Regardless of the Centre’s continued push for increased capital expenditure on infrastructure and emphasis on city growth, the City Infrastructure Improvement Fund (UIDF) launched within the 2023-24 Price range for 459 tier-2 and 580 tier-3 cities has seen tepid demand. Of the ₹10,000 crore allotted underneath the scheme annually, over the 2 fiscals, lower than ₹7,000 crore has been sanctioned, in response to Nationwide Housing Financial institution (NHB) officers, who spoke on situation of anonymity.
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Beneath the scheme, states can avail of loans at a reduced charge of 1.5% from the prevailing financial institution charge for roadworks, water and sanitation, space planning and growth tasks, amongst others. Even among the many ₹6,850 crore sanctioned as of December 15, near half of it will likely be used to fund states’ share of tasks underneath central authorities’s AMRUT 2.0 and SBM 2.0, an NHB official managing these funds stated.
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The Union ministry of housing and concrete affairs (MoHUA) allowed such tasks underneath the scheme to handle the low urge for food from states, HT has learnt. It’s to be famous that among the many tasks value ₹6,850 crore, detailed undertaking reviews—based mostly on which funds are sanctioned—for tasks value ₹1,050 crore are but to be submitted. Even states similar to Maharashtra and Gujarat, that are normally on the forefront of absorbing funds from MoHUA, have been gradual to this scheme.
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Most states are but to achieve their normative allocation and not less than 4 main states—Uttar Pradesh, West Bengal, Odisha and Madhya Pradesh—are but to be sanctioned a rupee underneath UIDF, a second NHB official stated. That is regardless of the NHB enjoyable norms to incorporate instructional and well being infrastructure, on solutions from MoHUA and the finance ministry.
Officers stated round 40% of the tasks sanctioned thus far are underneath the WASH (water, sanitation and hygiene) sector, whereas others are roadworks, similar to flyovers, underpasses, electrical and gasoline crematoriums, multilevel parking, libraries and anganwadis. Among the many standouts, Puducherry is utilizing these funds for heritage conservation. Many cities in Tamil Nadu are utilizing these funds for round the clock water provide, the primary NHB official stated.
Area consultants stated the scheme’s success or lack of it’s symptomatic of the state of Indian cities, particularly tier-2 and tier-3 ones. They stated the state of affairs will stay the identical so long as city growth actions stay centralised and the important process of strengthening the interior capability of the city native our bodies (ULBs) and empowering native governance as envisaged underneath the 74th Structure Modification Act is bypassed.
Ravikant Joshi, an city finance specialist and advisor with varied multilateral and nationwide organisations, reiterated that the present situation of gradual offtake from the UIDF is a structural and systemic concern of lacking long-term city infrastructure and capability funding planning. He stated that with low undertaking administration and capital absorption capability, most cities wrestle to utilise their very own funds and capital grants for growth. He stated that till the broader concern of economic independence of tier-2 and tier-3 cities is sorted, these loans must be serviced by the states and handed right down to cities as grants.
Tathagata Chatterji, an city governance skilled and professor at Xavier Institute of Administration, Bhubaneswar, stated, “As metro cities are overburdened, the necessity for enhancing the smaller cities can’t be overemphasised and UIDF can play a big position.”
He, nevertheless, questioned how tasks constructed underneath UIDF shall be operated and maintained because the income era capability of those cities is at the moment weak. “One other important level is fairness. Bankable tasks, a requisite for UIDF tasks, which purpose for fast financial returns, might overlook the wants of marginalised sections of the society, similar to slum upgrading,” he stated.
Srikanth Viswanathan, CEO of non-profit Janaagraha, stated within the present situation, the central authorities assist to 4,500-odd smaller cities needs to be largely untied in order that cities have the flexibleness to utilise funds in response to their wants. “Funds for these cities needs to be tied solely to primary circumstances like making a Metropolis Motion Plan by way of citizen participation, and publishing budgets and audited accounts, and to not reforms depending on state governments,” he stated.
Will the UIDF be discontinued?
Officers at NHB have been upbeat in regards to the scheme’s prospects and stated that even the agricultural infrastructure growth fund (RIDF), launched in 1995-96—based mostly on which UIDF is modelled—had a sluggish take-off. The allocation for RIDF has elevated from ₹2,000 crore within the first 12 months to ₹40,475 crore in 2023-24.
“We at NHB have achieved greater than 40 outreach programmes throughout the nation and elevated our footprint by opening 18 new places of work. We’re additionally hand-holding smaller states, particularly these within the northeast,” the primary official stated.
The official stated the finance ministry and the highest administration at NHB are visiting states. “It’s only after our MD’s go to that states, similar to Maharashtra and Gujarat, participated. Now, Jamnagar is among the cities with the best allocations underneath UIDF.”
The official stated that city growth departments on the state stage, which must consolidate the tasks, are slowly adapting to the scheme and studying to coordinate higher with their finance departments. “One other side is that states have been prepared with their budgets by March however our first allocation is simply round August. So, from subsequent 12 months, we anticipate issues to be higher.”
Even now, a number of states, similar to Telangana, Rajasthan, Himachal Pradesh and Tripura, have utilised considerably greater than their normative allocation after MoHUA relaxed the cap on funds for every state based mostly on their city inhabitants in July 2024, the official stated.
