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February 17, 2021

Budget 2021-22: A Boost to Affordable Housing, Urban Public Health, and Transportation

This year’s budget witnessed some important shifts in affordable housing, urban sanitation and public health, and transportation. 


Affordable Housing


The COVID-19 pandemic has shed light on urban issues such as inadequate housing, poor waste management and sanitation, lack of crisis management frameworks, and so on. City residents, particularly migrants living in informal settlements, were affected mainly because of inadequate or informal housing. Quarantining was hard due to cramped living space and overcrowded infrastructure. Slum settlements often don’t receive direct sunlight and have poor ventilation, making slum residents more susceptible to diseases. Residents being relegated to slums is a function of unaffordable housing which is in turn due to dearth of space in cities. Lack of affordable housing options are a result of archaic regulations such as low floor space index (FSI) and zoning; high stamp duties and registration fees leading to high transaction costs; high costs of financing real estate projects and so on.


This is why the Budget 2021-2022 provision of ₹ 1.5 lakh tax deduction on purchase of affordable or rental housing is needed. Moreover, a stamp duty reduction to around 1% of property values would ease transaction costs. Reducing supply-side constraints will improve provisioning of affordable housing in cities. Over and above this, improving access to formal financing, reducing the number of approvals for construction, abolishing rent control acts and updating regulations with changing economic and urbanisation patterns are some of the steps needed to reform the housing market in Indian cities.


Urban Public Health


The COVID-19 pandemic has also highlighted cracks in urban public health infrastructure. The creation of Jal Jeevan (Urban) Mission, and the continuation of the Swachh Bharat Mission (SBM) are steps in the right direction. With INR 2.87 lakh crore and INR 1.41 lakh crore respectively allocated over five years, this year’s budget appears to prioritise provision of public health infrastructure to cities.


The renewal of the SBM(U) is important since its outlay has been falling since 2018, when India’s economy began shrinking. While the reasons for the drop in spending are unclear, urban sanitation was not a large priority for the government.


Under the new Jal Jeevan Mission, the aim is to supply 4,378 urban local bodies with 2.68 crore tap connections in the next five years. The former Atal Mission for Rejuvenation for Urban Transformation (AMRUT), which was to provide piped water to urban households, will be integrated into this program. Under AMRUT, only 22.9 lakh water connections, as opposed to the target of 139 lakh water connections, were provided. 



The missions’ focus on solid waste management, wastewater treatment, water provision, segregation of garbage, and will hold the country’s urban areas in good stead in terms of improving sanitation conditions, both while moving out of the pandemic and in regular times. 


Public Transportation


According to the latest TomTom Travel Index, four Indian cities feature in the ten most congested cities in the world. With the ongoing pandemic and restrictions on public transport usage, private vehicles on roads appear to have increased. Both in the immediate and long-term future, public transportation policies need to be overhauled to make cities more accessible, reduce commute times, and reduce the negative impact of congestion such as rising air pollution. 


This year’s budget has important implications for public transportation. In particular, developing new metro rail technologies in major cities, investing in metro projects (especially in Bengaluru, Kochi, Nagpur and Nashik), and increasing spending for railways under the National Plan 2030 will help our cities and citizens to be more productive. Additional recommendations include integration of Intermediate Public Transport (IPT) with public transport systems, streamlining taxation of transport services across city dwellers, and ensuring regulations are compatible across mobility providers to enhance coordination and allow individuals to switch modes of transport easily.

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