Delhi's dichotomy: Big infra projects alongside unauthorised sprawl

Delhi's post-liberalisation growth turned it into a services powerhouse, but housing shortages, unplanned urbanisation, pollution and infrastructure gaps continue to test the capital

Five months after Manmohan Singh’s Budget speech announcing the liberalisation reforms in July 1991, a significant chapter unfolded in Delhi’s history, the passage of the Constitution (Sixty-Ninth Amendment) Act, 1991.  

The move granted the national capital more autonomy through a legislative assembly, though the Centre kept several major areas outside the legislature’s purview. 

Long-time residents remember a city undergoing a rapid transformation in the 1990s. 

After liberalisation, the city saw several major private infrastructure projects. In 2002, Delhi built what is one of India’s few infrastructure projects that operationally competes with the world’s best — the Delhi Metro. Experts call it the project that fundamentally changed the trajectory of Delhi’s development and reshaped urban transport for other Indian cities, which built their own systems under the guidance of the Delhi Metro Rail Corporation. 

There were also measures like the privatisation of power distribution in 2002 that experts say were successful. 

Today, the Savills Growth Hubs Index ranks Delhi as the world’s third-fastest-developing major city through 2033, behind Bengaluru and Ho Chi Minh City. That ranking reflects a city that has accumulated enormous economic weight over the past three decades. Delhi’s economy was worth about ₹17,004 crore in 1991-92 and has grown to about ₹13.3 trillion in 2025-26 in nominal terms.  

Per capita income was already about 2.5 times the national average in 1990-91 and remains at roughly that level today — projected at ₹5.3 lakh per person in 2025-26, according to the Economic Survey of the Delhi government, among the highest in the country. 

However, housing remained a pain point, as inventory failed to match demand, in the process creating two cities, one planned and the other unauthorised. This has sometimes had tragic consequences, like the recent building collapse in Satya Niketan, which killed seven people. 

Industry shifts   

One of the big shifts in Delhi occurred after the MC Mehta judgment of 1996 by the Supreme Court removed 1,300 polluting industrial units from the capital following an oleum gas leak. 

While many cities used the liberalisation momentum to boost manufacturing, Delhi transitioned into a services hub, with a major boom in the city’s knowledge economy. 

The manufacturing sector, which was small to begin with, declined even further after reforms, and the tertiary sector now accounts for nearly 90 per cent of value added. 

Delhi’s decline in manufacturing was not simply the result of factories being pushed out because of pollution, recalls Shailaja Chandra, former chief secretary of Delhi. “From the 1990s, environmental regulation, Supreme Court directions, land-use policy and the changing character of a densely populated national capital, all contributed to hazardous, polluting and non-conforming industries moving out,” she adds.  

During the Sheila Dikshit years there was a conscious emphasis on greening and sustainable urbanisation. Bhagidari sought to bring citizens and RWAs into the governance of the city rather than treating them simply as recipients of municipal services and the slogan of clean Delhi, green Delhi was ubiquitous — it was owned by citizens for almost 10-12 years, says Chandra.

When former CM Arvind Kejriwal-led Aam Aadmi Party came to power after a major upheaval in the capital’s politics in 2013, the focus shifted in response to pressure from the city’s low-income households on bettering the healthcare and education infrastructure, according to a former senior Delhi government official. 

Two cities 

However, hidden underneath this growth, is a dichotomy that the capital still struggles to reconcile with — the existence of a planned city and an unauthorised city. Experts warn of the major consequences as the latter expands unchecked. 

Delhi and other Indian cities have failed to reimagine what a city should be, experts say. “In the pursuit of growth, we’ve come to picture a city as a collection of infrastructure: Roads, drains, flyovers, water supply, traffic. We think that if we fix the infrastructure, we have fixed the city,” says  an executive at an urban policy think tank. “But a city is where people live, learn, work and play, it is not just a set of assets.” 

India’s latest Economic Survey for 2025-26 echoed this thought, calling for a major rethink. It highlighted the need for cities to be seen as living, breathing entities rather than a set of numbers. 

“Delhi’s growth has manifested in illegalities,” says Jagan Shah, who is currently Professor of Practice at the Transportation Research and Injury Prevention Centre in the Indian Institute of Technology, Delhi. 

 

For much of its modern history, Delhi’s housing story has been associated with the government, and particularly the Delhi Development Authority (DDA), established in 1957. But some of the capital’s best-known residential colonies owe their origins to a very different model. 

Before that, private developers were buying land from farmers and developing plotted residential colonies. Among them was DLF, which began with Krishna Nagar in East Delhi and went on to develop 21 colonies across the capital, including Rajouri Garden, Greater Kailash, Hauz Khas, Kailash Colony and Punjabi Bagh. 

That model, however, was largely squeezed out after the DDA came into being. “After the DDA came into being, it played a central role in land assembly and housing supply, barring private developers from buying agricultural land for development projects. This left no avenue for large-scale private development,” says Ankur Jalan, chief executive officer (CEO) of Golden Growth Fund (GGF), a realty-focused Alternative Investment Fund. 

Vineet Kanwar, vice president at the Delhi chapter of the Confederation of Real Estate Developers’ Associations of India (Credai Delhi), says the Delhi Development Act, 1957, has historically prevented private developers from purchasing large land parcels.

The expectation was that the DDA would meet the city’s growing housing needs. But Delhi was changing faster than its formal housing system could keep pace. 

Large-scale migration, particularly in the decades following Independence and Partition, put enormous pressure on the capital’s limited housing stock. The result was a widening gap between demand and formally planned supply, creating space for unauthorised development. 

