With policy and budgetary support from the central government, many development projects and governance initiatives have been successful in dealing with present-day urbanisation challenges
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India is undergoing changes in land use and occupation. This is noted from a gradual shift from agrarian to urban activities. An increasing number of people prefer to engage in occupations that offer them greater social and economic benefits. These changes are resulting in the growing number and population of urban centres. Due to the growth and diverse requirements of people, the institutions engaged in the governance of big urban centres are under tremendous stress. Efforts have been made to manage urban growth and emerging problems in a better manner.
Due to the growth and diverse requirements of people, the institutions engaged in the governance of big urban centres are under tremendous stress.
The budget speech delivered by the Minister of Finance, Nirmala Sitharaman, on 23 July this year, the allocations for various activities to be undertaken by the Ministry of Housing and Urban Affairs (MoHUA) during 2024-25, and the reply of Manohar Lal Khattar, Minister of Housing and Urban Affairs, on the working of the urban ministry help in understanding the priority areas of the government for 2024-25.
For the year 2024-25, MoHUA has received INR 825.76. billion. Of this amount, 36.5 percent is allocated for the provision of houses to the needy population under Pradhan Mantri Awas Yojana (Urban) or PMAY (U), and 30 percent is for metro rail-related projects. Other heads of expenditure are Atal Mission for Rejuvenation and Urban Transformation (AMRUT) (10 percent), Swachh Bharat Mission (Urban) or SBM (U) (6 percent), Smart Cities Mission (3 percent), Pradhan Mantri-eBus Sewa Scheme (1.6 percent), National Urban Digital Mission (1.4 percent), Deendayal Antyodaya Yojana or National Urban Livelihood Mission (0.36 percent), and City Investment to Innovate, Integrate and Sustain 2.0 (0.3 percent). The remaining expenses will be spent on the functioning of various government offices. The above-mentioned distribution of funds among various urban initiatives shows that the highest allocations are for housing and metro rail projects.
Housing: A large population lives in slums/unauthorised colonies, or faces difficulty in buying or renting houses. Thus, in the current budget speech, a commitment is made to address the housing needs of 10 million urban poor and middle-class families. This target group is expected to benefit from an interest subsidy to facilitate housing loans at affordable rates. Further, suitable policies and regulations will be formulated for the development of rental housing markets. In the last 10 years, about 29 lakh (or 2.9 million) slum dwellers in India have benefited from PMAY-U. This implies that their housing condition has improved. In Delhi, for example, 29,976 housing beneficiary applications were submitted under PMAY-U for which an interest subsidy of INR 6.92 billion was provided. In addition, the Delhi government runs its own Chief Minister Awas Yojana to meet the housing needs of slum dwellers. However, the central government has expressed concern over the reluctance of some state governments to apply for central financial assistance for housing development.
Metro rail: The demand for metro rail in cities is high. By October 2023, this facility was provided in 20 Indian cities. Presently, more cities are being covered, and the rail network is being expanded in existing cities. As per project cost sharing arrangement, the central and state government contribute an equal share (i.e. 20 percent each), and the remaining funds are obtained from non-government sources (such as loan from Japan International Cooperation Agency or Asian Development Bank). Although, development of metro rail services requires huge investments, people’s commuting woes have greatly reduced. It has also helped in addressing problems of air pollution and traffic congestion. In the case of Chennai’s second phase of metro rail development, it is learnt that the central government has given a guarantee, and the Tamil Nadu government is eligible to obtain loans from foreign agencies.
Regarding drainage, the MoHUA acknowledges that cities are not prepared to manage the high volumes of rainwater received, and is encouraging state governments to formulate stormwater management plans for which implementation support would be provided.
