Urbanisation and Budget: Addressing Challenges and Charting the Way Ahead

(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Inclusive Growth and issues arising from it.)

• Urbanisation in India is advancing rapidly, with cities now home to approximately 50 crore people, representing about 36% of the country’s population.
• This urban population is growing at an annual rate of 2% to 2.5%, necessitating sustained investments and strategic planning to manage this growth effectively.

Here are some of the critical challenges facing Indian cities –

1. Housing Shortages: The urban housing deficit is significant, particularly for the Economically Weaker Sections (EWS) and Middle Income Groups (MIG). While the Pradhan Mantri Awas Yojana (Urban) has delivered 85 lakh housing units since 2015, the demand remains high, especially among the migrant workforce.
2. Inadequate Core Infrastructure: Essential services like water supply, sanitation, roads, and sewerage systems are insufficient in many urban areas. The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) provides ₹8,000 crore for these services, but this funding alone is inadequate.
3. Solid Waste Management (SWM): Cities face substantial challenges in managing solid waste. Effective SWM requires substantial investment and innovative solutions to make the process financially viable and environmentally sustainable.
4. Urban Mobility and Traffic Congestion: As cities expand, traffic congestion and inadequate public transport systems become more problematic. Efficient urban mobility solutions are crucial for reducing traffic overload and ensuring seamless connectivity.
5. Digital Infrastructure and Governance: The digitisation of property and tax records and effective urban governance are essential for managing urban growth efficiently. Many urban local bodies lack the digital infrastructure necessary for this transformation.
6. Street Vending Management: The regulation and management of street vending need improvement to ensure healthy and safe options for consumers and vendors alike. The Street Vendors Act, 2014, requires effective implementation across cities.

Budget 2024-25: Provisions and Strategies –

1. Housing Initiatives: The Budget supports the construction of one crore additional housing units in urban areas with an investment of ₹10 lakh crore. This includes central assistance of ₹2.2 lakh crore over five years, with ₹30,171 crore allocated for the current year. A portion of this allocation will provide interest subsidies to facilitate affordable housing loans.
2. Infrastructure Development: The core infrastructure needs of cities are being addressed through the PPP model, supported by the Viability Gap Funding (VGF) scheme. The Budget allocates ₹8,000 crore under AMRUT and announces an investment of ₹11.11 lakh crore for capex in infrastructure, with a provision of ₹1.50 lakh crore as an interest-free loan to states for infrastructure development.
3. Smart Cities and Digital Transformation: While funding for the Smart Cities Mission has been reduced to ₹2,400 crore for 2024-25, the new National Urban Digital Mission (NUDM) has been introduced with a provision of ₹1,150 crore. This initiative focuses on the digitisation of property and tax records, enhancing the financial management of urban local bodies.
4. Public Transportation and E-Mobility: The Budget encourages the development of mass rapid transit systems and transit-oriented development. It also allocates ₹1,300 crore for promoting electric bus systems, which offer eco-friendly and economical transportation solutions.
5. Solid Waste Management: The Budget emphasizes introducing bankable projects for SWM in collaboration with state governments and financial institutions, with the possibility of using the VGF scheme. Successful examples, such as Indore, demonstrate the potential for financially viable SWM solutions.
6. Support for Street Vendors: The Budget proposes the development of 100 weekly ‘haats’ or street food hubs in select cities, facilitating the implementation of the Street Vendors Act, 2014, and promoting healthy and safe street vending practices.

 Way Ahead –

1. Enhanced Collaboration: Effective collaboration between the central and state governments, urban local bodies, and private sector stakeholders is crucial for the successful implementation of urban development projects.
2. Citizen Participation: The active participation of citizens in urban planning and development processes is essential. Public awareness and engagement can drive more sustainable and community-focused urban growth.
3. Capacity Building: Strengthening the capacities of urban local bodies in project management, digital governance, and financial management will be vital for achieving the desired outcomes.
4. Sustainable Practices: Emphasising sustainable urban practices, including green building technologies, renewable energy use, and efficient waste management, will help cities grow responsibly and reduce environmental impact.
5. Monitoring and Evaluation: Establishing robust monitoring and evaluation mechanisms to track the progress of urban development initiatives and make necessary adjustments will ensure that goals are met efficiently.

The Budget 2024-25 aligns with the Amrit Kaal vision of 2047, setting a clear direction for addressing the challenges of urbanisation in India. By leveraging the proposed financial support and strategic initiatives, and through concerted efforts by all stakeholders, Indian cities can embark on a path toward sustainable and inclusive growth, significantly enhancing the quality of life for their residents.