Urban Makeover 2024: Budget embraces brownfield redevelopment for smart growth

India is poised for a major urban transformation as the government rolls out a comprehensive strategy aimed at addressing urbanization challenges and enhancing city development. This strategy focuses on "creative brownfield redevelopment," planned peri-urban growth, and transit-oriented development (TOD) to revamp cities and improve residents' quality of life.

Government's Urban Development Focus
Urban development is a top priority for the government, aiming to create ample opportunities and foster growth. Union Finance Minister Nirmala Sitharaman emphasized the importance of urban development while presenting the Union Budget 2024-25. "The people have given a unique opportunity to our government to take the country on the path of strong development and all-round prosperity," she said.


Brownfield Redevelopment and TOD Plans
A cornerstone of the government's urban strategy is the brownfield redevelopment of existing cities. This initiative, described by Sitharaman as having a "transformative impact," will be guided by a new framework that includes enabling policies, market-based mechanisms, and regulations. This framework is set to be detailed soon.

The government will also formulate TOD plans for 14 large cities with populations over 30 lakh. TOD aims to maximize residential, business, and leisure spaces within walking distance of public transport. This approach is expected to enhance urban planning and boost city growth.

Water Supply and Sanitation Improvements
Addressing critical water and sanitation issues, the government plans to support 100 large cities in partnership with state governments and multilateral development banks. Projects will focus on water supply, sewage treatment, and solid waste management. The housing and urban affairs ministry targets 100% water-tap connections and sewage coverage by March 2029, with an aim to reuse 40% of treated water over the next five years.

Expansion of Housing and Rental Market
The PM Awas Yojana continues to play a crucial role in housing development. The government announced the construction of three crore additional houses in rural and urban areas. Under PM Awas Yojana Urban 2.0, the housing needs of one crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore, including ₹2.2 lakh crore in central assistance over the next five years. An interest subsidy is also envisioned to facilitate affordable housing loans.

Rental housing solutions for industrial workers will be developed through public-private partnerships (PPP) with support for dormitory-type accommodations. "Rental housing with dormitory type accommodation for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries," Sitharaman stated.

Development of Weekly ‘Haats’
Building on the success of the PM SVANidhi Scheme, the government will develop 100 weekly ‘haats’ or street food hubs annually over the next five years. This initiative aims to support street vendors and enhance urban vibrancy.

Stamp Duty Reforms
To make homeownership more accessible, the government will encourage states to lower stamp duty rates. Sitharaman emphasized, "Union Government will encourage States which continue to charge high stamp duty to moderate the rates for all, and also consider further lowering duties for properties purchased by women. This reform will be made an essential component of urban development schemes."

Most projects under the Smart City Mission have focused on brownfield areas, indicating the government's continued emphasis on planned urban development. In the past two Budgets, the government announced initiatives like the Urban Infrastructure Development Fund (UIDF) worth ₹10,000 crore for tier-2 and tier-3 cities.

Addressing cities facing water shortages is another priority. Projects will promote the use of treated water for irrigation and filling tanks in nearby areas. Despite these initiatives, some earlier plans, such as the performance-based challenge fund of ₹8,000 crore for incubating eight new cities, are yet to be completed, highlighting the need for more collaborative efforts with states.

For the fiscal year 2024-25, the government has allocated ₹82,575 crore for urban development, an increase from ₹76,431 crore in the previous financial year.