The Ministry of Housing and Urban Affairs is the nodal ministry overseeing issues related to urbanisation, housing, transport, and service delivery in urban areas.  Key areas under the purview of this Ministry include: (i) formulation of housing policies and programmes, (ii) urban development including slum clearance and rehabilitation, (iii) water supply, sewerage, and sanitation, and (iv) planning and coordination of urban transport systems.  The Ministry provides financial and technical support to states and urban local bodies through various centrally sponsored schemes. 

This note looks at the proposed allocations towards the Ministry of Housing and Urban Affairs for 2024-25, financial trends, and related issues with the schemes, and programmes of the Ministry.

Allocation in Union Budget 2024-25

The total expenditure of the Ministry of Housing and Urban Affairs for 2024-25 is estimated at Rs 82,577 crore.   This is an increase of 19% over the revised estimates of 2023-24.  In 2024-25, the revenue expenditure of the Ministry is estimated at Rs 53,948 crore (65% of the total expenditure) and the capital expenditure is estimated at Rs 28,628 crore (35% of the total expenditure).  In the year 2022-23, the Ministry’s expenditure was Rs 77,310 crore, which was 0.3% of GDP.  In 2024-25, according to the budget estimates, the Ministry estimates to spend around 0.25% of the GDP.  

Table 1: Budgetary allocation to Ministry of Housing and Urban Affairs (in Rs crore)

	2022-23 Actuals	2023-24 RE	2024-25 BE	% change (RE 23-24 to BE 24-25)
Revenue	50,432	42,737	53,948	26%
Capital	26,878	26,533	28,628	8%
Total	77,310	69,270	82,577	19%

Note: BE- Budget Estimates; RE- Revised Estimates.
Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget 2024-25; PRS.

Overview of finances

The Ministry implements several schemes to improve service delivery in urban areas such as: (i) Pradhan Mantri Awas Yojana – Urban (PMAY-U), (ii) Atal Mission for Rejuvenation and Urban Transformation (AMRUT), (iii) Smart Cities Mission, (iv) Swachh Bharat Mission – Urban (SBM-U), and (iv) PM Street Vendor’s Atmanirbhar Nidhi (PM SVANIDHI).  The Ministry also implements metro projects (MRTS – Mass Rapid Transit System) across states/UTs. 

2024-25 Budget Speech Highlights[1] Additional one crore houses will be made under the PM Awas Yojana 2.0 in the next five years.  Enabling policies for rental housing markets will be rolled out. Urban land management and planning reforms will be undertaken over the next three years. Land records will be digitised using GIS, facilitating improvement in the financial position of urban local bodies. Transit oriented development plans with an implementation and financing strategy will be made for 14 cities with population more than 30 lakh. A new scheme to support street vendors and the development of 100 weekly haats in select cities over the next five years is envisioned.

Table 2: Allocations under different schemes (in Rs crore)

	2022-23 Actuals	2023-24 RE	2024-25 BE	% change (RE 2023-24 to BE 2024-25)
PMAY-U	28,653	22,103	30,171	36%
MRTS & Metro	23,603	23,104	24,932	8%
AMRUT	6,500	5,200	8,000	54%
Smart Cities	8,653	8,000	2,400	-70%
SBM-U	1,926	2,550	5,000	96%
PM SVANIDHI	406	468	326	-30%

Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget 2024-25; PRS.

Until 2021-22, metro projects used to receive the highest financial allocation under the Ministry.  But since 2022-23, the highest provision under the Ministry is being made towards PMAY-U.  

In 2024-25, the largest allocation under the Ministry is towards the Pradhan Mantri Awas Yojana – Urban (PMAY-U), which is estimated to be Rs 30,171 crore (37% of the allocation).   Allocation towards PMAY-U has been estimated to increase by 36% over the revised estimates of 2023-24.  This increase could be due to the provision for one crore additional houses under the extended PMAY-U 2.0 scheme.  The allocation for MRTS and metro projects has increased by 8% from the revised estimates of 2023-24.  

Allocation towards the AMRUT scheme is expected to be Rs 8,000 crore, higher than the revised estimates of 2023-24 by 54%.  Allocation to the Smart Cities Mission has been reduced to Rs 2,400 crore from the revised estimates of 2023-24 (70% decrease).  This reduction is due to the projects nearing their completion.  The government has released the last tranche of the planned budget allocation for the mission (Rs 48,000 crore).  The scheme was set to end by June 2024, but has been extended until March 2025.[2] 

In the last 10 years, the expenditure of the Ministry has increased at an annual average rate of 30%.  

Figure 1: Expenditure by the Ministry of Housing and Urban Affairs

 

Note: For the years 2013-14 till 2017-18, the figures are a combination of the erstwhile Ministry of Housing and Urban Poverty Alleviation, and the Ministry of Urban Development.
Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget: 2013-14 to 2024-25; PRS.

Barring two years, since 2017, the Ministry has been underutilising funds every year.  In 2021-22, the Ministry spent 96% (Rs 52,259 crore) more than the budgeted figures owing to an increase (Rs 51,963 crore) in expenditure on PMAY-U.

