India’s Cities


The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, places a significant emphasis on urban development, introducing a series of transformative reforms and investments aimed at strengthening infrastructure, enhancing urban livelihoods, and improving city governance. The government has allocated substantial financial resources to promote sustainable urban growth, modernize municipal services, and boost affordable housing initiatives.

Urban Challenge Fund to Drive City Redevelopment


A major highlight of the budget is the establishment of an Urban Challenge Fund with an allocation of ₹1 lakh crore. This fund aims to support three key initiatives:

  1. Cities as Growth Hubs – Strengthening cities as economic engines to drive employment and innovation.
  2. Creative Redevelopment of Cities – Encouraging urban renewal projects to modernize public spaces and infrastructure.
  3. Water and Sanitation Initiatives – Improving urban sanitation, waste management, and water supply systems.

The government will finance up to 25% of project costs, provided that at least 50% of the funding comes from bonds, bank loans, and public-private partnerships (PPPs). For 2025-26, an initial allocation of ₹10,000 crore has been proposed.


Boost to Urban Livelihoods and Street Vendors

Recognizing the role of urban workers and small businesses, the budget introduces measures to enhance economic opportunities for marginalized groups. A new scheme focused on the socio-economic upliftment of urban workers will be implemented to increase incomes, create sustainable livelihoods, and improve living standards.

Additionally, the PM SVANidhi scheme, which has already benefited 68 lakh street vendors, will be revamped. Key enhancements include:

  • Increased access to loans from banks.
  • Introduction of UPI-linked credit cards with a limit of ₹30,000.
  • Capacity-building initiatives to help vendors expand their businesses.

These initiatives aim to promote financial inclusion and enable small businesses to thrive in urban areas.

Expansion of Affordable Housing Through SWAMIH Fund 2

To address the growing demand for affordable housing, the government has announced SWAMIH Fund 2, a ₹15,000 crore blended finance facility. This follows the success of the Special Window for Affordable and Mid-Income Housing (SWAMIH), which has already completed 50,000 housing units.

The second phase of the fund aims to complete an additional 1 lakh units, providing relief to middle-class families and ensuring the timely delivery of residential projects.

Enhancing Urban Tourism and Infrastructure

The government has also prioritized urban tourism and infrastructure development by selecting the top 50 tourist destinations for world-class redevelopment. These cities will receive financial support for:

  • Improved connectivity and infrastructure
  • Development of tourist-friendly amenities
  • MUDRA loans for homestays
  • Enhanced visa norms for international tourists

A special focus will be given to spiritual and heritage tourism, particularly locations linked to Lord Buddha, to boost India’s appeal as a global tourism destination.

Geospatial Planning for Smarter Cities

To modernize urban planning and infrastructure development, the government will launch a National Geospatial Mission. This initiative aims to:

  • Improve land record management.
  • Enhance city planning efficiency.
  • Support infrastructure development through better geospatial mapping.

A Vision for Sustainable and Inclusive Urban Growth

The urban development initiatives outlined in Budget 2025-26 reflect the government’s commitment to building sustainable, smart, and inclusive cities. With strategic investments in infrastructure, housing, and employment, the reforms are expected to drive economic growth, improve urban living standards, and create a more resilient urban ecosystem. As India continues its rapid urbanization, these measures are poised to transform cities into dynamic centres of progress, aligning with the nation’s vision of becoming a Viksit Bharat (Developed India) by 2047.

 

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