Budget 2023: The Budget for FY24 will likely increase incentives and funding support to state governments to undertake urban reforms.
For FY23, the Centre had budgeted Rs 11,000 crore as funding support to states, including Rs 6,000 crore (which is part of Rs 1 trillion, 50-year interest-free capital expenditure loans to states in FY23) for urban reforms such as framing building bylaws, town planning schemes, transit-oriented development, and transferable development rights. Capex loans of Rs 5,000 crore are earmarked for asset monetisation by states in FY23.
The Centre will likely further expand the incentives for states for undertaking asset monetisation and urban reforms planning as part of the long-term interest-free capex loans in FY24 too, sources said. The Centre might continue the special capex loan scheme for states in FY24 with an outlay of Rs 1 trillion or thereabouts.
“Most urban bodies are plagued with problems such as inefficient planning, poor project structuring, land and clearance delays, restrictive regulatory framework, and inadequate financing. The Centre will extend necessary support, including financial and technical support, the states need to take the lead,” an official told FE.
According to United Nations projections, the urban population in India is projected to increase from 461 million in 2018 to 877 million in 2050.
Since 2014, the Narendra Modi
As per a recent World Bank report, to efficiently meet the demand of the growing population, India will need approximately $840 billion in investment in urban infrastructure over the next 15 years. Of this, $450 billion investment needs are in basic municipal services such as water supply, sewerage, municipal solid waste management, storm water drainage, urban roads and streetlighting). The balance $300 billion is needed for mass transit systems.
For FY23, the Centre has provided Rs 28,000 crore for PMAY-U, Rs 8,300 crore for the Smart Cities Mission, Rs 7,600 crore for AMRUT and Rs 2,300 crore for SBM-U.
Given that these funding requirements are significantly higher than current levels of investment, the Centre wants to intensify collaboration and partnership with states and local bodies to rope in the private sector through public-private partnership, sources said.
The Centre launched PMAY-U in 2015 to provide housing for all. It assists implementing agencies through states/ UTs for providing houses to eligible economically weaker section, low-income group and middle-income group beneficiaries. Out of Rs 2 trillion in central assistance committed, it has already released Rs 1.28 trillion since 2015 for 12.27 million housing units.
With a rising urban population, there is a proportionate rise in the demand for urban services such as urban transport, sanitation, drinking water, housing, urban amenities etc. While urban areas constitute only about 3% of the total land area, they contribute to over 70% of the GDP.