Figure 2: Underutilisation of funds (BE compared to Actuals)

Note: For the years 2016-17 and 2017-18, the figures are a combination of the erstwhile Ministry of Housing and Urban Poverty Alleviation, and the Ministry of Urban Development.  Figures for 2023-24 are Revised Estimates.
Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget: 2013-14 to 2024-25; PRS.

Issues to consider

Urbanisation in India

The urban population in India increased from 28.6 crore in 2001 to 37.7 crore in 2011(31% of the population) when the last Census was undertaken, indicating a 32% growth during that period.[3],[4]   With increasing urbanisation, the demand for affordable housing is expected to increase.  According to Ministry of Health and family welfare, India’s urban population is projected to reach 59.4 crore by 2036.[5]  

Urbanisation puts incremental pressure on the existing infrastructure of urban areas.[6]   Policy responses to address urbanisation therefore require effective delivery of public services and provision of affordable housing and transport services for citizens.  The High-Powered Expert Committee (HPEC) Report on Indian Urban Infrastructure (2011) had noted that for the growth of cities to be managed well, there should be balance and integration between demands of commerce, transport including public transport, and housing including affordable housing for the poor.⁶  The Ministry implements various schemes to address issues in each of these sectors. 

Financial capacity of urban bodies 

As per the Constitution, development of urban areas is the primary responsibility of Urban Local Bodies (ULBs).  Their mandate is to undertake planning for economic development and social justice and implement city development plans.[7]  States have the power to devolve these powers to the ULBs.  However, a common concern across Indian cities has been that states have not devolved these powers adequately to the ULBs.  Lacking such powers, most ULBs have not developed technical and financial capacity to manage their cities.  This has had an impact on their ability to improve urban infrastructure and services, and also implement the schemes being run by the central government.   There is also a mismatch between the functional responsibilities and resource generation capacity of local governments.[8]  

According to the High-Powered Expert Committee (HPEC) Report on Indian Urban Infrastructure (2011), ULBs tax bases are narrow and they have been unable to levy sufficient user charges for service delivery leading to poor cost recovery.[9]   Own revenues of local bodies can only meet a part of their operation and maintenance expenses, therefore transfers from states and centre are required to fund even the recurring expenditure of the ULBs.[10]  This creates a dependency on transfers in the form of shared revenue and grants from the state government.  For ULBs, own revenue streams are mostly restricted to property tax collection.  

The 15^th Finance Commission recommended Rs 1,21,055 crore as grants for ULBs for the period 2021-26.[11]   Cities with million plus population will receive performance-linked grants.  For cities with a population of less than a million, all grants will be untied.  As of March 2023, grants worth Rs 57,897 crore (48%) have been released to ULBs.[12]  

Figure 3: Sources of revenue for Urban Local Bodies (in Rs crore)

Sources: Financial Resources of Urban Local Bodies’, Comptroller and Auditor General of India; PRS. [13]

As can be seen in Figure 1, the share of ULBSs own revenue as a percentage of total revenue has declined from 2015-16 to 2020-21.  This can be attributed to a higher increase in grants, which grew at an average rate of 20% from 2015-16 to 2019-20 (excluding the Covid-19 pandemic year).   In comparison, ULBs’ own revenue grew at an average rate of 12% over the same period. 

The HPEC also noted that low organisational and administrative capacity of the ULBs leads to underspending on urban infrastructure.  It recommended that ULBs be strengthened by improving their ability to raise own-revenue and improving their functional autonomy. 

The HPEC Report suggested increasing the investment in urban infrastructure from 0.7% in 2011-12 to 1.1% of GDP by 2031-32.9  It estimated that this would imply an investment of Rs 34.1 lakh crore over 2012-2032.  

Lack of affordable housing in urban areas

Housing demand: According to the Report of the Technical Group constituted by the Ministry of Housing and Urban Poverty (2012-17), the total urban housing shortage was estimated to be 1.87 crore in 2012.[14]  Of these, 5.3 lakh households were identified as homeless, while 1.5 crore households were estimated to be living in congested houses requiring new houses.   Most of the shortage was among the economically weaker sections (EWS) (56%) and low-income groups (LIG) (40%).     

Table 3: Distribution of Housing Shortage across Economic Categories (in crore)

Income group	Number (in crore)	% share in total demand
EWS	1.05	56%
LIG	0.74	40%
MIG	0.082	4%

Sources: Report of the technical group 12 (2012-17); PRS.

The housing scheme, Pradhan Mantri Awas Yojana – Urban (PMAY-U) estimated a demand for 1.12 crore houses in 2017.[15]^,[16]  Under the scheme, the total housing demand was initially targeted at two crore houses in urban areas, later revised to 1.18 crore houses.  The Ministry has stated that PMAY-U adopted a demand driven approach where states/UTs could assess the housing needs under four verticals of the scheme.[17]   

In several states, the houses approved under PMAY-U are much lower than the housing shortage estimated under Census 2011.  Some states like Bihar, Haryana, Punjab, Karnataka, Jharkhand, Uttarakhand, and the National Capital Territory of Delhi, have covered less than 30% of the estimated households.  In comparison, states like Andhra Pradesh, Gujarat and Mizoram sanctioned houses more than the estimated shortage in the Census 2011 (see Table 12 in Annexure for more details). 

