NITI Aayog Advocates for Urban Governance Reforms to Support India's Growth
Shri Rajiv Gauba, Member of NITI Aayog, delivered a keynote address at the 2nd National Urban Conclave emphasizing the critical need for comprehensive reforms in urban governance, planning, and financing to achieve the Viksit Bharat @ 2047 vision. He highlighted India's ongoing demographic transition, noting that the population will continue growing for several decades and stabilize at approximately 165 crore around 2060, with nearly half of India's population expected to live in urban areas by 2050. This represents a projected increase in urban population from approximately 50 crore currently to 85 crore, requiring fundamental changes in how cities are planned, governed, and financed to meet infrastructure, housing, and basic service requirements.
Financial Commitments and Growth Initiatives
The government has significantly increased urban sector investments, with the budgetary outlay growing 10-fold post-2014 through major missions including Smart Cities, AMRUT, Pradhan Mantri Awas Yojana, Swachh Bharat, and Urban Livelihoods Mission. Approximately ₹3.7 lakh crore has been invested in metro rail and bus systems. NITI Aayog's Growth Hub initiative includes the ₹1 lakh crore Urban Challenge Fund announced in the 2025-26 budget to develop cities as growth hubs, complemented by this year's budget allocation of ₹5,000 crore each for 7 city economic regions over five years.
Governance and Structural Reforms
Shri Gauba emphasized the essential need for empowered City Governments with directly elected mayors serving 5-year terms, introduction of Mayor-in-Council systems, and ensured timely municipal elections. He called for states to devolve all 18 functions to urban local bodies as mandated by the 74th Amendment, including master planning, water supply, fire services, and traffic management. The address referenced the joint NITI Aayog-Ministry of Housing and Urban Affairs report "Moving Towards Effective City Governance" which outlines these recommendations, stressing that cities cannot be effectively governed from state capitals and must have authority to respond to local needs.
Fiscal and Revenue Enhancement Measures
Municipal revenues remain inadequate, requiring improvement in property tax and user-charge recovery mechanisms. While Central Finance Commission grants to Urban Local Bodies have more than doubled with their share increasing to 45% from 36%, fund devolution from states to cities remains low. Shri Gauba emphasized the need for regular constitution of State Finance Commissions and adequate fiscal transfers to urban local bodies.
Urban Planning and Housing Reforms
The current planning paradigm requires overhaul through reforms removing restrictive Floor Area Ratios (FARs) and building norms that constrain land supply and drive up costs for residential and commercial users. Adoption of mixed-use zoning, development around transit hubs, and land pooling are essential to increase land supply and reduce costs for housing and economic activities. The address highlighted the importance of affordable rental housing for migrant workers, industrial labor, students, and young professionals, urging states to adopt the Model Tenancy Act to increase rental housing supply.
Shri Gauba concluded that these reforms can be implemented through new Municipal Acts by states, with MoHUA linking reform implementation to support under urban missions. Empowered city governments are presented as essential to unlocking India's urban growth potential and realizing the vision of Viksit States and Viksit Bharat.