Water supply, sanitation, and drainage: Water and sanitation projects are being implemented under various centrally sponsored schemes, including AMRUT and Swachh Bharat Mission (Urban). During 2024-25, the effort will be to promote bankable projects on water supply, sewage treatment, and solid waste management in 100 large cities. Meanwhile, the MoHUA has informed that water connections are available to 70 percent of the country’s urban population, and under the second phase of AMRUT, 1.8 crore new connections will be provided for which 70,000 km of water pipeline is approved. In addition, water resources of up to 6,123 million litres per day (mld) are being arranged under AMRUT, of which 4,489 mld has already been arranged. Regarding sewerage development, projects costing INR 344 billion have been initiated, and 14.7 million sewerage connections provided. For wastewater/sewage treatment, 4,174 mld capacity of sewage treatment plants (of the total proposed 6,232 mld) has already been developed under AMRUT. Regarding drainage, the MoHUA acknowledges that cities are not prepared to manage the high volumes of rainwater received, and is encouraging state governments to formulate stormwater management plans for which implementation support would be provided.
Smart cities mission: Budget allocation for the smart cities mission has reduced substantially from INR 80 billion in 2023-24 to INR 24 billion in 2024-25. The mission activities are nearing completion, and until August 2024, 7,239 projects (or 90 percent of the total proposed projects) of various kinds (such as parks, classrooms and libraries, digital health clinics, water, drainage, sanitation, energy, mobility, safety) worth INR 1452.93 billion have been implemented in the chosen 100 cities. With the amount of INR 24 billion, the remaining 10 percent of the work is being completed.
Livelihood: The MoHUA is focusing on addressing the livelihood concerns of street vendors. It has noted that street vendors often face difficulty in finding space over land to operate their economic activities; they are also harassed by the police due to illegal occupation of land and non-possession of vending certificates. Thus, over the next five years, 100 weekly haats or street food hubs will be developed in select cities for their convenience. Similar projects have been undertaken in the past in many states—three markets have been developed in the state of Haryana for street vendors. In cases where delays are observed in issuing vending certificates, letters of recommendation have been provided to street vendors, which allows them to apply for loans.
Similar projects have been undertaken in the past in many states—three markets have been developed in the state of Haryana for street vendors.
In addition to the above, other proposals of the MoHUA for 2024-25 are: The development of cities as growth hubs including orderly development of peri-urban areas; creative redevelopment of existing cities through enabling policies, market-based mechanisms and regulation; formulation of transit oriented development plans for 14 large cities; encouraging states to consider moderate stamp duty rates for all and lower duties for properties purchased by women; offering assistance in energy transition; encouraging households to install rooftop solar plants; financial assistance to flood-prone states for building flood control structures; comprehensive development of tourist destinations; financial assistance for research and development; offering incentives for digitisation of land records; and ensuring availability of capital for climate adaptation and mitigation.
The Budget and speech presented in the Parliament by the GoI every year provide information on various items of expenditure, financial transfers to states and union territories for implementation of centrally-sponsored schemes, and focus areas of reform. It shows that there are proposals for addressing many present-day challenges of urbanisation, such as shelter, public transport, water, sanitation, and livelihood. Suggestions are also provided for tackling emerging problems of air pollution, burning of fossil fuels, and climate change hazards.
The Budget and speech presented in the Parliament by the GoI every year provide information on various items of expenditure, financial transfers to states and union territories for implementation of centrally-sponsored schemes, and focus areas of reform.
With this policy and budgetary support from the central government, many development projects and governance initiatives have been successfully implemented, and citizens are benefiting in various ways. It is also true that many proposed ideas and projects have not seen the light of day due to various governance and finance-related problems. Some states and local governments, for example, are unhappy with the low quantum of funds allocated for pressing matters, such as creation of employment opportunities (based on available potential) as well as basic facilities in small and medium towns situated in various physiographic regions (hills, foothills, valleys, plains, plateaus, coasts), preservation of original city characteristics, including culture and tradition, safety of (vulnerable) citizens, sea level rise, and building city resilience to extreme weather events (heavy rainfall, heat/cold waves, and cyclonic storms), and pandemics. Concern is also expressed about delays in receipt of funds from the centre, underutilisation of funds, difficulties in attracting private investment, inability of states/citizens to contribute their proportion of funds, and inadequate support received for capacity building of functionaries.
The role of the national government in urban transformation is important. For a better impact, it must urgently address various state and local government concerns.
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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