Demand-supply mismatch for housing under different income segments: Amidst the growing housing shortage, India also has a growing stock of vacant houses.[18]  On the demand side, lower purchasing power, lack of cheap accessible loans, and inaccessibility of formal lending options have led to a higher demand for affordable housing solutions.¹⁹  Whereas on the supply side, scarcity of land, increased cost of construction, and growing informal housing options have reduced the supply of affordable and formal housing in urban areas.¹⁹ 

Additionally, the development control regulations around low floor area ratio and building heights have been responsible for creating sub-standard and smaller houses.  These houses do not find adequate demand in the market and lie vacant.[19] 

Pradhan Mantri Awas Yojana – Urban 

To address the affordable housing issue in urban areas the central government launched the Pradhan Mantri Awas Yojana – Urban (2015) in 2015 to provide all weather “Housing for All” with basic amenities.²³  The government aims to provide housing under this scheme in partnership with private agencies, state governments, and parastatal agencies.  The scheme comprises of four components: 

1. In-situ-slum-rehabilitation (ISSR) for existing slum dwellers in urban areas (using the existing land under slums to provide houses to slum dwellers) through private partnerships, 

2. Affordable Housing in Partnership (AHP) between states/UTs/cities and private sector and industries, 

3. Credit Linked Subsidy Scheme (CLSS) for economically weaker sections (EWS), lower income groups (LIG), and middle-income groups (MIG), and 

4. Subsidy for beneficiary led construction/ enhancement (BLC).  

In 2024-25, the Ministry has allocated Rs 30,171 crore towards the PMAY-U, which is an increase of 36% over the revised estimates of 2023-24.

Table 4: Allocation under different components of PMAY-Urban in 2024-25 (in Rs crore)

Scheme - component	Budget 2024-25
CLSS – I for EWS/ LIG	3,000
CLSS – II for MIG	1,000
Transfers to states/UTs	23,712
Interest Payments on loans raised against Extra budgetary borrowings	1,771
Others	688
Total	30,171

Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget 2024-25; PRS.

Status of the scheme: The government has announced construction of an additional one crore houses in the next five years.  The scheme has been extended as PMAY-U 2.0, with an investment of Rs 10 lakh crore, of which Rs 2.2 lakh crore will be central assistance.2 

Table 5: Year-wise data on houses targeted and houses approved (in Rs lakh)

	Houses targeted for approval	Houses approved
2015-16	7.31	5.81
2016-17	9.51	7.29
2017-18	26.48	18.61
2018-19	31.00	29.05
2019-20	19.62	20.41
2020-21	14.32	19.62
2021-22	4.00	21.90

Sources: Report No.17, Standing Committee on Housing and Urban Affairs, 2023; PRS.

As on July 29, 2024, 1.18 crore houses have been sanctioned and 85.4 lakh have been constructed.¹⁵  But this completion rate varies across states.  Some states such as Gujarat, Himachal Pradesh, Kerala, Madhya Pradesh, Tamil Nadu, Telangana, Uttar Pradesh have a completion rate above 80%.  Whereas states such as Andhra Pradesh, Bihar, Meghalaya, and Mizoram have completed less than half of the target (for details, see Table 11 in the Annexure). 

Shifting focus from output to outcome: The Standing Committee on Housing and Urban Affairs (2023) noted that 5,62,858 of the houses completed (7%) under the ISSR/ AHP verticals are lying unoccupied.¹⁷

Table 6: Unoccupied houses under the ISSR/AHP vertical

State/UT	ISSR	AHP	Houses Unoccupied
Andhra Pradesh	-	1,75,581	1,75,581
Chhattisgarh		16,155	16,155
Gujarat	5,431	53,251	58,682
Jharkhand	84	1,579	1,663
Karnataka	1,473	16,190	17,663
Kerala	81	316	397
Madhya Pradesh	1,508	12,188	13,696
Maharashtra	35,327	44,205	79,532
Odisha	1,870	280	2,150
Punjab	-	176	176
Rajasthan	3,398	5,373	8,771
Tamil Nadu	-	57,342	57,342
Telangana	-	1,26,486	1,26,486
Uttar Pradesh	32	3,662	3,694

Sources: Report No.17, Standing Committee on Housing and Urban Affairs, 2023; PRS.

The Standing Committee on Housing and Urban Affairs (2023) noted that houses constructed under the AHP vertical are counted as completed, pending project completion and availability of basic amenities.[20]   According to the Committee, the actual target of the scheme is focusing only on the output and not on the intended outcome.  It recommended that the Ministry should show results in terms of the scheme outcome, that is, the houses occupied by beneficiaries.  

Affordable rental housing:  PMAY-U has primarily addressed housing shortage by facilitating home ownership, and not the housing rental market.  Rental housing can offer affordable housing solutions to temporary settlers in cities and to those who cannot afford to own/build a house.  The number of people who worked for less than six months in urban areas, classified as marginal workers, grew by 94% between 2001-11.3^,4  

Table 7: Category of urban workers in 2001 and 2011 (in million)

Category	2001	2011	% Growth
Main workers	83.8	116.7	39.2%
Marginal Workers	8.5	16.4	94.4%
Urban Population	286.1	377.1	31.8%

Sources: Census 2011; PRS.

