The maiden budget of the new government for 2024–25 has highlighted cities as the growth hubs and offered many options and opportunities for planned development and growth of the cities. This article explores how the budget’s provisions aim to support planned urbanisation, enhance living conditions, and promote sustainable growth in India’s rapidly expanding urban areas.
Cities contribute almost 70 per cent of the GDP of the country and hold about 50 crore people, accounting for about 36 per cent of the country’s population, occupying just about 3 per cent of the land. Urban population has been growing at a steady pace of 2 to 2.5 per cent annually, and is expected to reach 60 cr by 2030 and 75 cr by 2040, as per the UN Population Division. The ever growing pace of urbanisation in India calls for sustained investments, with a vision and determination.
Infrastructure
The core infrastructure requirements for cities include water supply, sanitation, roads, and drains. AMRUT (Atal Mission for Rejuvenation and Urban Transformation) provides 8,000 crore for these needs. while this may not seem substantial, the finance minister has announced Viability Gap Funding (VGF) for projects undertaken as commercial venturesin PPP mode. Cities familiar with PPP models can accelerate core infrastructure development or upgrades. Additionally, a capex investments of 11.11 lakh crore for infrastructure and a `1.50 lakh crore interest-free loan to states can also benefit urban areas.
Housing
The Pradhan Mantri Awas Yojana (Urban), implemented since 2015, has delivered 85 lakh housing units for the EWS-MIG categories, with an investment of 8 lakh crore, of which a quarter was funded by the central government. The Budget now proposes to support the construction of another one crore units, with an investment of 8 lakh crore, of which a quarter was funded by the Central Government. The Budget now proposes to support the construction of another one crore units, with an investment of 10 lakh crore, including `2.2 lakh crore in central assistance over the next five years. Additionally, new rental housing with dormitory-type accommodation for industrial workers has been announced, to be developed in a public-private partnership (PPP) mode. The Central Government will provide up to 20% of the funding under the VGF Scheme, with potential additional support from state governments.
Smart Cities Mission
The Smart Cities Mission that was launched in 2015 was provided a budgetary support of 8,000 crore in 2023-24, which has been scaled down to 2,400 crore in 2024-25, to take care of the remnant commitments. However, a new window of the National Urban Digital Mission (NUDM) has been opened in this Budget, with a provision of `1,150 crore, with a focus on digitisation of property and tax records with GIS mapping. These will help the municipalities manage their finances better, besides helping the property owners as well.
City planning
The Budget emphasises planned urban development, allocating 25,653 crore for municipalities through the Finance Commission Grant. Mass rapid transit systems like metro rail and BRTS can support transit-oriented development (TOD), promoting denser growth around transit hubs without overloading roads. TOD can also help incubate new cities, supported by a500 crore budget provision. Additionally, the budget focuses on orderly development of peri-urban areas through town planning schemes and encourages the adoption of electric bus systems, with `1,300 crore allocated. E-buses, despite their higher upfront cost, offer an economical and eco-friendly transport solution, which should gain momentum with this financial backing.
Waste management
Solid Waste Management (SWM) and Waste Water Management (WWM) are, perhaps, the biggest challenges that most cities are facing. The budget has announced a special thrust for introducing bankable projects in collaboration with state government and financial institutions. States and municipalities can also make use of the VGF for this purpose. Cities like Indore (Madhya Pradesh), Surat (Gujarat), Visakhapatnam (Andhra Pradesh), and Mysore (Karnataka) have shown the way for making SWM and WWM a viable proposition.
Street markets
The Street Vendors Act of 2014 regulates street vendors in public areas, protecting their rights and ensuring pleasant street vending experiences. The Budget proposes developing 100 weekly ‘haats’ or street food hubs in select cities, with states encouraged to expand these plans based on local needs.
Way ahead
While the Budget has made a slew of provisions—financial as well as procedural—for pushing the planned urbanisation, the cities, represented by the municipalities and guided by the respective state governments, will have to show vision and determination to incorporate all the resources coming not only from the Union Budget, but also augmented by their own resources. Above all, the participation of the citizens would remain the bedrock for the success of the city’s development strategy. Visionary planning, coupled with a sharply focused people-centric governance, would facilitate speedy realisation of the goal of making cities the hubs of sustainable development of the people and their habitats.
The Budget has emphasised the planned development of the cities. Municipalities would get the normal ‘Finance Commission Grant’ of `25,653 core.