs 500 Crore ULFA Rehabilitation Package

A landmark provision is the allocation of Rs 500 crore specifically for the rehabilitation of former ULFA cadres and their families in Assam. This special package is designed to provide sustainable livelihoods, skill training, and community integration supporting peacebuilding and addressing longstanding socio-economic challenges.
Additionally, separate allocations under this umbrella include:
•    Rs 200 crore for the Karbi Anglong Autonomous Council
•    Rs 56 crore for the Bodoland Territorial Council
•    Rs 70 crore for Adivasi communities
•    Rs 70 crore for Dimasa and related communities

These funds are earmarked for local infrastructure, education, healthcare, market access, and cultural preservation addressing both identity and economic inclusion in historically underserved areas.

Transforming Urban Centres: Rs 5,000 Crore for City Development

Urban development has emerged as a priority area in Budget 2026–27. A dedicated allocation of ₹5,000 crore has been earmarked for the development of Tier-II and Tier-III cities, including Guwahati, Dibrugarh, Silchar, Imphal, and Agartala.
This funding will be utilised for:
•    Public transport systems
•    Waste management and sanitation
•    Digital governance platforms
•    Affordable housing
•    Smart infrastructure

By strengthening urban ecosystems, the Budget aims to create regional economic hubs that generate employment and reduce migration to metropolitan cities.

Infrastructure & Connectivity: Bridging the Region

A major highlight of Budget 2026 is the focus on strategic and border connectivity. The government has approved a special 34-km stretch of underground railway tracks in the strategically vital ‘Chicken Neck’ corridor, strengthening connectivity. This project will ensure uninterrupted rail movement, enhance national security, and safeguard supply lines to the region in times of natural or geopolitical challenges.

Besides, under the Budget’s broader thrust on national connectivity, including rail corridors extending toward northeastern nodes, it is expected to facilitate faster movement of goods and people. For example, the Varanasi–Siliguri corridor, projected under national high-speed rail initiatives, has indirect but significant regional benefits.

Several targeted schemes under DoNER secure direct financing for connectivity and basic services:
•    Prime Minister’s Development Initiative for the North East (PM-DevINE): Rs 2,300 crore — a flexible financing window supporting region-specific projects, especially in transport, community infrastructure, and local livelihood empowerment.
•    North East Special Infrastructure Development Scheme (NESIDS): Rs 2,500 crore — dedicated to water supply, electrification, urban upgrades, logistics nodes, and last-mile connectivity across the region.
•    North East Council’s Programmes: Rs 825 crore, which empower decentralised planning and execution of development priorities at the state and local levels.

These funds will be leveraged to reduce isolation, strengthen road and rail feeder links, and integrate economic hubs with national markets.

Agriculture, Forestry & Rural Livelihoods: Aligning Ecology and Economy

The North East’s growth narrative cannot be separated from its ecological base. Budget 2026 recognises this through support for environment-aligned agriculture and rural economies.
High-Value Crops and Ecological Cultivation
Special mention has been made of encouraging the cultivation of agar (oudh), a high-value fragrant wood with strong international demand. Combined with expanded horticulture support, animal husbandry, and allied sectors, these measures aim to:
•    Increase real incomes for farmers
•    Promote value addition and agro-processing
•    Expand market linkages into export chains

Rural development is further supported through integrated value chain financing and credit linkage for small producers, particularly in hilly and forested districts where traditional cropping patterns may not be as profitable.

Tourism & Cultural Economy: Unlocking Heritage Potential

One of the most transformative provisions of the 2026 Budget for the North East is the focus on tourism as an engine of inclusive development.

Buddhist and Heritage Circuits

The budget outlines a dedicated framework to develop Buddhist circuits across Arunachal Pradesh, Assam, Manipur, Mizoram, Sikkim, and Tripura. These corridors, grounded in both historical significance and cultural heritage, will receive infrastructure support for:
•    Pilgrim and meditation centers
•    Accessible visitor services
•    Digital and interpretive cultural trails
•    Linkages with international tourism markets

By expanding tourism infrastructure, the North East is positioned to attract visitors from South Asia, Southeast Asia, and East Asia, helping local economies reap the benefits of cross-border mobility, hospitality services, and artisanal enterprises.
Tourism growth, in turn, catalyses jobs in hotels, travel services, transportation, local craft markets, and environmental conservation, especially in remote areas where alternative employment opportunities are limited.

Human Capital: Skills & Education 

Budget 2026 underscores the role of human capital in driving sustained development. For the North East, this translates into investments in:

Skilling and Vocational Training

Expanding vocational training and skill development initiatives targeted at youth in the region will be critical. These programmes aim to:
•    Increase employability in service sectors
•    Improve digital literacy
•    Support specialised training for tourism, healthcare, and creative industries

Skill finance and placement assistance will help stem migration pressures by creating jobs closer to home.

Education and Institutional Support

The Budget includes expanded access to quality education, digital learning platforms, and institution building, especially in remote and tribal communities. This is expected to improve literacy, research output, and local capacity to participate in emerging sectors.

Healthcare Access & Special Services

A major healthcare milestone is the upgradation of the National Mental Health Institute at Tezpur into a Regional Apex Institute.

This will enhance specialised mental healthcare services, training, and research for the entire North East.

Healthcare financing under the budget emphasises:
•    Upgraded district and community hospitals
•    Telemedicine and diagnostic expansion
•    Mental health services and preventive care

These interventions reduce reliance on distant urban centres for critical care and strengthen resilience in rural and tribal populations.

MSMEs, Entrepreneurship & the Jobs Landscape

Micro, Small, and Medium Enterprises remain central to job creation in the North East and form the backbone of the North East’s economic activity. Budget 2026 strengthens this sector by advocating:
•    Credit access expansion
•    Technology adoption support
•    Market linkage programmes
•    Start-up facilitation

Entrepreneurship among youth and women is encouraged through targeted programmes that link production with digital marketplaces and logistics networks. The creative economy including handicrafts, textiles, cultural arts, and eco-tourism services, receives renewed emphasis, enabling artisans to translate heritage skills into sustainable livelihoods.
The Union Budget 2026–27 unmistakably signals a shift from rhetoric to targeted planning. Through a blend of financial allocations, decentralised schemes, and thematic priorities, the Budget seeks to weave the North East and particularly Assam into the nation’s growth tapestry.

It represents a thoughtful mix of enhanced fiscal support, cultural recognition, and long-term development vision for the North Eastern Region. For Assam with its unique demographic, historic, and strategic role, the Budget provides specific packages to ensure peace, infrastructure momentum, and economic opportunity.

From strengthened connectivity and ecological agriculture to tourism growth, human capital formation, and entrepreneurial empowerment, the North East stands to benefit from a multi-sectoral push that reflects its potential as a growth engine of India’s eastern frontier.

While implementation will test the strength of institutional machinery and interstate cooperation, the fiscal foundations laid in this budget could well redefine the development trajectory of the North East bridging peripheries to growth and turning geographical challenges into economic opportunities.