The story so far:
India is on the cusp of a profound urban metamorphosis. In the forthcoming decades, India is anticipated to boast the most significant urban population globally. However, India’s urban future is shaped by blueprints drawn far from the streets where people live.
What has been India’s urban journey?
The urban evolution was set in motion in the post-90s era when India embraced a liberalisation policy. Successive Union governments have played a pivotal role in steering India’s urbanisation through a series of missions, from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to the five urban flagship missions. This journey underscores the crucial role of the Union Government in sculpting India’s urban fabric.
What role does the Centre play?
As ‘urban development’ is a State subject, how much of a role should the Centre have to shape the urbanisation process has always triggered many questions. Many housing schemes such as the Indira Awas Yojana, the Rajiv Awas Yojana, and now the Pradhan Mantri Awas Yojana (PMAY) as well as welfare schemes for essential utilities starting from the Basic Services for the Urban Poor (BSUP) during the UPA regime, to the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and the Swacch Bharat Mission (SBM), have all been strong catalysts in triggering the urbanisation process in Indian cities.
In the mobility sector, centrally run urban missions supported cities in planning their city mobility plans. During the National Democratic Alliance (NDA) regime, the Union government focused on metro rail projects, which consumed almost 30% of the total Union budget. However, these missions often impose a prescriptive, top-down approach, prioritising spatial distribution, financial modalities, and administrative procedures over local needs. This leaves States and cities limited flexibility to customise and prioritise operational mechanisms within diverse contexts.
Why is the Centre promoting a top down approach when it comes to finances?
There are many reasons, with one of the major ones being that cities were treated as the “engines of growth”, leading urbanisation. Another plausible reason is that successive Union governments have seen cities as potential hubs with which they never wanted to part. It could also be the recognition that infrastructure is a ‘crucial enabler of growth’ for raising India’s competitiveness and achieving the target of a $5 trillion economy by 2025. Hence, even though the budgetary transfers were bracketed in centrally sponsored and Central sector schemes, they influenced urban trajectory. However, cities need targeted investments to accelerate economic growth. This includes building skilling centres, trade hubs, and innovation spaces; prioritising infrastructure that directly impacts economic indicators, not just livability.
Successive Union finance commissions, while transferring funds have put conditionalities to shape and design the urbanisation process at the sub-national level. For example, the conditionalities levied on city governments to enhance property tax and make it commensurate to the rise in the State’s GDP were suggested by the 15th Finance Commission. Likewise, instead of recommending grants directly to the city governments and letting them take a call according to their priorities, the Commission added conditions to the grants.
What could be the more effective alternative?
Urban development is a State subject, and while the Central government can ‘nudge’ and ‘guide’ substantially, State and local governments play significant roles in shaping the sector.
India is urbanising differently in different States, and even in various regions within States. The current labour migration is from the northern States to the ones in the south, and hence southern States now have a different demographic pattern. In States like Kerala and Karnataka, it is the rural-urban continuum that is dominating — the Kerala Chief Minister termed the State as a ‘single city’, for one doesn’t know where the boundary of the city ends and the village panchayat starts.
Initially driven by industry and migration, Gujarat’s urbanisation is also quite different from that of the rest of the country. In many regions of the State, the core is dominated by the rich while the poor are pushed to the peripheries. However, in some other areas, even the wealthy are moving to the peripheries as the core has gotten too crowded or polluted. Here, they travel to the city core for business or work, but prefer staying in the peripheries, similar to some U.S. cities in the 70s and 80s.
There are such regional aberrations everywhere. Take the example of housing. Not all cities require the construction of houses. There might be ample social housing; and thus, the PMAY does not bring much traction. Likewise, in some cities, water and essential sanitation services might be better than other cities, and such cities may not want investments in these utilities. In contrast, others who lack such amenities may require them more. Therefore, the universalisation of sanitation, as the provisions of the SBM are determined from the top, is meaningless. In some clustered towns, there may be more need for a decentralised mechanism, whereas for others, one would need a centralised system. The moot point is that ‘one size doesn’t fit all’. The devolution process must be rethought and devised more scientifically in such a scenario. Instead of creating an island of ‘developments’, it would be more prudent to devise ways the devolutionary exercise triggers needs/demand-based help.
The total Union Budget should be devolved so that around 70% goes as direct transfers to the States and through State finance commissions to city governments. The other, 30%, can be decided by the Union government, which can decide on national priorities, like climate-resilient infrastructure. However, due to the top-down approach, State governments are mirroring the Centre budget lines without making creative investments to tap their unique identities and contextualities.
This direct transfer of money can be categorised into broad sections: mobility, sanitation, housing, water, waste, and so on. The cities should be asked to prioritise their plans and, in this process, identify the most pressing space in which they require money. Such an exercise can be quickly done with the help of the State governments and through other knowledge agencies. It will also help devise a better, more scientific way of utilising the central devolutionary grant. The people and the city could decide, and universal mission guidelines would not influence it.
These exercises can also avoid what happened under the smart cities mission in many cities — wherein the money remained either unutilised or in the pressing eagerness to submit what they call the ‘utilisation certificate’, lousy infrastructure was created which had no demand from the people whatsoever.
Why is it important?
National governments should focus on national and regional issues and international policy, not local ones.
In a democracy like India, national institutions are geographically distant bureaucracies that tend to be insulated from the public and disconnected from community service delivery problems. And that is precisely why a shift is required in the financial devolutionary process. This fits with the fact that plurality is the essence of Indianness.
Unless this forms part of the larger vision, any incremental fixes to making a city liveable will lead to further influx causing infrastructural collapse and deterioration in the quality of living. Centrally driven missions cannot connect the government to the lives of citizen communities in a positive way — it becomes difficult for citizens to accept the central authority of the government to protect their property, resolve conflicts and collect taxes. City governments can provide this tangible link. A fundamental shift in the design of urban missions, redefining the mandate, roles, and responsibilities of actors at Central, State, and local levels, is mandatory for transformation in the new age.
Tikender Singh Panwar is the former deputy mayor of Shimla and Hitesh Vaidya is the former director of NIUA. Both are currently members of the Kerala Urban Commission.
Published – March 25, 2025 08:30 am IST
