The 15th Finance Commission's ambitious allocation of Rs 8,000 crore for a performance-based challenge fund to develop eight new cities across India has failed to materialize, with the commission's term concluding without any progress on this initiative. This fund, recommended in 2020 to promote planned urbanization and alleviate pressure on existing metropolitan areas, has remained entirely on paper, highlighting significant implementation gaps in India's urban development strategy.
New Cities Initiative Stalls Despite State Interest
Following the 15th Finance Commission's recommendation to incubate up to eight new cities as pilot projects, the Ministry of Housing and Urban Affairs invited proposals from states across the country. The response was substantial, with 28 proposals submitted from 23 different states, indicating widespread interest in this urban development opportunity.
However, despite this initial enthusiasm, the ministry has been unable to finalize the selection of eight cities or complete the evaluation process. The entire Rs 8,000 crore allocation now stands unused as the commission's period officially ends, raising questions about bureaucratic delays and implementation challenges in large-scale urban planning initiatives.
Expert Insights on Urban Development Priorities
An expert familiar with the deliberations of the upcoming 16th Finance Commission revealed that this initiative is unlikely to be carried forward. "This is one of the areas where the desired targets have not been met and there is hardly any hope of this proposal getting spilled over to the 16th Finance Commission," the expert stated.
The expert further explained, "We have understood well that we need to improve our existing cities and urban areas rather than creating new ones. Naya Raipur is a live example for all of us," referencing the planned capital city of Chhattisgarh that has faced its own implementation challenges despite substantial investment.
Air Pollution Control Measures Lagging
Parallel to the stalled new cities initiative, progress on air pollution control measures in million-plus population cities has also been unsatisfactory. The 14th Finance Commission had designated the housing and urban affairs ministry as the nodal entity for grants to these cities to implement specific pollution control measures.
These measures included:
- Deployment of mechanical sweeping machines
- Promotion of non-motorized transport including pedestrian and cycling infrastructure
- Paving road side flanks with facilities for water percolation
Experts indicate that the report to be presented in Parliament will provide detailed performance assessments of cities on these critical environmental parameters, likely revealing significant implementation gaps.
City Bus Scheme Faces Implementation Delays
Another urban mobility initiative has similarly stalled, with not a single bus deployed under a scheme announced six years ago to improve city bus availability. The government had announced in February 2020 an Rs 18,000 crore scheme designed to facilitate deployment of innovative Public-Private Partnership (PPP) models.
This ambitious program aimed to enable private sector players to finance, acquire, operate and maintain over 20,000 buses across Indian cities, addressing critical gaps in urban public transportation.
Current Status of Urban Bus Infrastructure
The Economic Survey presented in Parliament this week highlighted the government's more recent initiative, the PM e-Bus Sewa scheme, which aims to strengthen city bus operations with 10,000 electric buses on a PPP model. According to official status notes for FY25:
- 7,293 e-buses have been approved across 14 states and four Union Territories
- Rs 983.75 crore has been sanctioned for depot and behind-the-meter power infrastructure
- Rs 437.5 crore has already been disbursed for these initiatives
Despite these measures, the survey acknowledges that significant gaps in mass transit services persist across Indian cities. The housing and urban affairs ministry recommends 40-60 buses per one lakh population, yet many urban centers operate with far fewer vehicles.
National Urban Transportation Challenges
The Economic Survey reveals concerning statistics about India's urban bus infrastructure. Nationally, only about 47,650 buses serve urban residents, with nearly 61% of these concentrated in just nine megacities. This uneven distribution creates transportation inequities across different urban centers.
"Due to the layout of urban roads, low bus availability combined with high private vehicle use reduces person throughput per lane kilometre, leading to congestion and longer door-to-door travel times," the survey noted, highlighting the interconnected challenges of inadequate public transportation and urban congestion.
The convergence of these stalled initiatives—from new city development to pollution control and bus deployment—paints a concerning picture of implementation challenges in India's urban development sector, even as the country continues its rapid urbanization journey.
