Swachh Bharat Mission Budget Slashed by 50%, Major Cuts Hit Urban Schemes

The Union Budget 2026-27 has introduced significant cuts to important urban development programs. The Ministry of Housing and Urban Affairs (MoHUA) is experiencing a major decrease in overall funding. One of the most affected schemes is the Swachh Bharat Mission-Urban (SBM-U), which has seen its allocation reduced by 50 percent. This change reflects a broader trend of reducing urban spending.

According to the Notes on Demands for Grants 2026-27, the funding for Swachh Bharat Mission-Urban has dropped to Rs 2,500 crore, down from Rs 5,000 crore in the Budget Estimates of 2025-26. Previously, the scheme had already been scaled back to Rs 2,000 crore in the Revised Estimates of the last year. This reduction is likely to impact solid waste management projects, cleanup of old waste dumps, sanitation facilities, and cleanliness efforts in urban local bodies.

Overall MoHUA Budget Reduced by Rs 11,255 Crore

The cut to SBM-U reflects a general decline in the ministry's budget. The total funding for MoHUA has decreased from Rs 96,777 crore in 2025-26 (BE) to Rs 85,522 crore in 2026-27 (BE), resulting in a drop of Rs 11,255 crore, or nearly 11.6 percent year-on-year.

Budget documents show that several major urban missions have either received less funding or no new funds this year, indicating a shift from previous years of extensive central support.

No Fresh Allocation for Smart Cities Mission

A significant change in the 2026-27 budget is the lack of any new allocation for the Smart Cities Mission. This mission does not appear as a separate budget item this year, suggesting that the centrally funded program is approaching its end.

Although earlier budgets had gradually cut Smart Cities funding as projects progressed, the absence of new allocation indicates that remaining tasks are expected to be finished with already pledged funds or resources from state and city levels.

AMRUT Allocation Cut from Previous Budget

The Urban Rejuvenation Mission, which includes AMRUT, has received Rs 8,000 crore in Budget 2026-27, down from Rs 10,000 crore in Budget 2025-26. While this amount is slightly higher than the Rs 7,500 crore listed in the Revised Estimates, the decrease from the initial budget shows a slowdown in expanding water supply, sewerage, and urban infrastructure projects.

Pradhan Mantri Awas Yojana Subsidy Reduced

Housing remains a significant focus, but allocations have tightened here as well. The Pradhan Mantri Awas Yojana (Urban) subsidy has decreased from Rs 3,500 crore in 2025-26 to Rs 3,000 crore in Budget 2026-27.

This cut in subsidy funding could slow down the distribution of interest subsidies for beneficiaries in affordable housing programs. Meanwhile, the government continues to prioritize the completion of already approved houses.

Urban Mobility Schemes See Moderation

Urban transport schemes have also gone through funding cuts. The PM-eBus Sewa Scheme has been allocated Rs 500 crore in 2026-27, compared to Rs 1,300 crore in Budget 2025-26. Although this amount is higher than the Rs 300 crore provided in the revised estimates, it remains well below the original budget, which may delay the deployment of electric buses in cities.

The Union Budget 2026-27 marks a shift in India's urban development approach. With the Swachh Bharat Mission-Urban allocation cut in half, no new funds for Smart Cities, and a Rs 500 crore reduction in the PMAY subsidy, the focus seems to have moved from expansion to fiscal restraint. While essential housing and infrastructure commitments are still in place, the time of significant increases in urban flagship schemes appears to be coming to an end.