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Union Budget: Infrastructure development fund to be set up for Tier 2, 3 cities
Finance minister Nirmala Sitharaman said National Housing Bank will manage this and public agencies will use the fund to create infrastructure in Tier 2 and Tier 3 cities
An Urban Infrastructure Development Fund (UIDF) will be set up for Tier 2 and Tier 3 cities and ₹10,000 crore is expected to be allocated for it annually, finance minister Nirmala Sitharaman announced in the Union Budget on Wednesday.
“Like the RIDF [Rural Infrastructure Development Fund] ...[UIDF] will be established...” She said National Housing Bank will manage this and public agencies will use the fund to create infrastructure in Tier 2 and Tier 3 cities.
She said states will be encouraged to leverage resources from the grants of the 15th Finance Commission as well as existing schemes to adopt appropriate user charges while accessing UIDF.
Sitharaman said the government will incentivise cities to improve their finances and make them ready for municipal bonds. “Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivised to improve their creditworthiness for municipal bonds.”
Sitharaman said states will be encouraged to undertake urban planning reforms and actions to transform cities into sustainable cities of tomorrow. “This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all,” Sitharaman said.
She said all cities and towns will be provided 100% mechanical support for the desludging of septic tanks and sewers to transition from manhole to machine-hole mode. “Enhanced focus will be provided for scientific management of dry and wet waste.”
She said that urban local bodies will be provided incentives to improve their finances and creditworthiness.
Like last year, the stress was on the need for urban planning reforms for the sustainable development of cities as nearly half the country’s population is expected to be living in cities by 2047
The 2022-23 Budget focussed on the need for the orderly development of megacities and Tier 2 and Tier 3 cities for the future. The government last year announced a slew of measures and schemes to ensure planned development and implementation of urban reforms.
