As per Entry 5 of the State List of the Constitution, states can make laws on local government. The 74th Amendment to the Constitution gave a broad governance framework for municipalities and listed some functions that states can devolve to municipalities. The Ministry of Housing and Urban Affairs is the apex authority formulating policies and programmes related to urban development and urban housing. It provides technical and financial support to states through its schemes and programmes.[i] Some key areas of focus of the Ministry include: (i) urban planning, (ii) urban employment and urban poverty alleviation, (iii) planning and coordination of urban transport systems, (iv) formulation of housing policy, (v) water supply, sewerage and sanitation, and (vi) policy matters relating to municipal finances and urban local bodies.1
This note examines the proposed budget allocations for 2025-26 to the Ministry of Housing and Urban Affairs and looks at some related issues.
Overview of Finances
Allocation in 2025-26
In 2025-26, the Ministry has been allocated Rs 96,777 crore, which is 52% higher than the revised estimate of 2024-25.[ii] This is about 1.9% of the total central government expenditure (0.3% of GDP). The Ministry plans to spend 61% of its total budget on revenue items and the remaining on capital items. In 2024-25, revenue expenditure at the revised estimate stage was 41% less than the budget estimate for the year (Rs 53,948 crore). This was primarily on account of underspending on PM Awas Yojana – Urban (55% underutilisation).
Table 1: Allocation towards the Ministry of Housing and Urban Affairs (in Rs crore)
|
|
2023-24 Actuals |
2024-25 RE |
2025-26 BE |
% change RE 24-25 to BE 25-26) |
|
Revenue |
42,124 |
32,008 |
59,154 |
85% |
|
Capital |
26,441 |
31,662 |
37,623 |
19% |
|
Total |
68,565 |
63,670 |
96,777 |
52% |
Note: BE- Budget Estimates; RE- Revised Estimates.
Sources: Expenditure Budget, Ministry of Housing and Urban Affairs, Union Budget 2025-26; PRS.
Key Expenditure Heads
The Ministry has allocated 36% of its total budget for development of mass rapid transport systems and metro projects in urban areas. The PM Awas Yojana – Urban receives the second highest allocation (24%) under the Ministry (see Table 2). Other schemes implemented by the Ministry include: (i) Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which seeks to improve delivery of basic amenities in cities, (ii) Smart Cities Mission, which seeks to develop 100 smart cities, (iii) Swachh Bharat Mission – Urban (SBM-U), and (iv) PM Street Vendor’s Atmanirbhar Nidhi (PM SVANIDHI), which seeks to provide financial assistance to street vendors. In addition, Rs 10,000 crore has been allocated for the Urban Challenge Fund.
Table 2: Allocation towards key schemes under the Ministry (in Rs crore)
|
|
2023-24 Actuals |
2024-25 RE |
2025-26 BE |
% change RE 2024-25 to BE 2025-26) |
|
MRTS and Metro Projects |
23,102 |
28,613 |
34,807 |
22% |
|
PMAY- Urban and PMAY 2.0 |
21,684 |
15,170 |
23,294 |
54% |
|
AMRUT |
5,591 |
6,000 |
10,000 |
67% |
|
Urban Challenge Fund |
- |
- |
10,000 |
- |
|
Smart Cities Mission |
7,982 |
2,000 |
- |
- |
|
Swachh Bharat Mission - Urban |
2,392 |
2,159 |
5,000 |
132% |
|
Scheme for Industrial Housing |
- |
- |
2,500 |
- |
|
PM e-bus Sewa |
1 |
500 |
1,310 |
162% |
|
PM-SVANIDHI |
445 |
450 |
373 |
|
Note: BE- Budget Estimates; RE- Revised Estimates; AMRUT is Atal Mission for Rejuvenation and Urban Transformation; PM SVANIDHI is PM Street Vendor’s AtmaNirbhar Nidhi; PMAY is PM Awas Yojana – Urban.
Sources: Expenditure Budget, Ministry of Housing and Urban Affairs, Union Budget 2025-26; PRS.
Fund Utilisation
Since 2012-13, in most years, the Ministry has not utilised the entire amount estimated at budget stage. The exception was in 2021-22 when the Ministry’s total expenditure increased by 96% (Rs 52,259 crore) due to increased spending on PM – Awas Yojana Urban (Rs 51,963 crore). This was a part of the government’s stimulus to the economy under the Atmanirbhar schemes during Covid.[iii]