Urban Ministry Faces Major Budget Underutilization Despite Infrastructure Push
In a significant development highlighting implementation challenges, the Ministry of Housing and Urban Affairs is projected to end the current financial year with approximately 40% of its allocated budget remaining unutilized. This comes despite the central government's stated emphasis on enhancing urban infrastructure and promoting planned urbanization across the country.
Stark Numbers Reveal Systemic Issues
Budget documents indicate that against a total allocation of Rs 96,777 crore for the fiscal year 2025-26, the ministry's estimated expenditure stands at just Rs 57,204 crore. This substantial gap of around Rs 39,573 crore represents a serious underutilization of resources earmarked for critical urban development initiatives.
The situation becomes even more concerning when examining Centrally Sponsored Schemes specifically. These flagship programs, which include PM Awas Yojna (Urban), Swachh Bharat Mission (Urban), AMRUT, and the National Urban Livelihoods Mission, are showing particularly poor fund utilization rates.
Scheme-by-Scheme Breakdown Shows Widespread Underperformance
Out of the Rs 53,604 crore allocated for Centrally Sponsored Schemes this fiscal year, utilization is likely to reach only Rs 18,950 crore—representing just over one-third of the available funds. This pattern of underutilization is consistent across multiple high-profile initiatives:
- PM Awas Yojna (Urban): Targeted expenditure of Rs 19,794 crore contrasts sharply with the projected utilization of just Rs 7,500 crore.
- Interest Subsidy Disbursement: Only around Rs 300 crore likely to be disbursed against a target of Rs 3,500 crore.
- Industrial Housing Scheme: Merely Rs 100 crore expected to be utilized from a budget estimate of Rs 3,500 crore.
- AMRUT Mission: Estimated expenditure of Rs 8,000 crore compared to the allocation of Rs 10,000 crore.
- Swachh Bharat Mission (Urban): Only Rs 2,000 crore likely to be utilized from the allocated Rs 5,000 crore.
The PM e-Bus scheme, first announced in the 2020 Budget, follows this same troubling pattern of underutilization.
Historical Context and Expert Analysis
This is not an isolated occurrence. Previous budget documents reveal a consistent trend of underutilization. For instance, during the 2024-25 fiscal year, actual expenditure was Rs 53,255 crore against a total allocation of Rs 82,577 crore.
A former urban development secretary, speaking on condition of anonymity, emphasized that this persistent pattern should serve as a clear signal to the government. The expert suggested there is an urgent need to recalibrate Centrally Sponsored Schemes, which are primarily implemented by state governments, to improve fund utilization and project execution.
The substantial gap between budget allocations and actual expenditure raises important questions about implementation capacity, bureaucratic processes, and coordination between central and state authorities in executing urban development projects across India.
