The pilot scheme to develop satellite towns around seven mega cities will spill over to the 12th Plan period (2013 to 2018), as against the original deadline of April 2012.
The urban development ministry is in the process of writing to the Planning Commission to seek more time for executing the satellite town project.
Depending on the success of the pilot scheme around seven mega cities, a broad-based project with a national perspective is likely to be considered.
Although the approved central assistance for the scheme is Rs 500 crore (Rs 5 billion), the outlay is expected to go up significantly once it is listed under the 12th Plan.
According to a ministry official, "keeping in view the response of state governments and the urban local bodies, the scheme may be extended to next five-year plan and it is also possible that more satellite towns will be covered under it."
Initially, the urban infrastructure development scheme for satellite towns was meant to be around cities with population of more than a million, at a project cost of over Rs 10,000 crore (Rs 100 billion).
There would be around 50 cities with million plus population by the year end, estimates suggest.
Subsequently, the scope of the project was cut down to just a pilot for a satellite town each around the seven mega cities of Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad and Ahmedabad.
The towns being covered under the pilot project are Pikhuwa (Uttar Pradesh), Vikarabad (Andhra Pradesh), Sonepat (Haryana), Vasai-Virar (Maharashtra), Sriperumbudur (Tamil Nadu), Sanand (Gujarat) and Jyoti Basu Nagar (West Bengal).
The City Development Plans (CDPs) submitted by the states to the Centre indicate the likely cost escalation that the project may experience.
For instance, in its CDP, Sriperumbudur has estimated short-term capital investment on infrastructure development at Rs 188.12 crore (Rs 1.88 billion), medium term (2016-2025) at Rs 538.4 crore (Rs 5.38 billion) and long term (2026-2041) at Rs 3,322 crore (Rs 33.22 billion).
While the Central grant will be 80 per cent of the total expenditure, states and local municipalities will contribute 10 per cent each of the cost.
The scheme was approved in 2009, after which states were asked to nominate towns of their choice.
After states named the satellite towns of their choice, work started on the project in 2010-11.
Even as most of the towns, which are being developed under the pilot project, are industrial hubs, Sanand near Ahmedabad with the Nano factory being an example, officials said there was no directive from the government suggesting industrial activity should be the guiding principle.
Innovative features such as Geographic Information System (GIS), energy audit, and disaster management are integral parts of the satellite town development project.
It is believed the government is now seeking a sustained and long-term engagement with towns across the country, rather than a piecemeal approach focused on just a few areas.
An official said the new thinking may change the complexion of the urban infrastructure development scheme.
Satellite town is defined as self-contained and limited in size, built in the vicinity of a large metropolitan city to house and employ those who would otherwise create a demand for expansion of the existing settlement in metropolitan city.
The satellite towns are however dependent on the parent-city to a certain extent for major and specialised services.