India's Union Budget 2026-27 is likely to introduce special grants for Urban Local Bodies (ULBs) to address mounting urbanisation challenges like slum growth, water shortages, and waste crises. Building on the 15th Finance Commission's ₹1.21 lakh crore allocation (2021-26), Finance Minister Nirmala Sitharaman may announce an Urban Resilience Fund, targeting 500+ cities beyond metros.

Linked to reforms such as property tax digitisation and GIS mapping, these grants would likely fund smart infrastructure, sewerage networks, and green transport. Performance-based disbursals—rewarding ULBs for meeting sanitation or revenue goals—could supplant ad-hoc transfers, offsetting GST shortfalls and advancing Viksit Bharat@2047, potentially lifting ULB capacities by 30% amid 35% urban growth by 2030.