Skip to main content

Will Budget 2024 help empower city govts, make them India's growth engines?

By Soumyadip Chattopadhyay, Arjun Kumar*

Cities in India are envisioned as engines of growth. Any meaningful long-term vision for India would be incomplete without planning for the cities and quite rightly, urbanization is considered as one of the country’s top developmental challenges. Realization of full potential of cities depends crucially on their ability to provide ‘enabling’ environment especially in terms of sustained provision of a wide range of urban infrastructure and services.
Unfortunately, inadequate provisioning and improper maintenance of urban infrastructure and basic services are very common to almost all the cities in India which, in turn, greatly reduce their economic potential. The interim budget 2024-25 is driven by the vision of Viksit Bharat (Developed India) by 2047 and government policies are particularly focusing on improving infrastructure at a grand scale.
For our cities, the Central flagship programs including Smart Cities Mission (SCM), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Swachh Bharat Mission – Urban (SBM-U), Pradhan Mantri Awas Yojana – Urban (PMAY-U), and so on, coupled with many infrastructural developments have aimed at the promotion of sustainable infrastructure development in Indian cities.

Urban India’s budget at a glance

The Ministry of Housing and Urban Affairs (MoHUA) budget estimate (BE) for urban development has increased by 12% from FY 2023-24 revised estimate (RE) of budget of Rs 69,300 crore and now stands at Rs 77,500 crore. In last year’s budget, the ministry was allotted BE of Rs 76,400 crore.
One of the key takeaways of the Interim Budget 2024-25 is the thrust on launching “a scheme to help deserving sections of the middle class living in rented houses, or slums, or chawls and unauthorized colonies to buy or build their own houses”.
The PMAY – Urban, flagship central scheme for urban housing, has been allocated Rs 26,100 crore in the Interim Budget, equivalent to an increase of 18% over the budgetary figure of Rs 22,100  crore (revised estimates) of the last financial year. Increasing budgetary allocation seems to be based on better performance of the PMAY-U scheme as compared to the previous centrally sponsored housing schemes.
As on January 29 2024 under PMAY-U, around 118.63 lakh houses have been sanctioned, of which 114.01 lakh houses have been grounded for construction and 80.02 lakh houses are completed. Since inception in 2015, a total of 1.19 crores houses have been sanctioned. The PMAY comprises of four verticals: Insitu re-development of slums (ISSR); Credit-linked subsidy for housing (CLSS); Affordable housing in partnership (AHP), and; Enhancement and construction of beneficiary houses (BLC).
The Swachh Bharat Mission Urban received a substantial increase in allocations of Rs 5,000 crore, almost double that of the revised estimate for FY 2023-24 of 2,500 crore. This reflects a positive commitment to a cleaner India, with increased allocation supporting scientific management of dry and wet waste, mechanised desludging of septic tanks and sewers, and sanitation.
The Smart Cities Mission (SCM) and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) have received reduced budget allocations in FY 2024-25 of Rs 10,400 crore (BE) in FY 2024-25, compared to Rs 16,000 crore (BE) and Rs 13,200 crore (RE) in FY 2023-24. A dip in SCM's allocation from Rs 7,600 crore in 2023-24 to Rs 2,300 crore in 2024-25 is strategic in nature with SCM’s forthcoming expiration in June 2024. The budget estimate for the AMRUT scheme remained the same as the previous year in FY 2024-25 at Rs 8,000 crore.
The Metros and MRTS scheme saw a slight increase in BE for FY 2024-25 at Rs 24,900 crore compared to FY 2023-22 at Rs 23,100 crore. This has the potential for improving interconnectivity across larger and smaller towns in turn facilitating speedy and cost-effective access to jobs, contributing to economic efficiency enhancement of the cities.
The National Capital Region Transport Corporation received BE of Rs 3,500 crore for FY 2024-25 which was the same as the BE & RE for FY 2023-24. The allocation of Rs 1,300 crore to procure electric buses under the PM-eBus Sewa scheme is a significant step towards promoting sustainable urban mobility.
Allocation of funds to the tune of Rs 1,400 crore under the National Urban Digital Mission can also potentially improve the delivery of basic urban services and strengthen the capacity of the urban ecosystem. However, meagre budgetary allocation under the Deendayal Antodoya Yojna (DAY-NULM) is a serious policy concern.
Street Vendors Scheme (PM-SVANIDHI) with a budgetary allocation of Rs 326 crore is expected to counterbalance the dip in allocation for the DAY-NULM although it sees a slight decrease in its allocation from Rs 468 crore (BE 2023-24). PM-SVANIDHI is a micro-credit scheme that provides collateral-free working capital loans of up to Rs 50,000 to street vendors. It has provided credit assistance to 78 lakh street vendors, out of which 2.3 lakh have received credit for the third time.

