FY26 end nears, Housing Ministry spends only 27% of budget for urban development schemes

The highest amount, so far, has been spent on mass rapid transit system and Metro projects (Rs 14,811 crore). But it accounts for 42.55% of the budget allocated for the scheme.

The Ministry’s assessment of its Revised Estimates for 2025-2026 puts the figure at Rs 50,097 crore, a 46% reduction from the BE. This is primarily on account of the Urban Challenge Fund, which was allocated Rs 10,000 crore in the BE, but could see it being reduced to Rs 1,000 crore.

According to a senior MoHUA official, the spending depends on how the funds are used by the states as well as the cycles of new schemes starting and those being closed. For instance, the PMAY-Urban 2.0 was launched last year, but the spending is likely to pick up in the next FY, the official said. The Ministry has been regularly meeting state governments to monitor the progress of implementation, the official said.

As per the monthly report for October of Controller General of Accounts, the Ministry had spent 23% by the end of that month. For the same period last year, the spending was 31%, the CGA portal shows.

Key schemes of the Ministry, including the Swachh Bharat Mission and PMAY, have seen less than a quarter of the budget spent so far.

Under Swachh Bharat, the Ministry has so far spent Rs 829 crore of the Rs 5,000 crore allocated or 16.58%. Under PMAY, spending was 14.75% (Rs3,435 crore out of Rs 23,294 crore). Three schemes—National Urban Digital Mission, Urban Challenge Fund and Scheme for Industrial Housing—included in the Budget are yet to take off, with nil spending until December 2.

Union Finance Minister Nirmala Sitharaman had announced the setting up of the Urban Challenge Fund in her Budget speech this year to “finance up to 25% of the cost of bankable projects with a stipulation that at least 50% of the cost is funded from bonds, bank loans, and PPPs”, and proposed an allocation of Rs 10,000 crore for 2025-26.

According to the Finance Ministry’s guidelines, expenditure in the last quarter of FY is capped at 33%, with up to 15% allowed in the last month. With time running out, this time there is another consideration before the Ministry. The 15th Finance Commission’s five-year cycle is ending and the 16th Finance Commission’s recommendations are set to be implemented from the next FY. As per the guidelines, the Finance Commission can recommend allocations up to 5.5 times of the average annual spending by a Ministry for the next five-year cycle.

The MoHUA official, however, said the current year’s spending would not affect the Ministry’s allocations as the Finance Commission had already submitted its report in November, which is yet to be tabled in Parliament.