India needs $2.4 trillion to build future-ready cities by 2050: Report
India's cities are expected to contribute 75% of GDP by 2050, yet weak municipal finances threaten the investment needed to support rapid urbanisation
 "India needs $2.4 trillion to build future-ready cities by 2050: Report")
As cities expand and climate risks intensify, a new joint report by the Federation of Indian Chambers of Commerce and Industry (Ficci) and EY says India will need around $2.4 trillion by 2050 to build resilient and sustainable urban infrastructure. However, municipal corporations are far from equipped to raise capital on this scale.
According to the report, only 20 civic bodies have tapped capital markets so far, raising a modest $476 million. This severe financing gap poses a major obstacle to the Viksit Bharat 2047 vision, highlighting how city balance sheets have failed to keep pace with their growing economic role.
The scale of India's urban infrastructure challenge
India's cities are already home to around one-third of the country's population. However, municipal corporations generate revenues equivalent to only 0.6 per cent of India's gross domestic product (GDP).
The report says this gap is set to widen as urbanisation accelerates. India's urban population is projected to reach nearly 600 million by 2036 and 877 million by 2050, while cities are expected to contribute almost 75 per cent of the country's GDP by then.
To support this growth, India will require around $840 billion in urban infrastructure investments over the next 15 years, or roughly $55 billion annually.
It also notes that nearly 70 per cent of the urban infrastructure needed by 2047 has not yet been built, highlighting the scale of development that still lies ahead.
The report pointed to the concentration of economic activity in a handful of metropolitan centres. It noted that the 10 largest cities contribute nearly 30 per cent of India's GDP, while many Tier-II and Tier-III cities remain underutilised despite housing a significant share of the urban population, underscoring the need for more balanced urban development.
What does the report recommend?
The report outlines several measures to strengthen India's urban financing ecosystem, including:
- Building investment-ready cities with stronger financial management
- Improving governance and institutional capacity
- Using data-driven planning to support decision-making
- Expanding economic growth beyond major metropolitan areas by developing Tier-II and Tier-III cities
- Enhancing the competitiveness of urban centres
- Promoting climate-resilient and sustainable development
It also recommends adopting a polycentric urban growth model, where multiple cities develop as economic hubs instead of concentrating growth in a few large metros. The report says this approach, supported by economic corridors and initiatives such as PM Gati Shakti, could unlock new engines of growth across the country.
Urban Challenge Fund could boost municipal financing
The report identifies the Centre's ₹1 trillion Urban Challenge Fund as a key step towards strengthening the financial capacity of urban local bodies.
Under the scheme, cities are expected to mobilise 50 per cent of project costs through capital markets, which could catalyse nearly ₹4 trillion in urban investments. The idea is to reduce dependence on government grants while encouraging civic bodies to improve their financial health and access private capital.
The report also highlights progress under flagship urban development programmes. More than 8,000 projects worth over ₹1.64 trillion have been completed under the Smart Cities Mission, while ₹2.7 trillion has been committed under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
Despite these initiatives, the report says India's urban transformation will ultimately depend on stronger municipal finances, better governance, and the ability of cities to attract sustained long-term investment.