Fund Flows and Absorption Challenges under India’s National Clean Air Programme (NCAP) — Evidence from public financial management systems and city-level consultations

India, with its rapid urbanisation, faces high pollution levels and continues to fail to meet World Health Organisation (WHO) standards, accounting for 17 of the 30 most polluted cities globally.  The annual economic losses incurred due to its polluted air are equivalent to almost 3 per cent of the nation’s GDP.  Effective air pollution management requires adequate budgetary support and resource allocation. To address this, the National Clean Air Programme (NCAP), launched in 2019, is India’s flagship programme aimed at achieving a 40 per cent reduction in particulate concentration by 2026 in 130 non-attainment cities. NCAP implementation is supported through multiple funding streams, including convergence of existing national schemes like Smart Cities Mission, Swachh Bharat Mission, etc., as well as Fifteenth Finance Commission (XV-FC) and NCAP grants. Through this, India established a framework for financing clean air action, but challenges related to capital absorption and impact persist. As of October 2025, only 59.15 per cent of the NCAP funds and 77 per cent of XV-FC funds have been utilised, and by 2024-25, only 25 out of 130 cities have reduced PM 10 levels by 40 per cent.

This study critically examines the evolution of the fund disbursal mechanism (pre-requisites, performance assessment criteria and disbursement) over the years, by tracing the fund flow mechanism and Portal for Regulation of Air pollution in Non-Attainment cities (PRANA) records. Furthermore, it compares allocation versus absorption and assesses structural and operational complexities that limit the impact of fund utilisation and overall cost-effectiveness. This study leverages a mixed-methods approach, integrating insights from secondary literature and city-level field consultations. The analysis identifies a set of design and implementation constraints, including limited mechanisms for assessing the effectiveness of fund utilisation, sectoral prioritisation that is not consistently aligned with air quality outcomes, weak interdepartmental coordination and capacity limitations at the city level. It also highlights inadequate recognition of city-level initiatives within performance assessment frameworks, the absence of a sufficiently targeted and results-oriented approach, and delays in state-level financial systems that affect the timeliness of fund disbursal, and in turn, the overall progress of the programme. In addition, issues pertaining to data availability, pollution monitoring representativeness, and operation and maintenance requirements continue to influence programme performance. The study emphasises the value of integrating procedural and statutory costs and considerations into financial planning processes, strengthening institutional capacities and promoting effective fund utilisation. The findings aim to inform policy deliberations on air quality governance and financing in India.