A Kochi metro train leaves her station in Vyttilla Mobility Hub. , Photo Credit: Thulasi Kakkat
the story So Far: In 2015, the NDA government deployed urban development as a major pillar of its development strategy as the city contributes about 67% to GDP. However, in the government’s point of view, cities seem clearly absent for “Vikasi India”.
What was allotted for urban India?
The total outlay for urban development is 96,777 crore, which is more ₹ 82,576.57 crore than last year’s budget proposal. However, if a slight inflation rate is taken into consideration, the outlay actually declines. The revised estimate (RE) suggests that only ₹ 63,669.93 crore will be spent by March, which reflects a young age of 22.9%. One of the biggest drawback is the Prime Minister Awas Yojana (Urban) [PMAY(U)]In which there was an allocation of ₹ 30,170.61 crore for FY 2024-25, but only ₹ 13,670 crore saw a rigorous cut. This policy highlights a difference between ambitions and real implementation.
The increase in the total urban outlay is incorrect with the immediate need to bridge the infrastructure gaps in cities. Instead of focusing on employment and sustainable development, emphasis has been laid on capital-intensive projects.
How is the shortage?
Transfers to urban India are mainly through three channels – direct transfer for urban local bodies (ULB); Centrally sponsored schemes (CSS); And the central region’s plans. There is a decrease in direct transfer in ULBs. With the elimination of octroi – a major revenue source for cities – hope that lost revenue would be compensated through central deviation. With the introduction of GST, the source of ULBS fell more than 21%. But instead of increasing support, the stock for ULBS has actually come down from ₹ 26,653 crore to ₹ 26,158 crore this year. This deficiency will force cities to increase their own revenue, making citizens cumbersome with additional taxes.
The CSS includes cost-sharing between the union, states and local governments. Some major urban programs under this category include PMAY, Swachh Bharat Mission (SBM), Atal Mission for Rejuvenation and Urban Change (AMRUT), and Smart Cities Missions. However, budget allocation for these schemes becomes flat. PMAY (CSS component) saw a 30% decrease in allocation as compared to last year; The allocation for the Amarut and Smart Cities Missions jointly increased to about 10,400 crores in the previous budget, this year there was no money left for the mission of smart cities; And while the SBM (urban) retains the same outlay as last year at ₹ 5,000 crore, Re indicates that only ₹ 2,159 crore will be spent – 56% less than the allocated amount.
The central region’s plans are directly controlled by the central government and are often strong political overtones. A major part of such urban development is directed towards capital-intensive infrastructure projects, especially metro rail expansion. Unlike other urban initiatives, metro projects have seen an increase in allocation. In FY 2024-25, the budget for mass rapid transit systems and metro projects was ₹ 21,335.98 crore. RE has now increased to ₹ 24,691.47 crore. Additionally, in the 2025–26 budget, 31,239.28 crore is proposed, indicating an increase of 46% compared to the previous year. Priority of metro rail on broad urban mobility increases concerns about long -term inclusion of urban development.
What next?
A new urban challenge fund of ₹ 10,000 crore has been introduced in the budget. The government has set an ambitious target of ₹ 1 lakh crore to implement urban redevelopment programs. However, half of this funding is expected to come from private investments-a very-easeless approach has given the sector’s negligible contribution to the mission of smart cities.
Budget approach for urban development is clear-emphasis on capital-intensive projects and less focus on employment generation, green jobs and permanent economic policies. While infrastructure investment is necessary, ignoring social and economic equity can widen existing inequalities.
The author is the former Deputy Mayor and Member of Shimla, Kerala Urban Commission.
Published – February 10, 2025 08:45 am IST
