Urban development has become a focal point in India’s growth narrative. The government’s vision for a “Viksit Bharat” aims for a developed India. However, recent budget allocations reveal a troubling trend. Despite an increase in the total outlay for urban development, actual spending reflects shortfall. This gap marks a disconnect between policy ambitions and implementation on the ground.
Budget Allocation Overview
- In the 2025 budget, the total allocation for urban development reached ₹96,777 crore.
- This is an increase from the previous year’s budget of ₹82,576.57 crore.
- However, adjusting for inflation indicates a real decrease in funding.
- The Revised Estimate (RE) shows that only ₹63,669.93 crore is expected to be spent by March 2025, marking a 22.9% underutilisation rate.
Pradhan Mantri Awas Yojana (Urban)
The Pradhan Mantri Awas Yojana (Urban) faced a drastic reduction in funding. Initially allocated ₹30,170.61 crore for FY 2024-25, the RE slashed this to just ₹13,670 crore. This reduction signifies a failure to meet housing needs and aligns poorly with the government’s urban development goals.
Urban Local Bodies (ULBs) Funding
Funding for Urban Local Bodies (ULBs) has also decreased. Direct transfers fell from ₹26,653 crore last year to ₹26,158 crore this year. The abolition of octroi and the impact of GST have compounded revenue challenges for ULBs. As a result, cities may need to impose additional taxes on citizens to meet their financial requirements.
Centrally Sponsored Schemes (CSS)
Centrally Sponsored Schemes, which share costs between different government levels, have not fared well. Key urban initiatives, including PMAY, Swachh Bharat Mission, and Smart Cities Mission, received reduced allocations. The PMAY saw a 30% cut, while the combined budget for AMRUT and Smart Cities Mission diminished , raising concerns about the sustainability of these programmes.
Central Sector Schemes and Metro Projects
Central Sector Schemes are directly managed by the Union government. These schemes often focus on large-scale infrastructure projects, particularly metro rail systems. In FY 2024-25, the budget for metro projects increased from ₹21,335.98 crore to ₹24,691.47 crore. The 2025-26 Budget proposes a further rise to ₹31,239.28 crore, indicating a prioritisation of metro projects over broader urban mobility solutions.
Future Prospects and Urban Challenge Fund
The introduction of a new Urban Challenge Fund of ₹10,000 crore aims to stimulate urban redevelopment. The government has set a target of ₹1 lakh crore for urban projects, with half expected from private investments. This reliance on private funding raises questions about the feasibility and effectiveness of urban development initiatives.
Analysis of Urban Development Trends
The current budget approach prioritises capital-intensive projects. This focus may overlook critical areas such as employment generation and sustainable economic policies. While infrastructure development is essential, neglecting social equity could exacerbate existing disparities in urban areas.
Questions for UPSC:
- Critically analyse the impact of the Pradhan Mantri Awas Yojana on urban housing in India.
- Explain the role of Urban Local Bodies in urban governance. How do funding reductions affect their functioning?
- What are Centrally Sponsored Schemes? Discuss their significance in urban development.
- With suitable examples, comment on the challenges of balancing infrastructure development and social equity in urban planning.
Answer Hints:
1. Critically analyse the impact of the Pradhan Mantri Awas Yojana on urban housing in India.
- PMAY aimed to provide affordable housing to the urban poor, targeting 20 million homes by 2022.
- Funding for PMAY has been drastically cut from ₹30,170.61 crore to ₹13,670 crore, limiting its effectiveness.
- The reduction in allocation signifies a failure to address the growing housing crisis in urban areas.
- PMAY’s implementation challenges highlight gaps between policy intentions and ground realities.
- The scheme’s impact on improving housing quality and accessibility remains uncertain due to funding shortfalls.
2. Explain the role of Urban Local Bodies in urban governance. How do funding reductions affect their functioning?
- Urban Local Bodies (ULBs) are responsible for local governance, urban planning, and service delivery in cities.
- ULBs manage essential services like waste management, water supply, and urban infrastructure development.
- Funding reductions from ₹26,653 crore to ₹26,158 crore hinder ULBs’ ability to provide services effectively.
- Decreased funding forces ULBs to raise local taxes, potentially burdening citizens financially.
- Reduced financial resources may lead to a decline in the quality of urban services and infrastructure projects.
3. What are Centrally Sponsored Schemes? Discuss their significance in urban development.
- Centrally Sponsored Schemes (CSS) are funding programs where the central government shares costs with state and local governments.
- CSS play important role in financing urban initiatives like PMAY, Swachh Bharat Mission, and Smart Cities Mission.
- They promote cooperative federalism by involving multiple levels of government in urban development efforts.
- Recent budget cuts to CSS allocations threaten the sustainability and effectiveness of key urban programs.
- CSS are essential for addressing urban challenges by providing targeted funding for infrastructure and service improvements.
4. With suitable examples, comment on the challenges of balancing infrastructure development and social equity in urban planning.
- Infrastructure projects like metro rail systems often receive priority over affordable housing initiatives, leading to inequities.
- For example, increased funding for metro projects (from ₹21,335.98 crore to ₹24,691.47 crore) contrasts with cuts in housing schemes.
- Neglecting social equity can exacerbate disparities, leaving low-income populations without adequate housing and services.
- Urban planning must integrate social equity considerations to ensure all communities benefit from development efforts.
- Successful urban planning examples balance infrastructure and social equity, like inclusive housing policies in cities like Vienna.
