Union Budget 2021-22: The urban picture

By KK Pandey

This budget gives due cognisance to the increasing demand for urban infrastructure and services with a particular reference to sustainable, environment-friendly and inclusive growth. With a direct allocation to ministry of housing and urban affairs, ministry of Jal Shakti and the launch of Swachh Bharat Mission(SBM) 2, the budget makes provision for investment in infrastructure and also facilitates its augmentation from allocations to MSMEs, highway projects, asset monetisation etc. The Budget allocation for urban sector is critical for a V-shaped recovery of the Indian economy.

MoHUA has been allocated Rs 54,581 crore, comprising Rs 27,500 crore for Pradhan Mantri Awas Yojana (PMAY) and Rs 13,750 crore for Smart Cities Mission/Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and other urban missions. Besides, the ministry of Jal Shakti has received Rs 2,87,000 crore for five years to provide 2.87 crore tap-water connections in 4,378 statutory towns and liquid waste management in500 AMRUT towns. In addition, SBM-2 has been launched with Rs 1,41,000 crore for five years to focus on safe sanitation, water harvesting and recycling. Further, urban bus transport received Rs 18,000 crore to include 20,000 additional buses in the city transport system.

Tax concessions on affordable housing, in the form of additional deduction of interest to the tune of Rs 1.5 lakh, have been extended till March 2022. Increased allocation from grants for 2021-2026 as recommended by XV finance commission (FC) will further supplement municipal kitty for taking up the growth agenda.

This allocation will have a multiplier effect on several sectors. Piped water connectivity and safe disposal and treatment of waste-water in ULBs will address climate change and safe environment concerns. Similarly, access to safe water and sanitation across households, along with affordable housing, will provide inclusive development. Water and sanitation will also improve human health and have an associated effect on productivity. Allocation for PMAY will trigger investment in a ratio of 1:6 and generate employment serving the project sites in a ratio of 1:8. Further housing will have an income multiplier of 1:5. In addition, housing also increases indirect tax collection; it accounts for 12% of all indirect tax collection.

The Budget FY22 allocation on urban infrastructure and services needs a proper follow-up agenda to achieve its objectives. To this end: (i) Capacity building and reform agenda for ULBs under urban missions need a suitable review given the competency gap to absorb investments and maintain services, it should include deployment of manpower and exposure to necessary skills; (ii) as suggested in the Budget, the urban sector missions need to be rationalised to have convergence and synergy for more focussed and speedy implementation; (iii)ULBs should be made the focal point for top-down flow of schemes, in this regard, city-region approach, with largest ULB assigned a coordinating role, should be applied as suggested by XV FC; (iv) potential of circular economy from solid and liquid waste management and vehicle scrappage policy should be tapped, it should be able to enlarge the size of municipal finance and city economy.(v) Due care should be given to improve infrastructure and services across the urban centres, including those located in 115 aspirational districts, which will facilitate spatial dispersal of economic activities and job opportunities in the manufacturing and services at the doorstep of the surplus labour; and, (vi) nearly 4,000 census towns deserve due development of water, sanitation, climate-smart services and infrastructure.

These are urban by character but are not accorded the status of a ULB. These are located within urban agglomerations, across the country.

Coordinator, Centre for Urban Studies, Indian Institute of Public Administration. Views are personal