For India's urban rejuvenation, the case for practical, scalable fixes

Skipping the ideal and pushing doable urban reforms immediately is key to reviving India's sputtering city growth engines

India faces the spectre of slowing growth due to three simultaneous shocks: An El Niño-impacted monsoon, slowing global trade due to increasing tariff fragmentation, and elevated oil prices compared to before the outbreak of the conflict in West Asia. Since India typically undertakes reforms under tough circumstances, these adverse conditions may turn out to be a godsend. There is near-unanimity that state governments will drive the reform agenda. This raises two key questions: What drives state economic growth and how to turbocharge those areas?

   

The level of growth attributes and the performance of key economic centres (KECs) define state growth. Growth attributes include physical capital, such as road density; social capital, such as gross enrolment in tertiary education; and quality of governance, such as labour market flexibility. KECs are capital cities and million-plus agglomerations in each state. Of the nine growth attributes we identify, six are in the State List: Crime rate, fiscal deficit, health care, transmission and distribution losses, labour reforms, and land policies. KECs are large urban centres, accounting for about 35 per cent of India’s gross domestic product (GDP). They are governed by urban local bodies, which are controlled by states. Given this concentration of income, KECs are pivotal to state growth. While decent progress is made on most growth attributes — education and health indicators, among others — there seems to be stagnation or worsening of performance of our urban centres, which requires urgent redress.

   

Our urban growth engine is sputtering because the ease of living and the cost of doing business are severely compromised in our urban centres. Bengaluru ranks as the world’s second most congested city, while Delhi frequently records world-leading pollution levels. The real estate in major Indian cities is one of the costliest globally, making it unviable for businesses to expand meaningfully within the city boundaries. This has forced manufacturing to shift to the countryside; the share of manufacturing in the urban areas declined from about 70 per cent in the 1990s to less than 50 per cent by 2011. On average, Indian cities collect roughly 80 per cent of their solid waste, but half of it is disposed of in landfills with negligible processing, contributing to methane emissions and public health hazards. Piped water supply averages a mere 70 litres per capita per day (LPCD), drastically below the 135-150 LPCD benchmark needed for hygienic living. Finally, close to a quarter of the urban population is forced to live in subhuman conditions in urban slums. This share reaches a staggering 40-45 per cent in cities like Mumbai. The poor delivery of urban services is no longer a matter of liveability; it has become a matter of survival.

   

There has been consensus on the key reforms around three broad areas — higher funding, empowered local governance and transparent planning — needed to transform the functioning of our cities. However, not much has happened on any of these due to political economy realities. We now have two options: Preach and wait for the implementation of these ideal reforms, or push doable ones immediately, which will go a long way in improving city functioning.

   

The first pillar of the reform concerns urban finance. The key recommendation has been to increase the financial resources available to cities. Municipal revenues in India remain at around 1 per cent of GDP — far below levels observed in peers like Brazil and South Africa, at 7.4 per cent and 6 per cent, respectively. Limited resources undoubtedly constrain service delivery performance. However, focusing only on increasing funding overlooks an equally important dimension: How effectively cities are using the resources they have. Evidence from several cities suggests that higher spending does not necessarily translate into better outcomes. The Municipal Corporation of Greater Mumbai’s per capita expenditure on solid waste management is among the highest in the country — nearly three times the recommended benchmark. Despite this, its cleanliness score (Swachh Survekshan score) has hovered around 50 per cent, compared to above 90 per cent for neighbouring cities like Navi Mumbai and Pune. States should ask cities to focus on spend efficiency in a mission mode.

   

Governance reforms form the second pillar. City governments are currently run by frequently transferred commissioners and powerless mayors. Stronger city leaders may imply weaker state Chief Ministers, and hence, no real motivation for the latter to delegate according to the 73rd and 74th Constitutional Amendment Acts. One practical reform is to ensure greater stability for city leadership. Municipal commissioners — who oversee the day-to-day functioning of cities — often have extremely short tenures, averaging 10 months according to a Janaagraha survey. Such rapid turnover makes it difficult to implement long-term infrastructure projects or institutional reforms. States can ensure longer, stable and coveted tenures for city administrators that could significantly improve the quality of urban governance. In addition, it is worth examining the performance of development authority models in delivering core urban services relative to the preferred municipal corporation model. Cities such as Noida are administered by a development authority, which operates under the state government and exercises integrated control over land use planning, infrastructure development and urban services. In contrast, neighbouring cities like Gurugram, though governed by a municipal corporation, have often struggled with fragmented governance and slower infrastructure coordination. In recent Swachh Survekshan rankings, Noida ranked 14th compared to Gurugram at 140th position despite facing comparable urban pressures.

   

Urban planning forms the third pillar. Infrastructure development in most cities has followed urban sprawl. This unplanned model of development leads to spatial inefficiencies, causing productivity declines that we are witnessing in large cities. However, there are exceptions, such as Ahmedabad, offering hope. Despite being a city of over 7.5 million residents, Ahmedabad has the lowest average congestion levels among cities with over 5 million populations in the country. It is also among the most affordable, with a price-to-income ratio that is a third of Mumbai’s. Gujarat’s land pooling policy has prevented unorganised sprawl, often seen in cities that rely solely on private developers, something worth studying and emulating by others.

   

Implementing these doable reforms will give our cities their rightful place in India’s development journey.

   

Shishir is a senior fellow, and Rishita is an associate fellow at the Centre for Social and Economic Progress. The views expressed are personal