According to the sources, the required budget for the modified UDAN scheme will also come up for approval during that period. “Right now the priority is to complete the ongoing work in the old scheme. Some rounds of bidding are still left.”
The proposal for the new scheme will be scrutinised by the Expenditure Finance Committee (EFC) and then the final policy draft will be subject to the Union Cabinet’s approval.
On Saturday, during the Budget speech, Finance Minister Nirmala Sitharaman proposed to launch a modified UDAN scheme to connect 120 new destinations as well as ferry four crore passengers in the next 10 years.
Notably, businesslinewas the first to report that the finance minister is considering proposing the new iteration of the scheme, unofficially known as “UDAN 2.0” which intends to provide a cost-effective means to develop and operate over 100 underutilised airstrips in the country.
In her budget speech, Sitharaman said the scheme will also support helipads and smaller airports in hilly, aspirational, and North East region districts.
Since its inception, UDAN scheme has facilitated the travel of around 1.5 crore passengers across more than 2.8 lakh flights. The scheme has operationalised 619 routes, including helicopter routes, while the number of operational airports in the country has doubled from 74 in 2014 to more than 157 in 2024.
As of now, the market-driven model of the first UDAN scheme allows airlines to assess demand on specific routes and submit proposals during bidding rounds.
The scheme incentivises the creation of new airports as well as refurbishment and expansion of existing facilities. Besides, airlines are supported to connect underserved regions by offering them Viability Gap Funding (VGF) and various concessions provided by airport operators, the Central, and State governments.
In terms of Budget FY26 estimates (BE FY26), the allocation for the current version of the UDAN scheme has been pegged at ₹540 crore, which is far lower than the scheme’s grant of ₹800 crore given in the revised estimate (RE) of FY25.
Nevertheless, on a year-on-year basis, the allocation is marginally higher by 3 per cent from ₹502 crore allocated in BE FY25.
Sources added that the proposed budget outlay for FY26 is “sufficient” to complete the remaining work under the current scheme.
