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Urban infra boost for Tier 2, 3 cities: Rs 10,000 crore per year

The government will set up an Urban Infrastructure Development Fund (UIDF) of Rs 10,000 crore per year for creating infrastructure in Tier-2 and Tier-3 cities, Union Finance Minister Nirmala Sitharaman announced Wednesday.

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The minister said the fund would be established through the use of priority sector lending shortfall.

“This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier-2 and Tier-3 cities. States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF. We expect to make available Rs 10,000 crore per annum for this purpose,” she said.

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Sitharaman also said states and cities would be encouraged to undertake reforms in urban planning and take steps to make cities more sustainable. “This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all,” she said.

Among the reforms would be property tax governance reforms and ring-fencing user charges on urban infrastructure, she said. Cities would be given incentives to improve credit worthiness for municipal bonds, she added.

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On the sanitation front, she said: “All cities and towns will be enabled for 100% mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode. Enhanced focus will be provided for scientific management of dry and wet waste.”

In keeping with the focus on sanitation, the Budget for the Union Housing and Urban Affairs Ministry included Rs 5,000 crore for the Swachh Bharat Mission-Urban (2.0) in 2023-24, more than double of Rs 2,300 crore in the budget estimates (BE) 2022-23 and Rs 2,000 crore in revised estimates (RE) 2022-23. According to sources, while desludging of septic tanks was among the activities permitted under SBM-U, now it would be a focus area. Overall, the ministry’s expenditure budget for 2023-24 remained similar to last years, with Rs 76,431.60 crore as opposed to Rs 74,545.64 crore in the RE, and Rs 76,549.46 crore in BE 2022-23.

Two of the ministry’s schemes — PM-SVANidhi, which is a loan scheme for street vendors, and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) — were given higher funding compared to last year. For PM SVANidhi, the increase was over three times from Rs 150 crore in BE 2022-23 to Rs 468 crore in 2023-24. Expenditure on the scheme went up in the RE 2022-23 to Rs 433.94 crore.

On the other hand, funding for urban housing saw a decrease as the Pradhan Mantri Awas Yojana (Urban) will be coming to an end in 2024.

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Expenditure on PMAY-U decreased from Rs 28,000 crore in BE 2022-23 to Rs 25,103.03 crore in BE 2023-24. Expenditure on the Smart Cities Mission, which is set to end in June this year, was also reduced in 2023-24 to Rs 8,000 crore from Rs 8,800 crore in RE 2022-23.

The government would spend Rs 23,175.01 crore on Metro and mass rapid transit system projects, including the National Capital Region Transport Corporation that is implementing the Delhi-Meerut rapid transit project, in 2023-24, similar to 2022-23’s BE Rs 23,875 crore.

Union Budget 2023: All you need to know

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