NEW DELHI: The Union Housing and Urban Affairs Ministry on Thursday informed the Lok Sabha that the scheme to incubate eight new cities cannot be implemented as the period of the 15th Finance Commission is set to end on March 31 this year.
The Rs 8,000-crore grant provided by the Commission remained unutilised in the last five years.
Under the scheme, it had been proposed that each proposed city would get Rs 1,000 crore for development. A state can only have one city under the proposed scheme.
In a written reply to a question, Union Minister of State for Housing and Urban Affairs Tokhan Sahu said that during the process of detailed scrutiny and evaluation of the proposals, it appeared that the institutional and governance framework required to plan, execute and sustain new greenfield cities were underdeveloped in many of these proposals, thus raising concerns about the efficient utilisation of 15th Finance Commission (FC) grants.
The minister pointed out that new cities require massive, long-term public investment with robust revenue models, adding that these aspects were not convincingly addressed in the proposals.
In his reply, he said that as informed by the Department of Expenditure, Ministry of Finance, the budgetary provision made for ‘Incubation of New Cities’ has already been re-appropriated to other grants and there is no budget provision under this grant in the current Financial Year 2025-26.
“In view of these reasons, the scheme of ‘Incubation of New Cities’ cannot be implemented, particularly when the 15th FC award period is coming to an end on 31.03.2026,” Sahu said.
In the Union Budget 2026-27, the government has proposed to set up seven city economic regions (CERs), including in Bengaluru, Surat and Varanasi, with a proposed allocation of Rs 5,000 crore per region over five years.
