Our latest pre-budget brief, ahead of Odisha’s FY 2026–27 budget, examines trends in the budgetary allocations of the Housing and Urban Development Department (HUDD) from FY 2019–20 to FY 2025–26.
As Odisha closes the FY 2025–26 cycle, the XV Central Finance Commission and V State Finance Commission are also coming to an end with Budget Estimates standing at INR 1,045 crore and INR 1,490 crore under the respective Commissions. While the XVI Central Finance Commission promises a step-up in urban funding, the forthcoming VI State Finance Commission will be crucial in shaping how deeply fiscal decentralisation takes root, and how effectively cities are empowered to manage their own finances.
Our pre-budget analysis shows that transfers to Urban Local Governments (ULGs) have grown, but not at the pace of the state’s own revenues. V SFC transfers expanded at 5% CAGR, compared to 14% growth in state tax revenues — pointing to limited buoyancy in fiscal devolution.
At the same time, the growth in HUDD’s budget is being driven largely by schemes, especially state-led programmes. Between FY 2019–20 and FY 2025–26 (BE), allocations for Centrally Sponsored Schemes grew by 69%, while state schemes grew by 170%, signalling the State’s expanding role in shaping urban priorities.
The department’s flagship programme, Mukhyamantri Sahari Bikash Yojana (MSBY), introduced in FY 2025-26 reflects an important shift toward asset creation, revenue-generating infrastructure, and strengthening municipal Own Source Revenue. This signals a move beyond fragmented, scheme-driven spending toward a more sustainable, long-term fiscal vision for cities.
