Context

• Urbanisation in India has been a defining trend of the 21st century, with cities becoming the epicentres of economic and social development.
• Home to approximately 500 million people, which accounts for about 36% of India's population, urban areas are witnessing a steady population growth rate of 2% to 2.5% annually.
• Recognising the growing pace of urbanisation and the crucial role of cities as growth hubs, the new government’s maiden Budget introduces a variety of initiatives aimed at creating planned development and growth in urban areas.

Strategies Outlined in the Budget to Address the City Development

• Proposal to Expand the PMAY Scheme in Urban Areas
  • Since its implementation in 2015, the Pradhan Mantri Awas Yojana (Urban) has made significant strides.
  • Thus far, this scheme has provided around 8.5 million housing units for the Economically Weaker Sections (EWS) and Middle-Income Groups (MIG), with an investment of approximately ₹8 lakh crore.
  • The Budget proposes to boost this scheme by supporting the construction of an additional 10 million housing units in urban areas, involving an investment of ₹10 lakh crore, including ₹2.2 lakh crore in central assistance over the next five years.
  • For the current year, ₹30,171 crore has been allocated, part of which will subsidise interest to facilitate affordable loans.
• Housing Plans for Migrant Workers in Cities
  • For the migrant population working in industries, the Budget addresses the acute need for adequate housing through the introduction of new rental housing with dormitory-type accommodations for industrial workers.
  • This initiative is planned to be developed in a public-private partnership (PPP) mode, with upfront financial support under the Viability Gap Funding (VGF) scheme, covering 20% from the central government and potentially similar support from state governments.
• Development and Upgradation of Core Infrastructure Requirements
  • Urban infrastructure, encompassing water supply, sanitation, roads, and sewerage systems, is fundamental to city development.
  • The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) has allocated ₹8,000 crore for these purposes.
  • Although this amount may appear modest, the finance minister has announced the availability of the VGF window for projects undertaken as commercial ventures in PPP mode.
  • Given cities' familiarity with the PPP model, this provision could accelerate the development and upgrading of essential infrastructure.
  • Additionally, the Budget speech highlights a significant investment of ₹11.11 lakh crore for capital expenditure in infrastructure, including highways and other sectors, from which cities can benefit.
  • A provision of ₹1.50 lakh crore is also made available to states as an interest-free loan for infrastructure development, which states could use for urban projects.

Some Other Key Announcements Related to Smart Cities, Planned City Development

• Smart Cities and Digital Transformation
  • Launched in 2015, the Smart Cities Mission received ₹8,000 crore in budgetary support in 2023-24, which has been reduced to ₹2,400 crore for 2024-25 to meet residual commitments.
  • However, a new initiative, the National Urban Digital Mission (NUDM), has been introduced with a provision of ₹1,150 crore, focusing on the digitization of property and tax records and their management with GIS mapping.
  • This digital transformation will enable urban local bodies to manage their finances more effectively and assist property owners.
• Planned City Development
  • The Budget emphasises the importance of planned city development, allocating ₹25,653 crore as the normal ‘Finance Commission Grant’ for municipalities.
  • Additionally, ₹500 crore has been set aside for the incubation of new cities. The development of mass rapid transit systems allows cities to pursue transit-oriented development, where dense development around transit hubs can occur without overwhelming road traffic.
  • Enhanced focus on economic and transit planning, alongside orderly development of peri-urban areas using town planning schemes, is proposed.
  • The Budget also allocates ₹1,300 crore to encourage electric bus systems in cities, addressing the challenge of high upfront costs and promoting eco-friendly transportation.
• Solid Waste Management
  • Solid waste management (SWM) poses one of the biggest challenges for urban areas.
  • The Budget proposes introducing bankable projects for SWM in collaboration with state governments and financial institutions, leveraging the VGF for this purpose.
  • Cities like Indore, Madhya Pradesh, have demonstrated how SWM can become financially viable, providing a model for others to follow.
• Street Vending and Economic Opportunities
  • The Street Vendors Act, 2014, aimed at regulating street vendors and protecting their rights, envisages creating street-vending plans and zones.
  • The Budget proposes developing 100 weekly ‘haats’ or street food hubs in select cities.
  • This initiative aims to make street vending a healthy and safe option for both consumers and vendors.
  • States are encouraged to facilitate the preparation of street-vending plans and the development of 'haats' according to local needs.

Purpose of Newly Launched National Urban Digital Mission (NUDM)

• Digitisation of Property and Tax Records
  • The NUDM aims to digitise property records and tax management systems, ensuring transparency, accuracy, and efficiency.
  • Digital records make it easier for property owners to access information and conduct transactions, while also aiding municipal bodies in maintaining up-to-date records and improving revenue collection.
• Geographic Information System (GIS) Mapping
  • Integrating GIS mapping into urban planning and management allows for a more precise understanding of spatial data.
  • This technology helps in monitoring land use, planning infrastructure, and managing resources more effectively.
  • GIS mapping supports better decision-making processes by providing detailed visual representations of urban areas.
• Financial Management
  • Improved financial management through digital tools enables urban local bodies to streamline their budgeting, expenditure tracking, and revenue generation.
  • By leveraging digital platforms, municipalities can enhance their financial health, ensuring that funds are utilised efficiently for urban development projects.

Challenges and Future Prospects

• Funding and Resource Allocation
  • Adequate funding and resource allocation are critical to the success of these initiatives.
  • Ensuring consistent financial support from both central and state governments is essential for sustained progress.
• Capacity Building
  • Building the capacity of urban local bodies to implement and manage digital solutions is vital.
  • This includes training municipal staff, enhancing technical expertise, and fostering a culture of innovation.
• Interoperability and Integration
  • Ensuring that various digital systems and platforms are interoperable and integrated seamlessly is crucial for effective urban management.
  • This requires standardization of technologies and collaborative efforts among different stakeholders.
• Data Privacy and Security
  • As cities collect and process vast amounts of data, safeguarding privacy and ensuring data security are paramount.
  • Robust cybersecurity measures must be implemented to protect sensitive information and maintain public trust.

Conclusion

• The Budget presents a comprehensive approach to urban development, combining financial provisions and procedural strategies to promote planned urbanisation.
• However, the successful implementation of these initiatives depends on the vision and determination of cities, represented by municipalities, and guided by state governments.
• Crucially, the participation of citizens remains the cornerstone for the success of any city’s development strategy.