Global cities compete, Indian cities comply: Survey flags siloed governance

Calls for integrated city planning, land-use reforms, and disincentives on private vehicle use

Through policy interventions, Indian cities need to be reimagined as a network of inter-connected assets and services which serve to strengthen the social contract between citizens and their cities by improving their quality of life, the Economic Survey has flagged. 

Unlike global cities that operate with significant administrative and fiscal autonomy, Indian cities remain embedded within multi-layered governance structures. Urban functions are fragmented across Urban Local Bodies (ULBs), development authorities, state line departments, and parastatal agencies, it said. 

The Survey said the result is a model in which cities function primarily as implementation units rather than autonomous economic actors. Global cities compete, Indian cities comply, it said, calling for integrated planning for all cities across India. 

 

“Every million-plus city should be required to prepare a statutory 20-year City Spatial and Economic Plan, updated every five years, with three non-negotiable elements — a transport network plan, a housing supply plan with annual unit targets, and a land-value capture framework linked to infrastructure corridors,” it said. 

While physical infrastructure has been delivered at several levels in cities, the lack of integration leads to suboptimal results. In India, there is an inherent contradiction between urban policy and expected outcomes. Cities are expected to deliver growth, productivity, and jobs, yet policy is designed to restrain density, fragment authority, and ration urban land. 

Metro rail, flyovers, and expressways are built without parallel land-use reform, housing supply, or skill clustering. Transport systems are asked to compensate for planning failures rather than enable density, the Survey said. The result, the Survey finds, is capital-intensive infrastructure with suboptimal economic returns. Metro systems move people, but they do not always raise productivity because jobs, housing, and transport remain misaligned. “Infrastructure without institutional reform is concrete without consequence,” the Survey noted. 

On transport, the Survey — recognising the growing dependence on private vehicles as a problem — recommended a congestion price policy where road users have to pay for usage during peak congestion hours. “Targeted congestion pricing in dense business districts combined with demand-based parking management can reduce traffic, raise speeds, and cut emissions, as seen internationally,” it said. The Survey also flagged restrictive land-use norms as a key factor behind constrained housing supply and land turning into “dead capital” due to title insecurity, fragmented markets, and speculative incentives that limit land recycling. 

It said restrictive land-use rules such as low floor space index (FSI) or floor-area ratio (FAR) cap on built-up area per unit of land limit vertical development and push cities to expand outward, raising land values, limiting supply, and creating artificial scarcity in core urban areas. Dead capital refers to assets that are unable to function as productive capital and contribute to economic activity. FSI or FAR refers to the maximum permissible built-up area that a developer can construct on a land parcel. 

The Survey suggested that urban bodies use Ministry of Housing and Urban Affairs’ resources, including guidance on transit-oriented development, to optimise densities. It also flagged unclear land titles, fragmentation, and opaque records as key constraints, stressing that secure, transferable property rights are essential for land to function as capital. 

Infrastructure funding should be conditional on city-climate plans, ensuring that drains, pumping stations, roads, and public spaces are designed for future rainfall and temperature patterns, not historical averages, the Survey said. 

“As India competes globally for skilled workers, entrepreneurs, and ideas, cities that exhaust people will lose them, regardless of wage differentials. Cities that offer dignity, expression, and predictability will retain and attract them,” it said. 

The Survey also said reimagining cities as nurturing space will lead to better civic outcomes. As long as citizens feel ownership of cities, they will assume responsibility for it, like their own houses — a phenomenon called the endowment effect.  

However, since the system fails and is unrewarding for common citizens, their ownership is limited, it said.