NEW DELHI: The Union Ministry of Housing and Urban Affairs announced to the Lok Sabha on Thursday that the initiative to develop eight new cities will not move forward as the 15th Finance Commission’s period ends on March 31, this year.
The Rs 8,000-crore grant allocated by the Commission has remained unutilized over the past five years.
The proposal indicated that each city would receive Rs 1,000 crore for its development, with each state eligible for only one city under this initiative.
In a written response, Union Minister of State for Housing and Urban Affairs Tokhan Sahu stated that during the detailed evaluation of the proposals, it became clear that the institutional and governance structures necessary for planning, executing, and maintaining new greenfield cities were inadequately developed, raising efficiency concerns regarding the utilization of the 15th Finance Commission grants.
He added that the establishment of new cities demands significant long-term public investment and solid revenue models, which were not adequately addressed in the proposals.
Furthermore, Sahu indicated that, as per the Department of Expenditure, Ministry of Finance, the allocated budget for the ‘Incubation of New Cities’ has already been reallocated to other grants, meaning there is no current budget provision for this initiative in the Financial Year 2025-26.
“Given these reasons, the scheme for ‘Incubation of New Cities’ cannot be implemented, especially with the 15th FC award period ending on March 31, 2026,” Sahu stated.
In the Union Budget for 2026-27, the government aims to create seven city economic regions (CERs), including in Bengaluru, Surat, and Varanasi, with a proposed allocation of Rs 5,000 crore for each region over five years.