Across the world, government policies have mostly favoured homeownership over rental solutions via access to credit and subsidies.[21]   Most programmes targeting the low-income groups, such as upgrading of homes, public housing, and interest subsidies, have emphasised on homeownership.21  

Considering the need of urban migrants for affordable rental accommodation in urban centres, the government launched the Affordable Rental Housing Complexes Scheme (ARHC) in 2020.[22]  The scheme aims to target urban migrants and poor and was launched as a sub-scheme under the PMAY-U.  According to the scheme guidelines, urban migrants/poor consist of workers in manufacturing industries, domestic/commercial establishments, health sector, service providers, hospitality industry, construction, or other such sectors.  The target beneficiaries include labour, urban poor (street vendors, rickshaw pullers, other service providers), and industrial workers from EWS or LIG segments.[23]   The scheme is being implemented through two models: (i) utilising existing government funded vacant houses to convert into ARHCs through Public Private Partnership or by public agencies, and (ii) construction, operation and maintenance of ARHCs by public/ private entities on their own available vacant land.  As of July 2022, the Ministry has sanctioned Rs 178.28 crore as Technology Innovation Grant for the construction of 80,273 ARHC unit by Public/Private entities.[24]

The PMAY-U and ARHC schemes were extended until December 31, 2024, due to non-completion of sanctioned houses.

Urban Mobility 

With urbanisation, mobility related issues include increasing motorisation, increasing motor vehicle ownership, mixed vehicle traffic, pollution, congestion, and reduction in non-motorised transport.  Growing cities have, in the past, focused on automobile-centric development.[25]   Such development focuses solely on investing in infrastructure like road-widening, flyovers, foot-over-bridges, and underpasses.

In addition to private vehicles, commute in urban areas is characterised by mass transit systems.26  These systems help improve worker mobility, boost economic growth, and reduce travel time, congestion, and pollution.26   According to the Standing Committee on Housing and Urban Affairs (2022), mass rapid transit systems (MRTS) in urban areas can be classified in the following five categories: (i) Bus Rapid Transit System (BRTS), (ii) Light Rail Transit (LRT), (iii) Tramways, (iv) Metro Rail, and (v) Regional Rail (for example, the recently announced Delhi-Meerut Regional Rapid Transit System). [26]

The choice of MRTS depends upon factors like passenger density, peak hour traffic, population, demand, average trip distance, and cost of implementation.  While selecting an appropriate transport network, it is also important that the urban centres take the future projected demand into account.[27]  

In India, walking and cycling are prominent modes of commute.  In major urban centres like Mumbai, Delhi, and Kolkata about 27%, 22%, and 28% of the commuters walk to work.[28]   

Figure 4: Urban working population by mode of travel to work

 

Sources: Census 2011; PRS.

High allocation to Metro Rail:  In 2024-25, the Ministry is expected to spend Rs 24,932 crore (32% of its expenditure) on MRTS and Metro Projects in urban areas.  This the second highest allocation after PMAY-U.  Of this, Rs 23,114 (92.7% of allocation to MRTS and metro projects) crore will be spent on 16 metro projects.  

Figure 5: MRTS and metro project allocation (BE vs Actuals, in Rs crore)

Note: Actual figure for 2023-24 is revised estimate.
Sources: Demand No. 60, Ministry of Housing and Urban Affairs, Union Budget: 2017-18 to 2024-25; PRS.

According to the revised estimates of 2023-24, the Ministry incurred the highest expenditure (33.4%) on MRTS and Metro Projects.  In 2023-24, Metro Rail Projects in In Delhi (Rs 2,966 crore), Bangalore (Rs 3,460 crore), Mumbai (Rs 3,041 crore) and Surat (Rs 2,192 crore) received the highest budgetary support.  In addition, the Delhi-Ghaziabad-Meerut Regional Rapid Transit System received an allocation of Rs 3,538 crore.[29]

According to the Nation Urban Transport Policy, 2014, the government is expected to support rail and road-based transport (including bus services) along with taxi/cab services.  The Ministry has prioritised spending on metro projects.  In 2024-25, Rs 1,300 crore has been allocated to the PM e-bus Sewa Scheme, which is 1.7% of the total expenditure by the Ministry.  This scheme seeks to boost India’s electric mobility infrastructure.

Planning for mass transit systems: The National Transport Development Policy Committee (NTDPC) report (2014) had observed that high speed mass transit systems such as metro rail do not always reduce door-to-door travel time.[30]  When trip distances are short, underground or elevated transport systems do not save time as compared to cars or two- wheelers.  Time is lost in walking from ground level to the platform level.  Metro rail systems are efficient only when the average trip distance is greater than 12 km.  Indian cities, because of their mixed land use patterns and higher density development, have shorter trip lengths, and hence are better suited for non-motorised travel.  

The NTDPC had recommended that rail-based metro systems should be considered after examining the opportunity cost of investing in expensive fixed infrastructure.   It had recommended that metro rail projects should initially be limited to cities with population more than five million.  Cities should be able to cover all costs through user charges.  It had also recommended that Indian cities should focus on improving their existing bus systems, adding bus rapid transit (BRT) systems, and improving non- motorised transport.

