The increase in funds allocated for improving the quality of life in urban areas by 12 percent, as pledged in the Interim Budget, is positively received
The Interim Budget for 2024-25 was presented in the Parliament by Finance Minister Nirmala Sitharaman on 1 February 2024. This is a short-term financial plan and will be followed by the release of the final budget most likely in July this year after the country undergoes general elections in April-May 2024.
For the betterment of people’s lives in urban areas of the country, an amount of INR 775.24 billion is allocated to the Ministry of Housing and Urban Affairs (MoHUA). The money is to be spent on heads such as centre’s establishment expenditure, i.e. secretariat, attached offices and autonomous organisations, including training of municipal employees; central sector schemes/projects, such as mass rapid transit services, transport planning and capacity building in urban transport, street vendor’s fund; and transfers to states/union territories for centrally sponsored schemes, namely Pradhan Mantri Awas (Housing) Yojana (Urban) (PMAY-U), National Urban Livelihood Mission (NULM), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission, City Investment to Innovate, Integrate and Sustain (CITIIS), National Urban Digital Mission (NUDM), Swachh (Clean/Sanitation) Bharat Mission (Urban) (SBM-U), and PM-eBus Sewa (Service) Scheme.
For the betterment of people’s lives in urban areas of the country, an amount of INR 775.24 billion is allocated to the Ministry of Housing and Urban Affairs (MoHUA).
A review of budget allocations (considering revised figures for 2023-24 and allocation for 2024-25) of the Ministry of Housing and Urban Affairs reveals the following: There is an overall increase in fund allocation from INR 693 billion to INR 775 billion, which amounts to a nearly 12-percent increase during 2023-24 and 2024-25. The maximum allocations of about 33 percent each are for housing (PMAY-U) and metro rail projects. This is followed by AMRUT and sanitation (SBM-U), with allocations of about 10 percent and 6.5 percent respectively. In terms of growth rate or percent change during 2023-24 and 2024-25, the percentages are highest for sanitation (SBM-U) and AMRUT. For example, the amount allocated for SBM (U) has nearly doubled from about INR 26 billion to INR 50 billion.
On the other hand, a negative change, or decrease in amount from INR 80 billion to INR 24 billion, is noted for the Smart Cities Mission—a national initiative to be concluded in 2024. Another observation similar to last year is the low allocation for livelihood mission whereas the electric bus scheme, approved by the cabinet in August 2023, is allocated INR 13 billion, which is a substantial hike from last year.
In Sitharaman’s speech, references were made to India’s push for the development of metro rail and NaMo Bharat (i.e. regional rapid transit system-RRTS) services along with transit-oriented development (TOD) to cater to commuting needs of fast-growing urban and regional population in various urban regions of India. At present, several cities are offering metro rail services as well as numerous facilities at metro rail stations, and the country’s first RRTS project is nearing completion, which includes the development of an 82.15-km long corridor for connecting Delhi with Meerut—a fast growing city in western Uttar Pradesh.
The speech also included financial, educational and skilling benefits planned for the upliftment of vulnerable population groups including women, street vendors, tribes, artisans, craftspeople, differently-abled persons, and transgender persons.
The availability of more funds for the empowerment of vulnerable population, implementation of development projects, and capacity building of functionaries will help in reducing inequalities and thus improve people’s living conditions.
The other thrust areas mentioned were the holistic development of Gujarat International Finance Tec-city (GIFT), the Electric Vehicle (EV) sector (i.e. expanding and strengthening the EV ecosystem by supporting manufacturing and provision of charging infrastructure, electric bus adoption in public transport), green energy (including rooftop solarisation, tapping wind energy potential, biomass aggregation machinery), micro, small and medium enterprises (MSMEs), and tourist centres.
In the context of India’s urbanisation, the anticipated increase in budgetary allocation by 12 percent would be a welcome step. The availability of more funds for the empowerment of vulnerable population, implementation of development projects, and capacity building of functionaries will help in reducing inequalities and thus improve people’s living conditions.
A sizeable proportion of the middle-income population lives in rented houses, slums, and unauthorised colonies. This population would be assisted in buying or building their own house under a new scheme. The highest allocation for PMAY (U) would help in overcoming the housing shortage. It also opens opportunities for real estate developers.
The gaps in intra-urban and regional connectivity are planned to be addressed through higher investments in metro/rapid rail projects and electric bus services. Even now, adequate facilities for commuting are unavailable in a large number of cities and neighbouring regions, which is an important reason for the phenomenal growth of personal transport vehicles, traffic congestion, and vehicle emissions.
AMRUT is emerging as India’s main urban transformation initiative. It focuses on the development of basic infrastructure (i.e. water supply, sewerage, drainage, green spaces, non-motorised transport) in select urban settlements. Allocation of more funds and including more cities under this initiative are important requirements for ensuring balanced development (and distribution of population) or addressing the issue of urban agglomeration.
The doubling of funds for SBM (U) might help in the provision of adequate infrastructure and facilities needed for the proper management of solid waste.
Sanitation is another sector requiring substantial improvement in urban India. The doubling of funds for SBM (U) might help in the provision of adequate infrastructure and facilities needed for the proper management of solid waste. The poor environmental conditions in and around landfill sites, for example, require early interventions.
Given the emerging challenges of urbanisation (such as the growing population and climate change), the emphasis on the adoption of digital technologies, green energy, and electric vehicles is a natural and universal response. With the availability of more funds, the country might show progress in further penetration of these measures. While the use of digital technologies in governance is increasing (noted from the role played by integrated command and control centres in 100 cities), transitioning to green energy and EVs might take a long time.
This article holds an optimistic view of the allocations for urban development provided in the Interim Budget for 2024-25. However, there are a few other aspects that require greater financial support such as employment, the resilience of the most vulnerable populations, disaster management, as well as timely release and utilisation of funds.
Rumi Aijaz is a Senior Fellow at the Observer Research Foundation
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Rumi Aijaz is Senior Fellow at ORF where he is responsible for the conduct of the Urban Policy Research Initiative. He conceived and designed the ...
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