Rs 8,000cr funds allocated to develop 8 new cities unutilised for last 5 years

New Delhi: With just two months to go for the award of the 15th Finance Commission (FC) to end (March 31), the Rs 8,000 crore allocated for a performance-based challenge fund to develop eight new cities has remained unutilised for the last five years. Similarly, there has been little progress on checking air pollution in cities with a million-plus population.

After the 15th Finance Commission headed by NK Singh recommended the challenge fund to incubate new cities as a pilot to promote planned urbanisation and ease pressure on existing cities, the housing and urban affairs ministry invited proposals and received 28 of them from 23 states. But it has so far not finalised even a single city for the purpose, having failed to complete the evaluation exercise. "This is one of the areas where the desired targets have not been met," said an expert.




Focus shifts to improving existing cities, says expert privy to 16th FC

We have understood well that we need to improve our existing cities and urban areas rather than creating new ones. Naya Raipur is a live example for all of us,” said the expert privy to the deliberations of the 16th Finance Commission, led by Arvind Panagariya, whose recommendations will be tabled in Parliament on Sunday. The award of the 16th FC will cover the period from 2026-27 to 2030-31.

The 15th FC had also designated the housing and urban affairs ministry as the nodal entity for grants to million-plus population cities for initiating measures to check air pollution by using mechanical sweeping machines, promoting non-motorised transport (pedestrian and bicycle) and paving side flanks of roads with facility for water percolation. The outcome of this exercise is awaited, with a report likely to be tabled in Parliament.

Similarly, six years after the announcement to launch a new scheme to improve city bus availability, not a single bus has been deployed under the scheme yet. In Feb 2020, govt had announced that the Rs 18,000 crore scheme would facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.

The Economic Survey presented in Parliament this week mentioned that govt has launched PM e-Bus Sewa to strengthen city bus operations with 10,000 e-buses on a PPP model.

It said, “Official status notes for FY25 report 7,293 e-buses approved across 14 states and four UTs, Rs 983.75 crore sanctioned for depots and behind-the-meter power infrastructure and Rs 437.5 crore already disbursed.” The report said that despite these measures, gaps in mass transit services persist. It added that housing and urban affairs ministry has recommended 40-60 buses per one lakh population; yet, many cities have far fewer buses. “Nationally, only about 47,650 buses serve its urban residents. Nearly 61% of these are concentrated in just nine megacities. Due to the layout of urban roads, low bus availability combined with high private vehicle use reduces person throughput per lane kilometre, leading to congestion and longer door-to-door travel times,” the survey said.




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