The prime minister arrived here on Saturday to hand over documents and keys to 10 flats to beneficiaries in a housing colony in Dhanas area of the union territory under the city's slum rehabilitation scheme.
Addressing a gathering, the prime minister said rapid urbanisation was putting pressure on urban centres.
"We have over 10 crore people living in slums across the country. Urban centres are under pressure from rapid urbanisation," Manmohan Singh said.
Complimenting the Chandigarh administration for constructing the flats, he said the rehabilitation scheme will help make Chandigarh slum-free.
Punjab Governor Shivraj Patil, Haryana Governor Jagannath Pahadia, Punjab Chief Minister Parkash Singh Badal and Haryana Chief Minister Bhupinder Singh Hooda accompanied the prime minister to the site.
A total of 8,448 flats will be handed over to slum dwellers as part of the scheme.
Built under the Jawaharlal Nehru National Urban Renewable Mission (JNNURM) by the Chandigarh Housing Board, the flats will accommodate over 40,000 people.
The union ministry of housing and urban poverty alleviation has approved construction of around 25,000 flats for rehabilitation of the slum-dwellers in Chandigarh.
The project is being implemented with central assistance of Rs.436.30 crore.
The Chandigarh administration is contributing Rs.585.15 crore towards the balance funding of the project through its budget sanctioned by the union home ministry.
Chandigarh, the joint capital of Punjab and Haryana, is a 114-square-km union territory. It was conceived and built in the 1950s to showcase a modern, resurgent India.