AMRUT Scheme: Government Allocates ₹8,000 Crore for Urban Renewal in Budget 2026

The Union Budget for FY2026–27 has allocated ₹8,000 crore to the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) scheme, reflecting a 20% reduction compared with the ₹10,000 crore provided in the previous Budget. The move comes alongside a broader recalibration of urban development priorities. 

Revised AMRUT Outlay and Strategic Focus 

The lower allocation signals a measured funding approach even as the programme continues to support urban infrastructure and essential civic services. 

Launched in 2015 across 500 cities and towns, AMRUT focuses on water supply, sewerage, and basic urban services. Its upgraded version, AMRUT 2.0, introduced in 2021, targets universal tap connections in statutory towns and expanded sewerage and septage coverage. 

New Push for City Economic Regions 

The Budget places fresh emphasis on structured urban growth through the creation of City Economic Regions (CERs). The government plans to map and develop city clusters based on specific economic strengths and growth drivers.  

Each CER will receive ₹5,000 crore over five years under a reform-linked, results-based funding model. Finance Minister Nirmala Sitharaman described Tier I and Tier II cities as expanding growth centres and key engines of economic activity.  

Smart Cities Mission and Other Urban Funds 

The Smart Cities Mission has again received no allocation in FY27, after also being excluded in FY26. The scheme had earlier been allotted ₹2,400 crore in FY25. Industry voices suggest the programme is moving from a project rollout phase to consolidation and system-wide integration.  

Separately, the Urban Challenge Fund designed to promote governance, planning and land-use reforms has been given ₹10,000 crore this year, continuing the funding line announced earlier under the ₹1 lakh crore framework. 

Read More: Union Budget 2026 Highlights: Your 5-Minute Guide to Fiscal, Tax and Sectoral Measures! 

Conclusion 

The FY27 Budget indicates a shift from scheme expansion toward region-led urban planning and reform-driven funding, with AMRUT continuing but at a moderated allocation level. 

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