₹8,000 crore 15th Finance Commission grant reallocated to strengthen existing city regions.

Centre Drops Plan to Incubate Eight New Cities, Cites Weak Framework.

The Ministry of Housing and Urban Affairs has informed the Lok Sabha that the proposed scheme to incubate eight new cities cannot be implemented, as the award period of the 15th Finance Commission ends on March 31, 2026. The ₹8,000 crore grant earmarked for the project remained unutilised over the past five years due to gaps in planning and governance frameworks. In a written reply, Minister of State Tokhan Sahu said that proposals lacked robust institutional capacity, revenue models, and long-term investment planning needed for greenfield city development. Each city was to receive ₹1,000 crore under the scheme, with one city per state. Following advice from the Ministry of Finance, the allocation has been re-appropriated. Instead, the Union Budget 2026–27 proposes developing seven city economic regions, including Bengaluru, Surat and Varanasi, with ₹5,000 crore per region over five years.