Expert Speak Urban Futures
Published on Feb 17, 2021
Direct budgetary support for urban sector schemes do not show any appreciable increase.
Budget 2021 — What is there for the cities?

COVID-19 had badly impacted urban India, which accommodates one-third of the country’s population and two-thirds of economic production. Metro cities which are nerve centres of the economy and gateways to global trade turned into epicentres of the pandemic. Tens of millions lost their jobs during the peak lockdown phase and triggered an unprecedented wave of de-urbanisation of migrant workers. The pandemic had also widened urban social divides. Entrenched socio-economic inequalities in our city systems regarding access to water, sanitation, healthcare, and digital connectivity, which we had been ignoring for long, has come out in the open.

It is imperative to get our cities, especially the million-plus cities, up and running again, to create jobs and meet the livelihood aspirations of India’s burgeoning youth population. Would the first post-pandemic budget help us to restart our city economies in full throttle and help us to build better, healthier, and more humane cities? Analysis of the budget presents a mixed picture. The Finance Minister, Nirmala Sitharaman, addressed several issue related to urban infrastructure while presenting the Union Budget 2021–22, total funds earmarked for the urban development has also gone up from Rs 50,040 crore in FY 2020–21 to Rs 54,581 crore in FY 2021–22, an overall increase of 9.07 percent. However, funds allocated for transfer to the states for centrally sponsored schemes had remained static at Rs 24,845 crore between FY 2020–21 and FY 2021–22. Moreover, devolution of grants to the Urban Local Bodies (ULBs) had also gone down from Rs 25,098 crore in FY 2019–20 to Rs 22,114 crore in FY 2021–22 — a drop of 11.89 percent.

With cleanliness high on the priority table of the government, the Swachh Bharat Mission received a new impetus in the budget.

Urban-centric issues highlighted by the Finance Minister in her budget speech could be broadly grouped around the themes of cleanliness, mobility, and shelter. The Economic Survey 2021–22 as well as the 15th Finance Commission report had strongly emphasised on criticality of sanitation and water services in these COVID times. With cleanliness high on the priority table of the government, the Swachh Bharat Mission received a new impetus in the budget. Announcing launching of Swachh Bharat Mission 2.0, Finance Minister mentioned that the scheme would aim towards complete faecal sludge management and wastewater treatment, source segregation of garbage, reduction in single-use plastic, managing waste from construction and demolition activities, and bioremediation of garbage dump sites. The second phase of the Swachh Bharat Mission would be implemented over five years through an outlay of Rs 1.41 lakh crore. Additionally, Rs 2,217 crore was allocated to address air pollution in 42 big cities having more than one million population. Moreover, to provide universal piped water supply in all 4,378ULBs over the next five years, the Finance Minister announced the launching of the Jal Jeevan Mission (Urban) with an allocation of Rs 2.87 lakh crore.

In the areas of urban mobility, the Finance Minister talked about both bus and rail-based systems. She mentioned that presently the country has a metro rail network of 702 kilometres and another 1,016 kilometres of the network is under construction in 27 Indian cities. It was declared that the expansion of rail-based mass transit system shall be carried out for Tier-II cities and fringe areas of Tier-I cities, primarily through the application of MetroLite and MetroNeo technologies. According to the guidelines issued by the Ministry of Housing and Urban Affairs, the Metrolite trains would have 3-car units capable of carrying 300 passengers at a maximum speed of 60 kilometres per hour. The trains would be powered by 750V DC overhead traction and run on standard gauge of 1,435 millimetres width laid at grade or elevated sections. Capital costs of MetroLite trains are about 40 percent of conventional metro lines and are also cheaper to maintain. The MetroNeo trains, which are even cheaper, can run on road slabs and have rubber tires. Adaptation of light rail systems will provide a cleaner and greener mass transit system at a cheaper cost. The Budget also announced that the Centre would provide counterpart funding for the extension of the metro rail networks of Kochi (Rs 1,957 crore), Chennai (Rs 63,246 crore), Bengaluru (Rs 14,788 crore), Nagpur (59,575 crore), and Nashik (Rs 2,092 crore).

Metrolite trains would have 3-car units capable of carrying 300 passengers at a maximum speed of 60 kilometres per hour.

The Finance Minister also announced a scheme to augment city bus services, through an ‘innovative’ PPP (Public Private Partnership) mode. It was mentioned 20,000 new buses would be added; Rs 18,000 crore was allocated for the purpose. But what form and shape the ‘innovative PPP mode’ would take and reconfigure public sector bus transport undertakings, remains to be seen.

