Three years after the 15th Finance Commission recommended an Rs 8,000 crore grant for the incubation of eight greenfield cities, the Union government is yet to select them and time is running out for states to utilise the funds before they lapse, The Indian Express has learnt.

The Finance Commission had in 2021 recommended Rs 8,000 crore for eight greenfield cities. The grant will lapse on March 31, 2026, with the end of the 15th Finance Commission’s award period.

The Union Ministry of Housing and Urban Affairs (MoHUA), which is responsible for selecting the cities, is yet to select the cities out of the 28 proposals received from states over a year ago, sources said. When asked about the delay, Housing and Urban Affairs Minister Manohar Lal said at a press conference on September 30 that proposals had been presented and would be “finalised soon”. Selecting the cities was on the first 100 days’ agenda of the government after it came to power in June.

A MoHUA spokesperson did not respond to requests for a comment.

The Finance Commission had found that establishing greenfield cities runs into problems of land acquisition and rehabilitation. “Paradoxically, these problems are more pronounced in states that, because of their higher density of population, need such new cities more than sparsely populated states. Given these complexities, it is better to start on a pilot basis and, hence, we recommend a performance-based challenge fund of Rs 8,000 crore to states for incubation of new cities,” the Finance Commission report said.

While the Finance Commission had recommended Rs 1,000 crore each for eight cities, the government is considering giving Rs 1,000 crore each to seven cities and Rs 500 crore each to two North East or hill cities, so the total number of cities could be nine.

Till January 2023, the MoHUA had received 26 proposals for greenfield or expansion of existing cities from 21 states, as per a reply to the Rajya Sabha. These include Kopparthay in Andhra Pradesh, GIFT City expansion in Gujarat, Gurugram expansion in Haryana, New Ranchi City in Jharkhand, Ayodhya in Uttar Pradesh, and Bantala in West Bengal.

After that, the ministry allowed northeastern states to submit proposals beyond the last date, leading to two proposals from Meghalaya and Mizoram, taking the total to 28 proposals from 23 states.

Sources say the minister has been presented with all the proposals and is yet to take a call on the cities. With elections to the Maharashtra and Jharkhand Assembly around the corner, the Model Code of Conduct could be enforced soon and the announcement of cities could be affected.