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India could get 8 new cities after Finance Commission provides Rs 8,000 crore grant

Housing Secretary D.S. Mishra says it’s too early to give details like where the cities will come up, or if they will be new or carved out of existing cities.

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New Delhi: The Rs 8,000-crore grant provided by the 15th Finance Commission to the Housing and Urban Affairs Ministry to “incubate” eight new cities has come in time to address India’s growing urbanisation challenge, its secretary D.S. Mishra said Tuesday. 

Each proposed new city will get Rs 1,000 crore for its initial development over the next five years, and a state can have only one city under the proposed scheme.

All these details were part of the Finance Commission’s report submitted to the government, which was uploaded on its website Monday.

Speaking to reporters, Housing Secretary Mishra said the ministry will soon start working on the framework for the proposed new cities. 

“Details are being worked out. It will take time. As of now, we do not have any details on where these cities will come up; whether they will be ‘greenfield’ or carved out of the existing cities,” Mishra said.

He added that the Finance Commission’s grant was necessitated by the fact that most of the existing cities have become saturated, and are inadequate for catering to the growing urban population.  

According to Census 2011, 31.2 per cent of India’s population lived in urban areas — 26 per cent of the total in statutory towns constituted under the Municipal Corporation Act, and 5 per cent in either Census towns or “outgrowth”.

“Though urban in character, these towns do not have any planned development and are still run by gram sabha and panchayats. But there are about seven crore people living in these Census towns,” the housing secretary said. 

Also read: 15th Finance Commission to set up expert panel to look at roll-on fund, cess for defence

The challenges

The Finance Commission has suggested that the ministry, in consultation with the states, should draw up appropriate modalities for the administration of the grant of Rs 8,000 crore.

According to the commission’s report, the Covid-19 pandemic has brought into sharp focus the well-known problem of inadequacy of appropriate housing and infrastructure facilities in urban areas. 

“Given the trend in urbanisation, the country needs both rejuvenation of old cities as well as the setting up of new cities,” states the report.

“The challenge of setting up infrastructure, such as laying of roads, water and sewer lines and provision of sites for schools and colleges and parks in greenfield cities can be less daunting than the problem of setting up such facilities in old established cities,” it adds.

However, the establishment of greenfield cities is easier said than done, with land acquisition and rehabilitation likely to pose a big challenge. 

“… these problems are more pronounced in states that, because of their higher density of population, need such new cities more than sparsely populated states. Given these complexities, it is better to start on a pilot basis and, hence, we recommend a performance-based challenge fund of Rs 8,000 crore to states for incubation of new cities,” the Finance Commission report states.

Also read: GST dealt ‘big blow’ to municipal finances, 15th Finance Commission study finds


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