Metro projects in cities with lower demand:  Peak Hour Peak Direction Traffic (PHPDT), is used as a measure of passenger capacity/ density on a given route, in a particular direction, in a given peak period.  The conventional metro rail has a PHPDT of upto 72,000 passengers.26  Delhi has PHPDT ranging from 8,000 - 59,000 passengers (excluding the Airport Express Line).26  In comparison, other cities like Kolkata metro had PHPDT ranging from 15,000 – 43,000 passengers, 40,000 in Bhopal, 8,500 – 20,000 in Pune, and 72,000 for Mumbai.26  According to the Standing Committee on Housing and Urban Affairs (2022) cities with lower PHPDTs, should opt for lighter MRT solutions, as compared to cost-intensive projects (like Metrolite, Metroneo, Bus transport system) catering to higher PHPDT areas.17   Metro Rail systems are best suited for cities with high population/ projected populations with a spread-out spatial pattern and adequate population density.  In comparison light urban rail transport, called Metrolite can be constructed at 40% of the cost of conventional metro and has a PHPDT of upto 15,000 passengers.  This mode is more suitable to cities with lower ridership projections   

Metroneo, which is another alternative to conventional metro rail, can be constructed at 25% the cost of metro rail.  This metro system is suitable for Tier-2 cities with PHPDT of upto 8,000.26  The Standing Committee on Housing and Urban Affairs (2022) emphasised the importance of adopting these light and cost-effective transit modes in smaller cities aspiring for rail-based mass transit system.²⁶  

Transit Oriented Development The Ministry of Housing and Urban Affairs released an Advisory on Transit Oriented Development (TOD) in September 2023.[31]  TOD integrates land use and transportation around transportation hubs.25  It aims to promote the use of non-motorised modes over private vehicles and strengthen the linkage between mass transit and other modes of transport.  In addition, the strategy also aims to promote housing for EWS, LIG, and MIG (and those who depend on public transport for daily commute) in walkable neighbourhoods.  The Budget has proposed that TOD plans will be developed for 14 large cities in 2024-25.

Safety concerns for non-motorised transport (NMT):  With increasing urban sprawl, non-motorised modes are becoming unsafe as they share the same right of way with motorised vehicles.32  In addition, mixing of motorised vehicles and non-motorised modes hinders vehicular traffic flow, leading to congestion issues.[32]   

According to the Road Accidents in India Report 2022, 19.5% of persons killed/injured in road accidents in million-plus urban cities were pedestrians (highest share was two-wheeler riders – 42.9%).[33]  The High Powered Committee Report on Decongesting Traffic in Delhi stated the need for cities to focus on pedestrian-oriented road planning.[34]   

Increasing use of private vehicles: Difficulties in accessing NMT, also impacts the use of private vehicles, along with growth in cities.  As distance from work increases, the modal share of commute to work also changes.²⁸  In the absence of a reliable public transportation system, people move towards private vehicles or intermediate modes of public transport (auto/cab services).[35]  The National Urban Transport Policy, 2014, recommended the levy of a high parking fee to push people towards using more public transport.32 

Table 8: Modal share based on city populations (2007)

City Population	Public Transport	Private vehicle /taxi	NMT*
<5 lakh	8%	34%	58%
5-10 lakh	9%	39%	53%
10-20 lakh	13%	43%	44%
20-40 lakh	10%	47%	43%
40-80 lakh	22%	42%	36%
>80 lakh	46%	24%	30%

*NMT is non-motorised transport
Sources: National Urban Transport Policy; PRS.

According to the Household and Metro Users survey conducted by the Transport Department, Delhi Government, providing access to good public transportation system with a higher parking fee, incentivises more people to shift to public transportation.  According to this survey, 45% of car users are estimated to shift to public transport if parking fee is increased by 50%.34

Basic Civic Amenities in Urban Areas - Drinking Water, Sewerage, and Sanitation

Water Supply: According to the NFHS-5 data, during 2019-21, 54% of the urban households had access to piped water into dwelling as the main source of drinking water.  The rest relied on water from tube wells (16%), public taps (12%), and protected dug well (3.3%) amongst other sources.41  In urban India, in almost all towns, water supply is intermittent ranging from 2-6 hours a day.43  Water in urban areas is either sourced from groundwater resources or water bodies located in proximity of the urban areas.   But cities have had to source water from long distances.  For example, Delhi does not possess adequate natural water resources and is dependent on reservoirs situated at long distances.[36]  According to the Ministry of Housing and Urban Affairs, rapid urbanisation is affecting water quality (pollution of rivers and groundwater) and quantity as competing demands for water by states/cities increase.[37] 

Commercial Losses:  ULBs incur high revenue losses and operational costs due to high non-revenue water.39  Non-revenue water is water that is pumped and then lost or unaccounted for.[38]  Physical and commercial losses have pushed the non-revenue water levels upwards in cities.39   Distribution losses are mostly incurred due to lack of maintenance and water loss due to leakages.   Inefficiencies or lack of water metering leads to monetary losses for the ULBs.  The government has set benchmarks for non-revenue water at 20%.   Indian cities on an average have 38% non-revenue water.[39]   

According to the 15^th Finance Commission, 60% of the basic grants for ULBs in non-million plus cities must be tied to strengthening the delivery of: (i) sanitation and solid waste management, and (ii) drinking water, rainwater harvesting and water recycling.11 

