Context-

The FM's seventh consecutive national budget 2024-25 outlines the government's principal financial and policy decisions, including urban development, which is Priority No. 5 out of the nine priority areas.

Overview of Urban Development Priorities

The Budget speech covers urban development, addressing seven key areas: cities as growth hubs, creative redevelopment of cities, transit-oriented development, urban and rental housing, water supply, sewerage and sanitation, street markets, and stamp duty. The FM emphasizes the importance of working in partnership with states, acknowledging that urban development is constitutionally a state subject.

●     Cities as Growth Hubs

The budget proposes to develop cities as growth hubs through economic and transit planning and orderly development of peri-urban areas using town planning schemes (TPS). The TPS approach, extensively used by Gujarat, aims to generate much of the necessary revenue internally through betterment and compensation. The future governance of these developed peri-urban areas could involve merging with neighboring urban local bodies (ULBs) or establishing new municipalities.

●     Creative Redevelopment of Cities

The second focus area is the redevelopment of existing and old urban areas that have deteriorated. The budget suggests formulating a framework for enabling policies, market-based mechanisms, and regulations to support this redevelopment. This aspect is still under development, and its success will depend on the government's future policies and regulatory measures.

●     Transit-Oriented Development (TOD)

The third aspect is transit-oriented development, a subject of particular interest to the FM. The budget proposes TOD plans for 14 large cities with populations above three million, along with a financing and implementation strategy. This proposal requires further scrutiny to assess the feasibility of the selected cities for TOD.

●     Urban and Rental Housing

Urban housing is another key focus, with an investment of INR 10 lakh crore over five years under PM Awas Yojana 2.0 to provide housing for 10 million poor and middle-class families. The Centre will contribute INR 2.2 lakh crore, with other stakeholders covering the rest, including interest subsidies for affordable debt. The budget also aims to introduce policies and regulations for rental housing to increase housing stock availability in cities.

●     Water Supply and Sanitation

The budget highlights water supply and sanitation as crucial areas. The GoI, state governments, and multilateral development banks will collaborate on bankable projects for water supply, sewage treatment, and solid waste management in 100 large cities. Additionally, the recycling of treated water for irrigation and filling deficient water bodies is planned.

●     Street Markets

Building on the success of the PM SVANidhi Scheme, which boosted street vendors' earnings, the FM proposes a new scheme to develop 100 weekly ‘haats’ or street food hubs in select cities over the next five years. This initiative aims to support the informal sector of street vendors and street markets in cities.

●     Stamp Duty

The budget addresses the high stamp duty charged by certain states and seeks to moderate these rates in the interest of national and state economies. This effort continues from the days of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which made stamp duty reduction a condition for states to access funds. Additionally, the budget proposes lowering stamp duty more than the general amount for properties purchased by women.

Indirect Implications of the Budget on Urban Development

Several provisions outside above discussion have indirect or direct relevance for cities. These include:

●     Larger participation of women in the workforce through the setting up of women’s hostels.

●     Higher education loans.

●     Infrastructure projects and employment schemes.

●     Tourism provisions for cities like Gaya, Bodhgaya, and Rajgir.

●     A INR 15,000 crore debt for developing Amravati, contributing directly to urban growth.

●     Digitizing urban land records and property tax administration.

These initiatives, although outside the urban local body domain, will positively impact city economies, services, and quality of life.

Challenges

●     The budget's urban development proposals may have varying levels of acceptance from states. PM Awas Yojana is likely to succeed in small and medium towns but may face challenges in larger cities due to land availability issues. Water supply, sewage treatment, and solid waste management are top priorities for most cities and states, which will likely welcome central assistance.

●     The street market proposal is expected to be popular and readily adopted by cities. However, some proposals might receive a lukewarm reception from states due to perceived intrusions into urban planning, traditionally a state domain. Conceptual incompatibilities with the states might also arise. The model rental laws proposed earlier by the GoI have not seen widespread acceptance, and past attempts to reduce stamp duty have faced resistance.

●     The National Budget for 2022-23 aimed to provide a significant thrust to urban planning, envisioning cities as centers of sustainable and inclusive living. Despite these ambitions, substantial progress has yet to be seen in urban planning practices.

●     Much of the budget's funding for urban development depends on market and self-generating mechanisms. States will weigh the benefits of undertaking projects advised by the Centre. The budget avoids addressing the primary urban reform agenda left incomplete by the 74th Constitutional Amendment Act, and significant urban reforms remain pending.

Conclusion

The National Budget 2024-25 presents a comprehensive plan for urban development, recognizing the need for state cooperation and focusing on critical areas such as cities as growth hubs, creative redevelopment, transit-oriented development, urban and rental housing, water supply and sanitation, street markets, and stamp duty. While some proposals are likely to be well-received, others may face challenges in acceptance and implementation. The success of these initiatives will depend on the collaborative efforts of the GoI, states, and other stakeholders, and the willingness to address the fundamental urban reforms needed for sustainable urban growth.

Source- The Hindu