16th Finance Commission Recommends Rs 56,100 Crore Grant for Wastewater Projects in 22 Cities

The 16th Finance Commission has identified 22 cities, including Pune, Jaipur, and Howrah, as eligible for a special component fund for wastewater management projects. In addition to this, a Rs 10,000 crore premium has been recommended to encourage the transition from rural to urban areas.

Urgent Focus on Drainage System and Urbanisation

Highlighting the critical need for enhancing drainage systems in cities and addressing the slow pace of urbanization, the Finance Commission has proposed a substantial grant of Rs 56,100 crore for wastewater management projects in selected cities. The report, tabled in Parliament, emphasizes accelerating urbanization through strategic recommendations for drainage improvement and rural-urban transition.

Revamping Drainage Systems in Middle-Level Municipalities

The report underscores the immediate requirement for overhauling drainage systems in Indian cities, especially in smaller municipalities lacking the fiscal capacity for such upgrades. In response to constrained resources, the Finance Commission has suggested allocating fiscal resources for drainage system revamp in middle-level municipalities on a cost-sharing basis.

Special Infrastructure Component for Wastewater Projects

The Finance Commission has proposed a Special Infrastructure Component fund of Rs 56,100 crore for wastewater projects in the identified cities. Notably, cities like Lucknow, Kanpur, Nagpur, and Patna are among those eligible for this component, alongside Pune, Jaipur, and Howrah.

Success Story of Indore's Wastewater Management

The report highlights Indore as a model for successful wastewater management, citing its transformation and consecutive top rankings in Swachh Survekshan. Despite recent water contamination incidents, Indore's efficient liquid waste management through a robust sewerage network serves as a commendable example.

Incentivizing Rural to Urban Transition

To expedite urbanization, the Finance Commission has recommended a Rs 10,000 crore urbanization premium to incentivize the shift from rural to urban areas. The incorporation of peri-urban regions exhibiting urban characteristics into adjacent municipal bodies has been proposed to streamline the urbanization process.

Significant Funding Allocation for Urban Local Bodies

From 2026-2027 to 2030-2031, the Finance Commission suggests a total allocation of Rs 3,56,257 crore for urban local bodies. This includes Rs 2,32,125 crore as the basic grant, Rs 29,016 crore for ULB performance, Rs 56,100 crore as the Special Infrastructure Component, and Rs 10,000 crore for the urbanization premium.

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