HomeEconomy NewsBudget 2023: More money for smart cities as FM Sitharaman announces urban infra fund

Budget 2023: More money for smart cities as FM Sitharaman announces urban infra fund

The Indian government has allocated Rs 16,000 crore towards its Smart Cities Mission and announced the establishment of an urban infrastructure development fund for smaller towns and reforms in urban planning and property tax to improve sustainability.

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By Jude Sannith  February 1, 2023, 1:31:48 PM IST (Published)

2 Min Read
Budget 2023: More money for smart cities as FM Sitharaman announces urban infra fund
The mention of the term ‘smart cities’ was conspicuous by its absence in finance minister Nirmala Sitharaman’s Budget speech. However, the government has allocated Rs 16,000 crore towards its Smart Cities Mission for FY24 against the allocation of Rs 14,100 crore in FY23.


he FM also announced the government’s intent to oversee urban planning and property tax reforms, to ensure urban sustainability. Sitharaman also announced the setting up of an urban infrastructure development fund for smaller towns.

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“States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into sustainable cities of tomorrow,” said the FM, announcing property tax governance reforms directed at improving creditworthiness for municipal bonds.

In an apparent attempt to further incentivize urban development, Sitharaman announced the establishment of an infrastructure development fund for tier-2 and tier-3 towns.

“An urban infrastructure development fund will be established through priority sector lending shortfall, and will be managed by the National Housing Bank to be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities,” said Sitharaman.

Further, the FM’s budget speech provided for “all cities and towns” to be equipped with mechanical de-sludging mechanisms, in an apparent attempt to phase out manual scavenging.

“All cities and towns will be enabled with 100 percent mechanical de-sludging of septic tanks and sewers, in order to transition from manhole to machine-hole mode,” said Sitharaman, “This will also enhance our focus on the scientific management of dry and wet waste.”

Budgetary allocation towards urban development has seen a steady rise since 2017-18. From Rs 34,020 crore spent on urban development — Rs 9,520 crore of this on Smart Cities alone — an estimate of Rs 76,549 crore is likely to be spent on urban development in 2022-23, of which Rs 14,100 crore is expected to be set aside for development of smart cities.

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