Issues and concerns

The FM has made an attempt to put up a vision plan for urban development by duly emphasizing the importance of infrastructural development. The task of squeezing the nation’s growing urban population into India’s towns and cities, regardless the redevelopment of existing towns, seems near impossible.
The government faces an urban duality, it is on one hand expected to create a new metropolises and satellite cities and on the other hand allocations are to be made for the upkeep of old cities. These towns and cities would also have to be designed differently, taking into consideration sustainable energy consumption, vehicular mobility, effective policing, blended land use (both commercial and residential) and seamless connectivity between towns and cities.
However, Indian cities are hamstrung by a series of structural and institutional problems leading to improper implementation of urban plan and programs. In case of SCM, only 50% of the funds have been utilized. AMRUT records 51% fund utilization for water supply and 30% fund utilization for sewerage facilities.
Even after 30 years of the 74th Constitutional Amendment Act (CAA) for decentralised urban local bodies, not a single city government in India has control over all 18 functions as specified in the 12th Schedule. Parastatal agencies controlled by the State government and Special Purpose Vehicles in case of smart cities plan and operate bulk of the critical infrastructure including transport, water supply, sewerage and storm water drainage systems. Lack of synchronization of responsibilities among the multiple agencies leads to poor availability of urban infrastructure and basic services.
The cities also face revenue shortfalls as municipal revenue continues to account for a small share of GDP in India. More alarmingly, cities tend to spend more on per capita basis on general administration and salaries, leaving limited funds for development.
Essentially, the cities often get entangled in a vicious circle where paucity of resources causes poor service delivery, leading to poor revenue generation. Moreover, majority of the city governments are understaffed. As per the Annual Survey of India City System report, Indian megacities are working with significantly less municipal staff.
New York has 5,906 municipal staff per lakh population while the corresponding figures range from 317 in Bengaluru to 938 in Mumbai. Further, cities struggle with inadequate data as many cities have only limited information on the needs of their residents. For instance, in urban housing, developers lack insight into low-income households' needs, and these households lack involvement opportunities. Such gaps result in misguided policies.
With a burgeoning city population, India faces a formidable task to achieve its vision of cities as growth engines. There is an urgent need to empower the city governments through according equal importance to three Fs – functions, funds and functionaries.
Financially empowered city governments with clear functional domain and adequate institutional capacity can facilitate the transformative shift towards building inclusive and sustainable cities and thus shaping India into a 'Viksit Bharat' by 2047.
---
*Dr Soumyadip Chattopadhyay is associate professor, Visva-Bharati, Santiniketan, and visiting senior fellow, Impact and Policy Research Institute (IMPRI), New Delhi; Dr Arjun Kumar is Director, IMPRI. This article was prepared with the assistance of Rehmat Arora, researcher, IMPRI

Comments

TRENDING

What's Bill Gates up to? Have 'irregularities' found in funding HPV vaccine trials faded?

By Colin Gonsalves*  After having read the 72nd report of the Department Related Parliamentary Standing Committee on alleged irregularities in the conduct of studies using HPV vaccines by PATH in India, it was startling to see Bill Gates bobbing his head up and down and smiling ingratiatingly on prime time television while the Prime Minister lectured him in Hindi on his plans for the country. 

Muted profit margins, moderate increase in costs and sales: IIM-A survey of 1000 cos

By Our Representative  The Indian Institute of Management-Ahmedabad’s (IIM-A's) latest Business Inflation Expectations Survey (BIES) has said that the cost perceptions data obtained from India’s business executives suggests that there is “mild increase in cost pressures”.

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

Govt putting India's professionals, skilled, unskilled labour 'at mercy of' big business

By Thomas Franco, Dinesh Abrol*  As it is impossible to refute the report of the International Labour Organisation, Chief Economic Advisor Anantha Nageswaran recently said that the government cannot solve all social, economic problems like unemployment and social security. He blamed the youth for not acquiring enough skills to get employment. Then can’t the people ask, ‘Why do we have a government? Is it not the government’s responsibility to provide adequate employment to its citizens?’

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

IMA vs Ramdev: Why what's good or bad for goose should be good or bad for gander

By Dr Amitav Banerjee, MD* Baba Ramdev and his associate Balkrishna faced the wrath of the Supreme Court for their propaganda about their Ayurvedic products and belittling mainstream medicine. Baba Ramdev had to apologize in court. His apology was not accepted and he may face the contempt of court with harsher punishment. The Supreme Court acted on a public interest litigation (PIL) moved by the Indian Medical Association (IMA).

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

Youth as game changers in Lok Sabha polls? Young voter registration 'is so very low'

By Dr Mansee Bal Bhargava*  Young voters will be the game changers in 2024. Do they realise this? Does it matter to them? If it does, what they should/must vote for? India’s population of nearly 1.3 billion has about one-fifth 19.1% as youth. With 66% of its population (808 million) below the age of 35, India has the world's largest youth population. Among them, less than 40% of those who turned 18 or 19 have registered themselves for 2024 election. According to the Election Commission of India (ECI), just above 1.8 crore new voters (18-and 19-year-olds) are on the electoral rolls/registration out of the total projected 4.9 crore new voters in this age group.

Indians witnessing 'regression to Hindutva politics' under Modi ahead of elections

By Bhabani Shankar Nayak*  The forthcoming general election in India, scheduled from April 19, 2024, to June 1, 2024, to elect the 543 members of the 18th Lok Sabha and the new Government of India, carries immense significance for the preservation of India's identity as a liberal, secular, and constitutional democracy.

Anti-Rupala Rajputs 'have no support' of numerically strong Kshatriya communities

By Rajiv Shah  Personally, I have no love lost for Purshottam Rupala, though I have known him ever since I was posted as the Times of India representative in Gandhinagar in 1997, from where I was supposed to do political reporting. In news after he made the statement that 'maharajas' succumbed to foreign rulers, including the British, and even married off their daughters them, there have been large Rajput rallies against him for “insulting” the community.