Budget 2025: A Major Push for Urban Development in India

1. Budget 2025: A Major Push for Urban Development in India India’s urban landscape is undergoing rapid transformation, with the population in cities expected to reach 500 million by 2025. As urban centres expand, the need for sustainable infrastructure, housing, and efficient public services has become more pressing. Recognising these challenges, Budget 2025 for Urban Development has allocated significant financial resources to modernising transport systems, enhancing housing projects, and improving sanitation facilities. With a 17% increase in funding compared to the previous year, this budget signals a strong commitment to reshaping India’s urban future. Key Allocations and Sectoral Priorities The Budget 2025 for Urban Development has set aside INR 96,777 crore for urban infrastructure, a substantial rise from INR 82,576 crore in 2024-25. A significant portion of this funding—36%—will be dedicated to transport projects, including metro rail expansion and Mass Rapid Transit Systems (MRTS). Housing has received 24% of the allocation, while the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) accounts for 10%. Additionally, 5% of the budget is directed towards improving sanitation, reflecting the government’s focus on enhancing the quality of urban life. A major highlight of Budget 2025 is the introduction of the Urban Challenge Fund, with an allocation of INR 100 billion. This fund aims to transform cities into economic hubs, support creative redevelopment projects, and improve water and sanitation services. Notably, the government has mandated that at least 50% of project funding must come from bonds, bank loans, or public-private partnerships, ensuring greater financial participation from various stakeholders. Impact on Urban Livelihoods and Infrastructure Beyond physical infrastructure, Budget 2025 for Urban Development also focuses on supporting livelihoods. While direct funding for the Urban Livelihood Mission has been discontinued, the government has maintained a strong commitment to street vendors through the PM SVANIDHI scheme, allocating INR 3.7 billion. This initiative has already benefitted 6.8 million vendors, providing them with access to loans and digital financial services. Furthermore, efforts are underway to register 10 million gig workers on the e-Shram portal, granting them social security benefits and access to identity cards. While the Smart Cities Mission (SCM) has officially ended, its sub-component, the City Investment to Innovate, Integrate and Sustain (CITIIS) initiative, continues

2. with an allocation of INR 2.5 billion. Compared to the INR 24 billion allocated to SCM in 2024-25, this marks a significant reduction, suggesting a shift in government priorities towards decentralised urban development projects. Future Prospects and Governance Challenges The success of Budget 2025 for Urban Development will depend on effective implementation by state and local agencies. The Urban Challenge Fund, in particular, will require efficient financial planning and governance to maximise its impact. Metro rail projects, e-buses, and digital urban initiatives are expected to drive sustainable urbanisation, but challenges such as resource allocation, municipal accountability, and long-term project viability remain. With a well-structured budget and a clear focus on sustainable development, India’s cities are poised for significant transformation. To learn more about Budget 2025 and its impact on urban development, visit the detailed article for a comprehensive analysis.