For Good Governance, We Need to Rethink Free Public Services: Union Minister Manohar Lal Khattar
New Delhi, February 28, 2026: Urban local bodies that actively work to develop their own resources should be moved up the queue for financial assistance from the Union government and states, said Manohar Lal Khattar, Minister of Housing and Urban Affairs. In an interview with HT, he cautioned against the trend of providing free public services and stressed the need to build the capacity of urban local bodies to generate revenue .
On Free Public Services
"We have to stop this. Even the courts are helping us. In a recent case, the court questioned the announcement of free electricity in Tamil Nadu, asking about the source of funding for such declarations. Although you will provide it for free (to people), you'll still need to pay for it. Where will you get the funds from? This is a cause of concern. As part of good governance, we all have to think about this," Khattar said .
On Urban Challenge Fund
Regarding the recently approved ₹1 lakh crore Urban Challenge Fund, where states must contribute 25% and 50% must come from financial institutions, Khattar explained that major projects will focus on a revenue-generating model to ensure repayment. "For example, Integrated Command and Control Centres can use special IDs for households to track and increase property tax collection through digitisation. It is easy to repay the 50% cost from the increased revenue within four to five years. Other examples include parking sites, local markets with rental income, and toll roads" .
On Metro Project Viability
Khattar made it clear that the ministry would not hesitate to deny approvals to Metro projects that are not financially viable. Addressing the controversy surrounding the rejection of the Metro rail project for Coimbatore, he said: "The data submitted by Tamil Nadu for Coimbatore was found to be inconsistent by the approval committee. There were projections suggesting (ridership) figures that were higher than even those in Chennai. We have to see what the ridership is and what the revenue can be. While one-time capital loss can be managed through loans, recurring losses will be hard to manage" .
He noted that many cities see Metro as a sign of progress or a prestige project, "but they have to be told that this approach will lead to losses." He emphasized that priority should be to connect the city's market with heavy footfall and industrial areas via Metro .
On Delhi's Unauthorised Colonies and Slums
Khattar announced that Delhi's development is now benefiting from a "triple-engine government" (BJP in power at the Centre, Delhi, and the Municipal Corporation). "We are implementing PM-UDAY to give land rights to residents of 1,700 colonies. Although the Act was passed in 2019, the previous government did not implement it properly. But we are fast-tracking it. We will not only regularise these colonies but also give them land rights so that they can be redeveloped" .
Regarding slums, the plan is to replace them with in-situ housing or flats within 3 km. "We will keep some share and give the rest to the dwellers. The ministry and the Delhi government have made budgetary provisions. A policy will be announced soon." He also noted that over 700 families from one large settlement have already been allotted houses .
On Delhi Master Plan
The Delhi Master Plan draft is ready and in the final review stages between the ministry and the Union Home Ministry. "We are confident that within the next two meetings between the ministry, we will be able to finalise it" .
On ULB Capacity Building
Khattar emphasized that governments cannot fund everything as public expectations grow. "ULBs, as the third tier of government, must raise their own resources under the provisions of the 74th Amendment. But they will implement them only when it becomes a condition for getting financial assistance. It should go to those who actively work to build their own resources" .
On Affordable Rental Housing
Regarding the slow uptake of Affordable Rental Housing under PMAY 2.0, Khattar explained that states and the private sector are still assessing how to implement the projects. "So far, only Tamil Nadu, Haryana, Rajasthan, and Gujarat have started adopting it. Often, implementing these schemes takes time as states try to figure out how best to mobilise resources" .