New Delhi, Feb 3: Finance Commission for the first time has created a provision for Rs 8,000 crore incentive grant for eight states for incubation of one new city each as a pilot project.
The Housing and Urban Affairs Ministry will come up with the framework for this, which will be taken up on a challenge mode.
While Rs 1,000 crore would not be sufficient to build a new city, states should see this as seed funding for an innovative venture.
“We will start work on this. For several years, no new city has been developed and hence this need was felt. We have taken a policy decision that all new cities should be developed on the principle of Smart Cities. It will be too early to say whether these will be completely greenfield cities,” Housing and Urban Affairs Secretary Durga Shankar Mishra said in a post-budget presser here.
The 15th Finance Commission in its report has talked about the need for both rejuvenation of old cities and setting up of new cities. It said the challenge of setting up infrastructure in greenfield cities can be less daunting than the problem of setting up such facilities in old established cities. On the other hand, the development of greenfield cities runs into the problem of land acquisition and rehabilitation.
“Given these complexities, it is better to start on a pilot basis and, hence, we recommend a performance-based challenge fund of Rs 8,000 cr to states for incubation of new cities. The amount available for each proposed new city is Rs 1,000 crore and a state can have only one new city under the proposed scheme,” the commission said in its report.
According to experts, this would encourage states to invest in satellite towns or industrial zones which would result in attracting investments and job creation besides decongesting the existing cities.
Creation of new cities could be also be an interesting experiment for states and urban planners.
The Commission’s report has been accepted by the government. Another recommendation by the panel to fix price for water on a graded basis, wherein higher consumption entails higher charges and periodic revision of the charges has also been accepted at a time when the government is going to launch a Rs 2.64 lakh crore scheme to provide universal household tap water connection to all houses across 4,378 municipal areas by 2026.
Mishra said the programme will focus on rejuvenation of water bodies to augment sustainable fresh water supply and creating green spaces and sponge cities to reduce floods and enhance amenity value through an Urban Aquifer Management plan. There will also be focus on meeting 20 per cent of water demand by reusing the treated water.
The Covid-19 pandemic has brought into sharp focus the well-known problem of inadequacy of appropriate housing and infrastructure facilities in urban areas. Given the trend in urbanisation, the country needs both rejuvenation of old cities as well as the setting up of new
cities, the report said.
The challenge of setting up infrastructure, such as laying of roads, water and sewer lines and provision of sites for schools and colleges and parks in greenfield cities can be less daunting than the problem of setting up such facilities in old established cities.
On the other hand, establishment of greenfield cities runs into the problem of land acquisition and rehabilitation.
Paradoxically, these problems are more pronounced in States that, because of their higher density of population, need such new cities more than sparsely populated States.
“Given these complexities, it is better to start on a pilot basis and, hence, we recommend a performance based challenge fund of Rs 8,000 cr to States for incubation of new cities. The amount available for each proposed new city is Rs 1,000 cr and a State can have only one new city under the proposed scheme,” according to the Commission report .
Thus, a maximum of eight States can avail this grant for eight new cities over the award period of the Commission.