Aging sewerage infrastructure: Growth of urban centres is expected to put additional stress on the already-insufficient water resources and inadequate infrastructure.[40]  According to the National Family Health Survey (2019-21), only 23% of urban households were connected to the piped sewer system, while 47% of the households had a septic tank sewer system in place.[41]   Older sewerage systems designed for lower population densities continue to deteriorate, leading to blockages and leaks.[42] 

Stormwater drainage and flooding: In India, urban centres lack a properly engineered storm water drainage infrastructure.   The existing infrastructure serves as a combined system for sewage and storm water runoff.  Urban flooding has worsened due to dumping of solid waste in drains and absence of preventative regular maintenance.[43]  The aging drainage system struggles to handle the increased water flow due to high intensity rainfall and the effects of climate change, leading to urban flooding.  Moreover, consistent drain management and cleaning is restricted due to ULBs’ lack of finances.  To prepare integrated solutions for urban flood management, the 15^th Finance Commission recommended an allocation of Rs 500 crore each for Mumbai, Chennai, and Kolkata, and an allocation of Rs 250 crore for Bengaluru, Hyderabad, Ahmedabad, and Pune.11   Major cities affected by floods during the last five years include Palakkad, Thrissur, Cochin, and Malappuram in Kerala (2018 & 2020), Hyderabad (2020), Bengaluru (2022), Manali in Himachal Pradesh (2023), Patiala, Dera Bassi in Punjab (2023) and Yamuna river Banks in Delhi (2023).[44]  To mitigate urban flooding, the Ministry has published a Standard Operating Procedure for Urban Flooding for States/UTs in 2017.[45]

Atal Mission for Rejuvenation and Urban Infrastructure (AMRUT)

To deal with the issues of water supply, sewerage, storm water management, and public transport, the Atal Mission for Rejuvenation and Urban Infrastructure (AMRUT) was launched in 2015.  The mission covers 500 cities and was extended as AMRUT 2.0 in 2021 for a period of five years.  The total budgetary allocation for AMRUT 2.0 from 2021-22 to 2025-26 is Rs 66,750 crore, of which Rs 6,908 crore has already been released (as of December 2023).[46]  The scheme has been allocated Rs 8,000 crore in 2024-25.  

Out of the total projects grounded under the scheme, 70 are water supply projects, and 140 are sewerage and septage management projects.[47]   Out of these, 68 sewerage and septage management projects are still incomplete (as of December 2023).  The mission has targeted the provision of 1.4 crore sewer connections.  As reported by AMRUT cities, 1.47 crore new/ serviced sewerage and septage facilities were added/serviced in these cities till 2023.[48] As of December 2023, under storm water drainage component of AMRUT, 739 out of the 813 approved projects have been completed, eliminating 3,416 water logging points in urban areas.45

National Mission on Sustainable Habitat As a part of the National Action Plan for Climate Change, the National Mission on Sustainable Habitat aims at promoting low carbon growth and development in urban areas.[49]  The mission focuses on urban development in the five following areas:  Energy and Green Buildings aims at reducing energy consumption for lighting, heating and cooling and promotes a shift towards renewable energy sources.  Recommendations include annual energy audits and requisite changes in water supply, sewage, and storm water management.  Under the AMRUT scheme, energy audit was undertaken in 370 cities until October 2021.  Under Smart Cities Mission, renewable energy is being promoted as 10% of city’s energy needs are to be met by solar power. Urban Planning, Green Cover and Biodiversity focuses on climate sensitive integrated urban and regional planning.  It aims to preserve and rejuvenate water bodies and green spaces. Mobility and Air Quality aims at reducing the use of private motor vehicles by implementing strategies that promote multi-modal mobility channels.  Water management focuses on rain-water harvesting, rejuvenation of water bodies, recycling of sewage water, and water conservation. Waste management focuses on the need for cities to reduce waste generation and promote waste management.

Delay in project completion:  The Standing Committee on Housing and Urban Affairs (2023) highlighted the delay in project completion under AMRUT 1.0.⁵²  12% of these projects were subsumed under AMRUT 2.0 and received an extension until March 31, 2023.  In a response to the observation by the committee, the Ministry, in December 2023, stated that the mission has further been extended until March 31, 2024.  They also stated that any spill over liability beyond this deadline would be borne by the state governments.  As of December 2023, 754 (13% of total grounded projects) projects worth Rs 40,246 crore (49% of project cost of total grounded projects) were still pending completion under AMRUT.[50]   Out of these, 68 are sewerage and septage management projects, while 37 are water supply projects.50   Additionally, as of December 2023, under AMRUT 2.0, 18 out of the total 830 grounded water supply projects have been completed.50  11 out of 163 sewerage and septage management projects have been completed under AMRUT 2.0.50 

Table 9: Details of status of AMRUT Projects, as of December 2023 

	Grounded Projects		Ongoing Projects
	No of Projects	Project Cost (in Rs crore)	No of Projects	Project Cost (in Rs crore)
India	5,902	82,904	754	40,246

Sources: Starred Question No. 3053, Ministry of Housing and Urban Affairs, Lok Sabha, December 21, 2023; PRS.