On the shelter front, the government had announced an affordable rental housing programme as a sub-scheme under the PMAY (Pradhan Mantri Awas Yojana), through PPP mode as part of the economic stimulus package in May 2020. The Budget 2021–22 sought to facilitate affordable housing through indirect measures, by extending tax breaks for the developers of notified affordable housing projects. Similarly, income tax rebates of Rs 1.5 lakh for individual home buyers was also extended until March 2022.

With the pandemic accelerating process of digitalisation, it was hoped that the Finance Minister would announce additional funds for the Smart Cities Mission — a flagship initiative of the NDA government. Moreover, Integrated Command and Control Centres developed under the mission played significant roles in the battle against the Coronavirus pandemic through spatial tracking of virus outbreak, availability of hospital beds, and targeted delivery of emergency medical assistance. But the prestigious mission failed to receive any additional support in Budget 2021–22. Similarly, the allocation for the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) had remained static between FY 2020–21 and 2021–22.

What form and shape the ‘innovative PPP mode’ would take and reconfigure public sector bus transport undertakings, remains to be seen.

The Smart Cities Mission and AMRUT were both launched in 2015 by the NDA government and raised hopes about rapidly transforming Indian cities to international standards through the infusion of digital technology and streamlined management practices. However, five years down the road, both the projects are struggling with low fund utilisation. In the Revised Budget for FY 2020–21, allocation for the Smart Cities was sharply cut by Rs 3,050 from the original allocation of Rs 6,450 crore, while AMRUT faced a more modest reduction of Rs 850 crore from allocated Rs 7,300 crore. In FY 2021–22, both the missions were allocated the same amount as in the previous year — Rs 6,450 crore for the Smart Cities and Rs 7,300 crore for AMRUT.

As the informal sector workers in the cities faced the most severe disruptions to their livelihoods due to the COVID-19 induced lockdown, there were high expectations that the government might launch an urban employment guarantee programme, in line with the rural-centric MGNREGA to reduce vulnerabilities of the urban poor. But no such announcement was made in the Union Budget.

The budget also did not provide any additional financial support for the ongoing urban poverty alleviation programme — Deendayal Antyodaya Yojana National Urban Livelihood Mission (DAY-NULM). The self-help groups (SHG) registered under the DAY-NULM in various states contributed enormously to the battle against the pandemic by producing over 6.80 crore masks and 2,84,000 litres of hand sanitisers. Moreover, the mission had generated over 21 lakh livelihoods. But in Budget 2021–22, the DAY-NULM was allocated only Rs 795 crore — the same amount as in FY 2019–20. Additionally, Rs 200 crore was allocated for PM SVANIDHI (Prime Minister Street Vendor’s Atmanirbhar Nidhi) and Rs 100 crore under Nirman Kaushal Vikas Yojana (NKVY). Greater funding for these poverty ameliorating schemes could have helped in reducing livelihood vulnerabilities of the urban poor in these difficult times.

The budget did not provide any additional financial support for the ongoing urban poverty alleviation programme - Deendayal Antyodaya Yojana National Urban Livelihood Mission.

The DAY- NULM together with PM- SVANIDHI and NKVY, accounts for only Rs 1,095, which is just about 10 percent of their rural counterpart. The rural livelihood mission — Ajeevika — was allocated Rs 10,005 crore in FY 2019–20, which had gone up to Rs 14,473 crore in FY 2021–22 — a sharp 44.65 percent increase. Even though India is going through a process of steady urbanisation of poverty, acknowledgement of the phenomenon seems limited in the top policy circles.

To sum up, the budget had reposed faith in the supply side approach with a focus on augmenting urban infrastructure and had sought to favour the PPP model to deliver major projects. Except metro rail projects, direct budgetary support for urban sector schemes do not show any appreciable increase.

However, the flow of funds for urban development may improve substantially in near future, as the Finance Minister tabled the report of the 15th Finance Commission on the day of the budget presentation. The 15th Finance Commission has allocated Rs 1.21 lakh crore in grants to the ULBs over five years as compared to Rs 87,000 crore by the 14th Finance Commission. Recognising importance of the million-plus cities in Indian economy, the 15th Finance Commission has set aside Rs 38,196 crore as performance linked grants for 50 million plus cities. Basic grants are available for smaller ULBs. Moreover, the 15th Finance Commission also suggested additional grant of Rs 70,051 crore to rural and urban local governments for developing public health infrastructure and primary health clinics. If implemented properly, these recommendations can not only improve the financial health of Indian cities but may also reduce disparities with regards to health care facilities in Indian cities. However, to enable the ULBs to utilise additional fund flows optimally, it would be necessary to simultaneously focus on improving their techno-managerial capacities.

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Tathagata Chatterji

Tathagata Chatterji

Tathagata Chatterjiis Professor of Urban Management and Governance Xavier University Bhubaneswar India. His research interests are urban economic development and political economy of urbanisation. He ...

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