India needs to give city governments greater administrative and financial autonomy to address the challenges of rapid urbanisation, NITI Aayog member Rajiv Gauba said on Sunday. Addressing the valedictory session of the second National Urban Conclave, he said cities could not be effectively governed from state capitals.
The former cabinet secretary of India called for comprehensive reforms in urban governance, planning and financing to achieve the vision of Viksit Bharat by 2047.
Urban population to reach 85 crore by 2050
India's urban population is projected to rise from around 50 crore currently to 85 crore by 2050. Nearly half of the country's population is expected to live in cities by then, Gauba said.
He added that India's population was likely to continue growing for several decades before stabilising at around 165 crore by 2060. This would increase the demand for infrastructure, housing and public services.
Urban investment rises tenfold
Gauba described cities as centres where talent, capital and ideas converge to drive economic growth. He said urban development had received greater attention since 2014 through initiatives such as the Smart Cities Mission, AMRUT, Pradhan Mantri Awas Yojana, Swachh Bharat Mission and the Urban Livelihoods Mission.
Budgetary allocations for the urban sector had increased tenfold, he said. Around ₹3.7 lakh crore had also been invested in metro rail and bus transport systems.
Gauba highlighted NITI Aayog's Growth Hub initiative. This includes the ₹1 lakh crore Urban Challenge Fund announced in the 2025-26 Union Budget. The latest Budget also allocated ₹5,000 crore each for seven city economic regions over five years.
Call for stronger municipal institutions
He stressed that investment alone would not be enough without stronger municipal institutions.
Referring to the report Moving Towards Effective City Governance, prepared jointly by NITI Aayog and the Ministry of Housing and Urban Affairs, Gauba called for directly elected mayors with five-year terms. He also advocated a mayor-in-council system and timely municipal elections.
He said states should transfer all 18 functions listed under the 74th Constitutional Amendment to urban local bodies. These include master planning, water supply, fire services and traffic management.
Gauba also flagged weak municipal finances. He urged cities to improve property tax collection and recover user charges to strengthen their revenue base.
While grants from the Central Finance Commission to urban local bodies had increased, transfers from state governments remained inadequate, he said. State Finance Commissions should be constituted regularly to ensure predictable financial transfers to municipalities.
Planning reforms to reduce housing costs
On urban planning, Gauba called for relaxing restrictive floor-area ratios (FARs) and building norms. He also advocated mixed-use zoning, development around transit hubs and land pooling to increase land availability and reduce housing costs.
He urged states to adopt the Model Tenancy Act to improve access to rental housing for migrant workers, industrial labourers, students and young professionals.
Gauba also called on the Ministry of Housing and Urban Affairs to link support under urban development missions to the implementation of reforms.
He said stronger city governments were essential to building Viksit States and achieving the vision of Viksit Bharat by 2047.