Fund utilisation: As of February 2023, the average fund utilisation by states was 84.9%.[51]   The Ministry, in its response to the Standing Committee on Housing and Urban Affairs (2023), said that laying a sewerage network across the country will require an investment of Rs 3,00,000 crore as against the existing allocations.51  

Smart Cities Mission

Launched in 2015, the primary objective of the Mission is to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and apply ‘smart’ solutions using technology.  100 cities were selected for development as smart cities under the mission.  The Mission was to run till 2020, with the central government spending Rs 48,000 crore.  It has been extended till March 2025 on the requests of states/ city governments.

As of July 2024, 100 cities have finished 90% of the total projects (7,188 projects).   The remaining projects (830 projects) are estimated to receive Rs 2,400 crore in 2024-25.

Inconsistencies in project implementation: As on December 2023, the total number of projects planned for execution were 5,151.52  In comparison, a total of 7,970 projects were taken up for execution.  A city-wise analysis reveals that 70 cities have taken up a higher number of projects for execution, while 30 cities have dropped some of the planned projects.[52]   Many projects in cities have been dropped due to factors like: (i) land procurement issues, (ii) resettlement/ rehabilitation issues, and (iii) lack of capacity or time to finish projects.52  An advisory dated January 21, 2019, was released which provided flexibility to smart cities to undertake changes in plans.52  As a result, some cities modified their plans with alternate ones meeting similar objectives.

Inadequate fund mobilisation from states: Despite the release of full government financial support to 74 cities under the scheme, fund disbursal from states has been inadequate under the mission.2^,46  Of the 100 cities, only 28 cities have received 100% of their share of funds from states/ ULBs, while 14 other cities have received less than 14% of their share.46 

Swachh Bharat Mission (SBM) and SBM 2.0

Sanitation, including the availability of washrooms and absence of open defecation, is a major challenge to public health.  The Swachh Bharat Mission (Urban) (SBM-U) was launched in 2014, to provide access to sanitation facilities in urban areas.  The objectives of the scheme included: (i) make all urban areas open defecation free, and (ii) achieve 100% scientific management of municipal solid waste.   

According to the NFHS-5 data, 6% of urban population was still practicing open defecation by 2019-20. Under the SBM-U, 4,576 cities have been declared ODF and 3,913 have been declared ODF+ (no defecation/urination in the open).[53]  In 2021, the Mission was extended for five years, as SBM 2.0.  Goals for phase 2 include: (i) source segregation of solid waste at source, (ii) scientific processing of waste, and (iii) improving dumpsites for solid waste management.

100% mechanical desludging of sewers As of February 2024, 35% cities have declared that they are 100% enabled for mechanical desludging of septic tanks and sewers to ensure transition from manhole to machine hole mode.  These 1,709 cities (‘Safai Mitra Surakshit Shehar’) have enhanced their focus on scientific management of dry and wet waste.[54]

Poor Solid Waste Management: In 2020-21, 75-80% of the municipal solid waste was collected, 22-28% of which remains untreated.   This untreated waste is then deposited in dumping yards and landfills.[55]   The Standing Committee on Ministry of Housing and Urban Affairs (2021) noted that ULBs are not getting adequate funds for solid waste management.55   60-70% of the total funds received for solid waste management by the ULBs goes towards street sweeping, while 20-30% goes towards waste transportation.55  Source segregation, an objective under SBM 2.0, also remains under 48% in the country.55

For the period 2021-26, the 15^th Finance Commission has recommended grants worth Rs 4,829 crore to be used for supply and management of water and efficient solid waste management in urban agglomerations.11

Inadequate spending on driving behavioural change and capacity building for ULBs: Behavioural change and public participation are key components in achieving sanitation and cleanliness goals, and spending to augment behavioural change is important.  The Standing Committee on Housing and Urban Affairs (2023) highlighted that spending on Information, Education and Communication (IEC) in states was almost nil.51 

Table 10: Fund utilisation under the IEC component of Swachh Bharat Mission – Urban and SBM 2.0 (in Rs crore)

Mission Allocation for IEC	2021-22	2022-23	Total
3,630.5	123.19	20.23	143.49

Sources: Demand No. 60, Detailed Demands for Grants of Ministry of Housing and Urban Affairs for 2023-24; PRS.

Similarly, expenditure on capacity building of ULBs has been minimal.  Of the total allocation for capacity building worth Rs 2,118 crore, only Rs 144 crore has been utilised.  The Standing Committee recommends increasing expenditure under the IEC component to ensure active engagement from citizens to achieve the vision of garbage free cities.51  

Lack of Master Plans

A report by Niti Aayog on Reforms in Urban Planning Capacity in India notes that about 65% of the 7,933 urban settlements do not have any Master Plans to guide the spatial growth and infrastructural investments in the city.[56]  The absence of a master plan leads to piecemeal interventions, haphazard constructions, urban sprawl, and environmental pollutions.  This is indicative of an absence of a spatial strategy for urban centres for the next 20 years.  For towns with master plans, sometimes they fail to accommodate the social and economic changes in the urban centres and its peripheries.  The 74^th Amendment to the Constitution recommended setting up of a District Planning Committee and a Metropolitan Planning Committee (for cities with population of 10 lakh or more).[57]  These committees would be responsible for formulating draft development plans for the district/metropolis.  The HPEC also notes that according to the 74^th Constitutional Amendment Act, District/Metropolitan Planning Committees have been set up but not empowered to function in many states. 

