Budget 2023 bets big on cities, infrastructure growth

The AMRUT Mission II has already increased coverage. Planning, water, sewerage, drainage and transport connectivity are all critical in the success of these cities.

Over the past year, I have been raising the issue that real estate reforms can only be effective if they are backed by municipal and city-level reforms. Budget 2023 has ticked all the checkboxes for inclusive, long-term growth. The cities and towns should be standing up and cheering. Capital investment outlay has been increased by 33 percent to Rs 10 lakh crore, roughly about 3.3 percent of GDP. That’s a massive directional statement.

The signature mission, the Pradhan Mantri Awas Yojana (PMAY), was bumped up 66 percent to Rs 79,000 crore. Of this Rs 25,103 crore was allocated to PMAY Urban. PMAY has been one of the most successful missions in terms of the number of homes delivered. But the Indian urban population is poised to rise to 600 million by 2030. This population needs new towns and cities. The AMRUT Mission II has already increased the coverage from 500 to 4,800 towns and cities. Planning, water, sewerage, drainage and transport connectivity are all critical in the success of these cities.

A large number of these are on the periphery of agricultural areas. They would definitely get a boost from the agricultural credit target, which was raised to Rs 20 lakh crore for 2023-24. Clearly, the smaller cities can now plan their economic profile as facilitators for the marketing and processing of agri-produce. Besides crops, the focus is on animal husbandry, dairy and fishery. Combine this with a slew of operational benefits to the micro, small and medium enterprises, and the small city economic profile seems to be even more robust.

The problem of skilled manpower available across India is being addressed in the budget through the Rs 1.12 lakh crore, the highest ever, for the education ministry. Of this, Rs 44,000 crore is for higher education and over Rs 68,800 crore for school education. About 157 nursing colleges will be established in core locations. The Pradhan Mantri Kaushal Vikas Yojna 4.0 will be launched to skill lakhs of youth, as well.

Improving Connectivity

Connecting these remote cities and villages should be done by the railway, which has an enhanced budget of Rs 2.4 lakh crore. Supporting them is the network of 50 small airports, heliports and water aerodromes that are to be revived, with an allocation of Rs 3,114 crore, to improve regional connectivity. A hundred critical transport infrastructure projects for the last and first-mile connectivity for ports, coal, steel, fertiliser and foodgrains sectors have been taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.

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When so many new towns and cities are on the anvil, their governance framework is a priority. The Budget has allocated Rs 288 crore for the training of bureaucrats. “All cities and towns will be enabled for 100 percent mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode,” Finance Minister Nirmala Sitharaman said. Taking municipal governance one step further she said incentives would be provided to civic bodies to improve their finances and credit-worthiness to be able to raise municipal bonds. "Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be given incentives to improve their credit-worthiness for municipal bonds," she said. A Rs 10,000 crore annual Urban Infrastructure Development Fund, managed by the National Housing Bank can be used by public agencies to improve urban infrastructure in Tier II and Tier III cities.

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The 50-year interest-free loan option to State governments has been extended for one more year till March 2024, provided 10 per cent is used for power sector reforms. Along with the Rs 35,000 crores priority capital for energy transition and battery storage to get viability gap funding, green reforms in the urban space are very much on the agenda.

E Jayashree Kurup is a writer/researcher on Real Estate & Cities. She is Director Wordmeister Editorial Services. Views are personal and do not represent the stand of this publication.