In 2015, the Government of India launched its Smart Cities Mission, envisioned as the lighthouse of city development. With a total of 100 cities included in its proposal, this flagship programme received budgetary support and continued to dominate urban planning discussions.
However, there was no mention of urban planning or cities in the Union budget speech. It appears that the concept of smart cities has faded, with only a passing reference to urbanisation taking place at a rapid pace.
Note that the interim budget boasted of its revenue receipts, saying that there is an increase of 11% in 2024-25. However, the growth in revenue receipts is driven by corporate tax and income tax, which is estimated to grow by 13% each.
In fact, between 2018-19 and 2022-23, individual tax collections in India have surged by a whopping 76%. However, the corporate sector share in that tax collected has inched by only a fraction, just 24.45%, during the same period.
This implies that common people and the poor are contributing more to the country’s development. However, the dividends seem to be favouring corporates, as their tax percentage has been reduced from 30% to 20%, and even 15% in some cases.
If one looks at the expenditure part, Budget 2024-25 is a sheer disaster. The social welfare expenditure has been reduced from the budgetary estimates of 2023-24, from Rs 2.42 lakh crore to Rs 2.25 lakh crore in revenue terms.
Budgetary allocation for urban areas
In the urban domain, the situation is more pathetic. The total outlay falls far below expectations.
The budgetary allocation for urban areas in the year 2023-24 was Rs 76,431 crore. However, the revised estimate is approximately Rs 69,270 crore, indicating a shortfall of Rs 7,000 crore. This shortfall should have been accommodated in the succeeding year of 2024-25. However, the total proposal for 2024-25 stands at Rs 77,525 crore, just 1% more than the previous year. Considering inflation and other factors, this suggests a decline in real terms.
Let us also find out where the shortfall has been in both the revised budget estimates and the proposal for 2024-25.
In centrally sponsored schemes, there’s a massive shortfall of nearly Rs 6,000 crore from the budgetary proposals and revised estimates of 2023-24. There has been a shortfall of around Rs 2,000 crore in these schemes since last year. The figures are as: the proposal was Rs 46,103 crore, whereas the revised estimate is Rs 38,396 crore and the proposed outlay for 2024-25 is Rs 44,545 crore.
Of these schemes, it is interesting that around Rs 19,518 crore was allocated for metro rail projects, as per budget estimates of 2023-24, and in the current proposal of 2024-25, it stands at Rs 21,335 crore. That means 48% of the centrally sponsored schemes (in the urban category) will be usurped by the capital intensive metro projects, whereas the demand was for more buses in the cities.
Another notable feature is a major setback to the creation of capital assets or urban infrastructure. There has been a drastic fall of around Rs 8,000 crore, from Rs 41,830 crore as proposed in the 2023-24 outlay to Rs 33,779 crore.
The proposed outlay for 2024-25 also remains lesser than the previous year at Rs 39,861 crore. Now, where is it that the budget could not be spent in the current fiscal year?
It is interesting to note that the major fall has been in almost all the flagship programmes.
The outlay in the Smart Cities’ proposal fell from Rs 7,634 crore to Rs 7,535 crore in the revised budget of 2023-24, with a major slash in the 2024-25 outlay to Rs 2,236 crore.
Likewise, for AMRUT, the proposal sees a Rs 5,000 cut from Rs 7,634 crore to Rs 2,236 crore; PMAY(U), the housing trumpet being blown by the finance minister, also does not match the noise. The total outlay in 2023-24 was Rs 22,967 crore, whereas the revised estimate is at Rs 19,966 crore – a shortfall of Rs 3,000 crore. Additionally, the proposal for 2024-25 is Rs 23,920 crore, which is just 1% higher than the previous year’s proposal. Considering inflation and the cost of construction, there is a downslide.
The Swachh Bharat Mission, which started in rocket mode, also fell from expectations. Against the total outlay of Rs 4,238 crore, the revised estimate for 2023-24 is at Rs 1,978 crore, a fall of nearly Rs 2,000 crore, and a proposed figure of Rs 4,246 crore, once again not even matching the previous year’s budgetary proposals.
Promises versus reality
The finance minister used the terms “housing, water, sanitation, and finance for all” in her remarks. But how does these items fare in the current figures.
The government, despite its 10-year rule and promises of providing houses to everyone within the first five-year period from 2014 to 2019, admits that there is still a shortfall of nearly 20 million houses in rural areas. The urban figures have not been mentioned, but various estimates suggest that the figure is more than three million. How will this be addressed? As seen above, the figures belie the rhetoric.
Under the water supply and sanitation category, the figures remain static at Rs 64,000 crore under the revenue expenditure head.
Neglecting the Himalayan states
Another notable feature of the current budgetary proposal is the complete absence of the Himalayan states. These 13 states have been demanding special financial packages and architecture owing to their extreme vulnerabilities, both climatic and geographic. It was expected that the government would assist these states in promoting tourism and allied sectors, such as fruit processing plants, agri-based allied help in the forms of procurement, and compressed atmosphere stores, which are capital-intensive technologies ensuring them a better livelihood.
Additionally, linking their development models to climate change realities was anticipated. However, nothing has been said about them.
The reduction in apple import duty is negatively impacting farmers in Himachal Pradesh, Jammu and Kashmir, and Uttarakhand, the three major apple-producing states. Fruit processing plants were considered one of the ways to mitigate the current challenges. However, the Himalayan mountains remain far beyond the domain of the centre’s financial assistance ambit.
This budget resembles more of an election speech, eulogising the prime minister, rather than addressing the essentialities of the current times.
Tikender Singh Panwar was once directly elected deputy mayor of Shimla. He was linked with the Leh Vision document and has written vision documents for a dozen cities. Author of two books, he is an urban specialist working in the design of inclusive cities.
The article was first published as ‘Bleak Urban Outlay, Neglected Himalayan States: Decoding the 2024 Budget’s Election Rhetoric ’ in theWire on February , 2024.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organization.
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Acknowledgement: This article was posted by Nikita Saha, a research intern at IMPRI.