The lack of these plans and committees leads to haphazard growth in the cities.   This leads to issues like lack of land for affordable housing, congestion, unplanned construction, ad-hoc provisioning of infrastructure, and difficulties in accessing basic services.

Annexure

Table 11: Status of PM Awas Yojana-Urban as of July 15, 2024

State/UT	Sanctioned	Completed	Completion rate
Andaman and Nicobar Islands	376	47	13%
Andhra Pradesh	21,37,028	9,73,837	46%
Arunachal Pradesh	8,499	7,753	91%
Assam	1,76,643	1,02,712	58%
Bihar	3,14,477	1,47,979	47%
Chandigarh	1,256	1,256	100%
Chhattisgarh	3,02,663	2,38,894	79%
Dadra and Nagar Haveli and Daman and Diu	9,947	9,230	93%
Delhi	29,976	29,976	100%
Goa	3,146	3,145	100%
Gujarat	10,05,204	9,18,185	91%
Haryana	1,15,034	68,114	59%
Himachal Pradesh	12,758	10,705	84%
Jammu and Kashmir	47,040	24,244	52%
Jharkhand	2,29,156	1,42,810	62%
Karnataka	6,38,121	3,69,449	58%
Kerala	1,67,322	1,23,453	74%
Ladakh	1,307	843	64%
Madhya Pradesh	9,61,147	8,01,068	83%
Maharashtra	13,64,923	8,55,339	63%
Manipur	56,037	14,699	26%
Meghalaya	4,758	1,632	34%
Mizoram	39,605	11,069	28%
Nagaland	31,860	22,850	72%
Odisha	2,03,380	1,47,148	72%
Puducherry	15,995	9,994	62%
Punjab	1,32,235	83,894	63%
Rajasthan	3,19,863	1,91,971	60%
Sikkim	316	202	64%
Tamil Nadu	6,80,347	5,70,294	84%
Telangana	2,50,084	2,24,659	90%
Tripura	92,854	74,049	80%
Uttar Pradesh	17,76,823	15,47,101	87%
Uttarakhand	64,391	34,504	54%
West Bengal	6,68,953	4,00,257	60%
India	1,18,63,524	81,63,362	69%

Sources: National Progress, PMAY-Urban Dashboard.

Table 12: Urban housing shortage estimates: Census 2011 vs PMAY-U estimates

State/UT	Urban Housing Shortage (based on Census 2011)	Houses Sanctioned under PMAY-U	PMAY-U Sanctioned houses as % of Housing Shortage
Andaman and Nicobar Islands	-	376	-
Andhra Pradesh	12,70,000	21,37,028	168%
Arunachal Pradesh	30,000	8,499	28%
Assam	2,80,000	1,76,643	63%
Bihar	11,90,000	3,14,477	26%
Chandigarh	20,000	1,256	6%
Chhattisgarh	3,50,000	3,02,663	86%
Dadra and Nagar Haveli and Daman and Diu	60,000	9,947	17%
Delhi	4,90,000	29,976	6%
Goa	60,000	3,146	5%
Gujarat	9,90,000	10,05,204	102%
Haryana	4,20,000	1,15,034	27%
Himachal Pradesh	40,000	12,758	32%
Jammu and Kashmir	1,30,000	47,040	36%
Jharkhand	6,30,000	2,29,156	36%
Karnataka	10,20,000	6,38,121	63%
Kerala	5,40,000	1,67,322	31%
Ladakh	-	1,307	-
Madhya Pradesh	11,00,000	9,61,147	87%
Maharashtra	19,40,000	13,64,923	70%
Manipur	80,000	56,037	70%
Meghalaya	30,000	4,758	16%
Mizoram	20,000	39,605	198%
Nagaland	2,10,000	31,860	15%
Odisha	4,10,000	2,03,380	50%
Puducherry	70,000	15,995	23%
Punjab	3,90,000	1,32,235	34%
Rajasthan	11,50,000	3,19,863	28%
Sikkim	10,000	316	3%
Tamil Nadu	12,50,000	6,80,347	54%
Telangana	-	2,50,084	-
Tripura	30,000	92,854	310%
Uttar Pradesh	30,70,000	17,76,823	58%
Uttarakhand	1,60,000	64,391	40%
West Bengal	13,30,000	6,68,953	50%
India	1,87,70,000	1,18,63,524	63%

Sources: Census 2011, National Progress, PMAY-Urban.

 

[57] The Constitution (Seventy-fourth Amendment) Act, 1992, https://www.india.gov.in/my-government/constitution-india/amendments/constitution-india-seventy-fourth-amendment-act-1992. 

DISCLAIMER: This document is being furnished to you for your information. You may choose to reproduce or redistribute this report for non-commercial purposes in part or in full to any other person with due acknowledgement of PRS Legislative Research (“PRS”). The opinions expressed herein are entirely those of the author(s). PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the contents of the report are accurate or complete. PRS is an independent, not-for-profit group. This document has been prepared without regard to the objectives or opinions of those who may receive it.