NITI Aayog member Rajiv Gauba says expanded investment must be matched by empowered mayors, stronger municipal finances and greater control for urban local bodies.
India’s urban budget has expanded sharply since 2014, with the government stepping up spending on city infrastructure and services through programmes such as Smart Cities, AMRUT, Pradhan Mantri Awas Yojana, Swachh Bharat and the Urban Livelihoods Mission, NITI Aayog member Rajiv Gauba said in Bhubaneswar. He said the scale of public investment in urban areas has increased tenfold over the period, while spending on metro rail and bus systems has reached about Rs 3.7 lakh crore.
Gauba, speaking at the closing session of the 2nd National Urban Conclave, pointed to the new Urban Challenge Fund of Rs 1 lakh crore announced in the 2025-26 Budget and the allocation of Rs 5,000 crore each for seven city economic regions over five years. He said the aim is to turn cities into engines of growth, not just centres of administration, and tied that ambition to the broader vision of Viksit States and Viksit Bharat.
A key part of that agenda, he argued, is stronger local government. Gauba said cities need directly elected mayors with five-year terms, a Mayor-in-Council system and timely municipal elections. He also called for states to transfer all 18 functions listed under the 74th Amendment to urban local bodies, including master planning, water supply, fire services and traffic management, saying city administration cannot be effectively run from state capitals.
Gauba also said municipal finances remain too weak to support the level of service delivery urban India needs. He urged better property tax collection and higher user-charge recovery, while noting that grants from the Central Finance Commission to urban local bodies have risen to 45 per cent from 36 per cent of the previous allocation. Even so, he said fiscal transfers from states to cities remain limited and State Finance Commissions should be constituted regularly.
On planning and housing, he said India needs to move away from restrictive floor-area ratios and building rules that limit land supply and push up costs. He called for mixed-use zoning, development around transit hubs and land pooling to expand supply for both housing and commercial use. Gauba also highlighted the need for affordable rental homes for migrant workers, industrial labour, students and young professionals, and urged states to adopt the Model Tenancy Act to widen rental supply. According to government releases on urban missions, the latest phase of Swachh Bharat has been backed by Rs 1.41 lakh crore and has helped lift door-to-door waste collection to 98 per cent, while AMRUT and other flagship programmes have also received major funding increases as the Centre has pushed urban reform more aggressively.
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