How has the Budget allocated funds for urban development?

Budget Allocation Overview:

• Total Allocation: ₹96,777crore for urban development, up from ₹82,576.57 crore last year.
  • However, when adjusted for inflation, the allocation shows a real decline.
  • Revised Estimate (RE) for FY 2024-25 suggests only ₹63,669.93 crore will be spent, reflecting a 22.9% underutilisation.
  • A significant cut in the Pradhan Mantri Awas Yojana (Urban) (PMAY(U)) allocation: from ₹30,170.61 crore to ₹13,670 crore, signaling implementation gaps.

Relevance : GS 3(Infrastructure)

Focus on Capital-Intensive Projects

• The budget emphasizes capital-intensive infrastructure projects rather than employment generation and sustainable urban development.
  • Metro Rail Expansion:
    • Budget for metro and Mass Rapid Transit Systems increased by 46% for 2025-26, from ₹21,335.98 crore to ₹31,239.28 crore.
    • Metro rail prioritisation over other urban mobility solutions raises concerns about inclusivity.

Transfers to Urban Local Bodies (ULBs)

• Direct transfers to ULBs show a decline:
  • Previous year: ₹26,653 crore.
  • This year: ₹26,158 crore.
  • The reduction in transfers follows a revenue loss from the abolition of octroi and the introduction of GST, forcing ULBs to raise funds through additional local taxes.

Centrally Sponsored Schemes (CSS) and Central Sector Schemes

• Centrally Sponsored Schemes (CSS):
  • Programs like PMAY, Swachh Bharat Mission (SBM), AMRUT, and Smart Cities Mission face funding cuts.
  • PMAY (CSS component) saw a 30% reduction in funding.
  • Swachh Bharat Mission (Urban) funding remained steady, but spending fell short by 56%, with only ₹2,159 crore spent out of the allocated ₹5,000 crore.
• Central Sector Schemes:
  • These are controlled by the Union Government and prioritize infrastructure, especially metro projects.

Urban Challenge Fund and Redevelopment Programs

• New Urban Challenge Fund: ₹10,000 crore introduced for urban redevelopment.
  • Ambitious target of ₹1 lakh crore set for redevelopment programs, with 50% of funding expected from private investments.
  • However, private sector participation in Smart Cities Mission has been negligible, casting doubt on the feasibility of this goal.

Concerns and Implications

• The focus on capital-intensive projects like metro expansion neglects more holistic urban development strategies such as employment generation, sustainable economic policies, and green jobs.
• Social and economic equity may be undermined, exacerbating disparities in urban development.
• The allocation for urban local bodies and key social programs remains insufficient, raising concerns about long-term urban growth and inclusivity.