New Cities Incubation Scheme Faces Setback as Finance Commission Period Ends

The Indian government's scheme to develop eight new cities is halted due to the 15th Finance Commission period ending. Rs 8,000-crore grants remained unused. Institutional and governance concerns were cited. Budgetary provisions have been re-appropriated, and funds are redirected to City Economic Regions.

The Union Housing and Urban Affairs Ministry has announced that the ambitious scheme to incubate eight new cities cannot proceed, as the 15th Finance Commission's term concludes on March 31. The Rs 8,000-crore allocation remained unspent over five years, intended to allocate Rs 1,000 crore for each city.

Union Minister of State for Housing and Urban Affairs Tokhan Sahu explained that evaluations revealed many proposals lacked the necessary institutional and governance frameworks for efficient resource utilization. This realization led to budget re-appropriation, leaving no funding for new city incubation in the 2025-26 financial year.

With the current plan scrapped, the 2026-27 Union Budget now focuses on establishing seven city economic regions, including Bengaluru, Surat, and Varanasi, with Rs 5,000 crore allocated per region for five years.

(With inputs from agencies.)