Centre shelves ₹8,000-crore greenfield cities mega scheme

Hindustan Times

4 hours ago

The Union government has shelved the scheme to incubate eight new cities, as recommended by the 15th Finance Commission (FC), according to senior government officials. A senior official at the Union ministry of housing and urban affairs (MoHUA), on condition of anonymity, said that ₹ 8,000 crore allotted for the scheme will now be subsumed under another new scheme. Lavasa city in Maharashtra. (HT Archive)
A second official said that this new scheme may be designed based on ongoing deliberations between the ministry, NITI Aayog, and the Asian Development Bank (ADB) for infrastructure upgrades in smaller cities with a population of up to 100,000, as per the 2011 Census.
The decision to shelve the greenfield cities plan came after the Union government already received 26 proposals, including one for Ayodhya in Uttar Pradesh, Jagiroad in Assam, GIFT City expansion in Gujarat, Jabalpur Extension in Madhya Pradesh, Virul and Sawargaon Mal in Maharashtra, among others. In many of these cities, the state governments had already started making investments of their own. Subsequently, after a second nudge, two more proposals from northeastern states were also received by MoHUA, according to a reply in the Parliament in December 2024.
The second government official said the decision to put the FC's proposed idea on the back-burner came from the Prime Minister's Office (PMO). The official said the PMO's decision was based on presentations made by interministerial groups along with the NITI Aayog and other stakeholders as part of preparatory meetings for the 100-day agenda of the new government in the first half of 2024.
This official said that instead of going for greenfield cities, the PMO has called for efficient investments in existing organic cities as the next 'growth hubs' rather than developing new 'cities from scratch'.
The first official quoted above said that for the current financial year, the Centre is promoting planned greenfield townships through the Centre's Special Assistance to States for Capital Investment (SASCI) programme. SASCI provides 50-year interest-free loans for capital investment projects based on the adoption of reforms across sectors, including urban development, advocated by the Centre.
Townships typically are a planned self-contained primarily residential development that can act as a mini-city but planned as an expansion of an existing city in rural areas or as an add-on to large industrial belts.
While MoHUA is still framing the contours of the marquee ₹ 100,000 crore 'urban challenge' scheme, as mentioned by finance minister Nirmala Sitharaman in her budget speech, the official said it is likely to target smaller cities, and not the Capital or other large cities.
'So far, it has been decided that smaller cities and even towns with a population between 50,000 and 100,000 (will be considered),' the official said, adding that while bigger cities can be the 'growth hubs', the smaller sub-100,000 cities will be covered so that their basic infrastructure can be upgraded.
The FC, in its report tabled in the Parliament in 2021, had recommended the eight new cities to address a host of challenges faced by urbanisation in India, such as to alleviate the population burden on existing mega cities and check the haphazard growth at city peripheries, as is the case with most Indian cities. A report in 2022 by the Niti Aayog and ADB said that even though cities occupy only about 3% of India's land area, they contribute to around 60% of the GDP.
'Focus on peri-urban'
'City economies aren't confined to municipal limits; peri-urban areas are increasingly driving urban GDP, especially around large cities where much of the recent growth has occurred in an ad hoc manner,' Jaya Dhindaw, executive programme director of sustainable cities and director, WRI India Ross Centre, said.
She emphasised that to sustain this momentum, priority must be given to planning and investing in areas beyond city boundaries, with integrated infrastructure and services.
She said, 'Governance in these transitional zones—whether under gram panchayats or small-town municipalities—needs to be reimagined with clear frameworks agreed upon by states and the Centre.'
She added that attention must also turn to Tier-II and Tier-III cities, both of which demand a tailored approach.
'In large cities, the focus should be on improving livability for all. In smaller cities, we must prioritise access to education, skilling, capacity building, and improving the quality and availability of basic services and amenities.' For this to work, she stressed, states must have the flexibility to identify their priorities to enable balanced regional growth, while the Centre should play an enabling role by establishing standards.
Artificial cities not for India
Another urban planning expert, Rutul Joshi, professor of urban planning at CEPT University, Ahmedabad, said the decision to do away with the idea of greenfield cities is a 'good idea' as cities are not just townships but economic agglomerations.
'People move to cities as there are jobs there and not the other way around. Historically, the idea of creating artificial cities has not worked well, be it when the government does it or the private sector,' he said, citing the examples of 'ghost city' Lavasa in Maharashtra, GIFT City, or even Gandhinagar in Gujarat, which was made the state capital in 1970.
The experience has been no different in Naya Raipur (Atal Nagar), Chhattisgarh. It was planned to be the largest greenfield city at the turn of the millennium, but it has failed to take off. While the target was to have 560,000 residents by 2031, the population has stagnated well short of 100,000 by 2025.
Densify city core
Joshi said governments in India (Centre and states) should respect the market momentum and focus on densification of city cores, which have traditionally been hollow, rather than building things from scratch. 'This is the right time to create enabling instruments for re-densification and renewal of the building stock in the big cities and limit the growth at peripheries. All global cities have done this at some point in time, be it London or Hong Kong.'
Stating the example of the national capital Delhi, Joshi said that even if the Luytens' Bungalow Zone is kept out of this due to political and security reasons, multiple areas near public transit in south Delhi can be densified with Transit-Oriented Development (TOD) principles to maximise the benefits of investments made for the metro network and make urbanisation efficient at large.
Redevelop existing cities
R Srinivas, former town planner at the country and town planner with MoHUA said that in 2018-19, MoHUA, as part of a sub-scheme of the flagship AMRUT mission, had introduced a local area planning/town planning scheme pilot covering 25 cities across the country with a total outlay of ₹ 50 crore for brownfield development.
'Among them, only Indore is a prominent city that worked on brownfield development and Chennai is currently doing so in the George Town area.' For these to work, the states were advised to revise their town and country planning acts, and many states are yet to implement the necessary legal changes, he added.
While Delhi was left out of MoHUA's plan, the Municipal Corporation of Delhi (MCD) prepared more than 30 Local Area Plans (LAPs), but the Delhi Development Authority (DDA) Act did not allow for that, which meant the plans remained as an advisory only. 'In 2017-18, a committee was formed under the then DDA chairman Madhukar Gupta, which also recommended the changes in the DDA Act, but MoHUA did not act to revise the law.'