The DDA has itself acknowledged that unauthorised colonies emerged because it struggled to construct enough low-cost housing amid large-scale migration from neighbouring states. 

Those problems have persisted in the post-reforms period, when its population jumped from 9.4 million according to the 1991 Census to nearly 17 million by 2011. Provisional figures from the Census underway peg Delhi’s population at 23 million in 2026.

The population expanded, but the availability of land has not kept pace. 

“The growth of Delhi was partly strangulated by the lack of developed space. We reached the limits of what DDA could assemble once it had put together Rohini, Dwarka, and Janakpuri. Beyond these urban extensions, the whole area of Delhi was in a twilight zone between being city land and agricultural land,” says Shah, who was formerly the director of the National Institute of Urban Affairs, a statutory and autonomous body under the Ministry of Housing and Urban Affairs. 

A lot of illegal plotting happened starting with Lal Dora areas like Kotla Mubarakpur, and before that at Chandrawal in North Delhi, which was subsumed into the city and all the agricultural land was developed. These lands were taken up by the city but not developed as a planned urban space.  

“Unauthorised colonies are the result of a pattern that has built up over several decades. Settlements have repeatedly grown ahead of formal planning and basic infrastructure; once large populations are established, regularisation becomes difficult to avoid. The consequence is that water, sewerage, drainage and roads are left trying to catch up with urbanisation instead of preceding it,” says Chandra. 

Delhi is estimated to have 1,731 unauthorised colonies, housing nearly 4.5 million, who are eligible under the Centre’s Pradhan Mantri Unauthorised Colonies in Delhi Awas Adhikar Yojana, which grants legal ownership and mortgage rights to those living in notified unauthorised colonies. Former officials say that successive governemnts allowed unauthorised colonies to not only fester, but grow, as it had political dividends for them in the form of votes.  

Around 1,511 unauthorised colonies are now set to be regularised under the newly notified Master Plan for Delhi (MPD) 2047.

The lack of availability also pushed private developers outside Delhi and into NCR areas like Noida, Gurugram, Ghaziabad, and Faridabad, which offered larger developable land parcels, more flexible development frameworks and greater scope for private-led township and group housing projects. 

Unauthorised development was also a result of the city’s industrial history, says Shah. Before 1996, when formal industrial mills existed in areas like Okhla, Khyber Pass, Mayapuri, there were no plans for industrial housing. These workers settled in unauthorised colonies and urban villages and remained there even after the industries moved out.  

Environmental nightmare 

One challenge Delhi has grappled with, and found few solutions to, is pollution, with air quality ranging anywhere between hazardous and extreme on most days. The city’s environmental crisis has perhaps brought it more disrepute than anything else.   

Delhi has been the world’s most polluted capital city for eight consecutive years, with studies estimating that this cuts life expectancy by 8.2 years.   

Unchecked private vehicle growth has choked the city’s arteries. While the automotive sector has helped the NCR’s economy, this is a reflection of the long commutes its residents are forced to undertake, often two to three hours a day, which the economic survey called the “productivity tax”.   

“The present government is trying to improve mobility, but expanding flyovers can also encourage greater dependence on private cars. Whatever the emission standard of an individual vehicle, too many vehicles competing for limited road space means congestion, idling, greater fuel consumption and more emissions,” says Chandra.   

While the metro has operationally been a resounding success, it remains economically and logistically inaccessible for a large part of the population. In contrast, buses have not received the focus they deserve in bridging the city’s last-mile and long distance transit gap.   

Per the latest available data, Delhi had a fleet of over 7,100 buses as of FY23 transporting around 4.2 million passengers daily through two agencies — DTC and Delhi Integrated Multi-Modal Transit System (DIMTS). In contrast, Beijing has a fleet of over 27,000 buses despite having a smaller population than Delhi.   

Pollution is also exacerbated by illegal work that continues in erstwhile industrial areas or completely unauthorised residential areas. 

“The city has failed to plan for its own exponential growth, and its citizens bear the brunt. This is unsustainable. A city cannot sustain private prosperity alongside public squalor indefinitely,” says the executive quoted above. 

Governments have brought out multiple master plans for Delhi, the latest one released just last month, but these have been characterised by little consultation on capacity planning, says Chandra. These capacity plans should ideally include infrastructure like water pipelines, sewerage and drainage systems. 

In her book Connaught Place and The Making of New Delhi, historian Swapna Liddle highlights the lengthy deliberations between key British architects Edwin Lutyens and Herbert Baker on a guiding philosophy for the upcoming city’s architecture. Urbanists note that for decades now planning in Delhi has not been driven by any such meaningful re-imagination of what the city should look and feel like. 

An expert notes that the success of the next generation of reforms will come down to a simple question: If people have the talent and are willing to work hard, can Delhi give them a fair chance to succeed?  

The latest Master Plan could, however, mark a shift. Developers believe the MPD 2047’s emphasis on redevelopment, regeneration, transit-oriented development (TOD), land pooling and more efficient utilisation of land could create greater room for private participation in the capital’s housing market. 

 

“The larger opportunity now lies in moving away from a predominantly land-constrained approach towards unlocking the potential of underutilised and already urbanised areas,” says Ravi Kant, cofounder of realty firm Elegance Infra. 

The plan provides for regularisation of residential buildings in 1,511 unauthorised colonies on an “as is where is” basis, without requiring layout plans, potentially simplifying the regularisation process. 

The MPD has also recommended major reforms in transport like congestion pricing, dynamic parking fares, and the return of the Bus Rapid Transit System. However, experts remain wary of these promises as it has no concrete implementation timelines.