Amidst rapid urbanisation ,as our mega cities burst at the seams, facing immense pressure on housing , infrastructure and basic civic services , there is an urgent need for a holistic policy driven approach for urban renewal  through infra modernisation , slum rehabilitation, empowerment of ULBs and creation of new urban hubs.

Vinod Behl

Under Article 21, our Constitution recognizes the right to housing and quality life with access to basic amenities like electricity , water , sanitation and health  as the   fundamental right for living with dignity. However , despite all the efforts , our cities are still  devoid of quality life, with poor infrastructure and sheer lack of basic civic amenities including   sanitation , roads,  public transport, sewerage and drainage systems, power and drinking water , besides  dangerous levels of pollution. 

The Modi government has been undertaking key flagship programmes  including Pradhan Mantri Awas Yojna (PMAY-Urban), Atal Mission for Rejuvenation & Urban Transformation (AMRUT) and Smart Cities Mission (SMC) .PMAY-U, launched by Ministry of Housing & Urban affairs (MoHUA) in 2015, to provide affordable housing (under EWS, LIG & MIG categories) and integrating basic civic infra with housing, is currently on an extended term till 31 December 2025.By early 2025, around 90 lakh houses were completed under PMAY-U- nearly 80% of the sanctioned houses.Amrut 2.0, aimed at improving basic municipal services in urban areas, launched in 2015, is running through FY 26. SMC was launched in 2015 to develop 100 chosen cities into smart cities through area-based redevelopment and pan-city solutions. Its extended term was up to 31 March 2025. Though the majority of the projects were completed by that date, yet a number of projects are still being completed.

The  central government has also  been making record budgetary allocations for developing infrastructure. In the 2025-26 union budget, INR 11.21 lakh crore were earmarked. Further, there was a funding support of INR 1.5 lakh crore to states in the form of 50-year interest-free loans , in addition to reform incentives. The allocation from the Ministry of Housing and Urban Affairs (MoHUA) which covers infra besides housing, was to the tune of INR 96777 crore.  

Urban Local Bodies(ULBs)  and other development agencies play a key role in developing and maintaining civic infrastructure in cities. But fiscally-challenged ULBs  are unable to cope up with the pressure of rapid urbanization to provide adequate infrastructure and civic facilities. With the urban population projected to be 600 million by 2030, there will be a massive funding requirement of  INR 600 billion  by 2030. Even today, the revenue of ULBs  lags 3X to their  expenditure. What further makes the matters worse is that two-fifth of the funds go towards staff salaries and administrative expenses.

Today, the poor state of our cities is simply not because of fund crunch with ULBs, but also due to mis-governance and misuse of funds. The government is seized of this problem and working towards improving the fiscal health of the ULBs with reformist policy measures. It is now planning a specific insolvency law for fiscally strained, debt-ridden  ULBs to help them reorganise their debt by way of refinancing and extending maturity date .The proposed law will also encourage financial discipline of ULBs and help them access capital from investors. To source required funds from investors for capital-intensive infra projects, there is also need to give a push to secure funding through municipal bonds. Only a handful of ULBs have successfully taken to this route. 

One big challenge before the city planners is to tackle the serious problem of urban slums. As per 2011 census data, about 65.5 million people were living in slums, making up for 17.4 % of urban population and 5.41 % of overall population in India. Slum redevelopment and slum rehablitation is a crucial aspect for making cities livable. The government has been  making efforts under PMAY-U  through in-situ slum rehablitation . However, there is a slow progress due to a number of challenges pertaining to land acquisition disputes, delayed clearances and implementation bottlenecks due to capacity constraints of ULBs and slum rehablitation projects not being financially appealing to private developers. Robust public-private partnerships with innovative financial models involving higher FSI and TDR incentives and streamlined approval processes , is the way forward to renew slums as livable communities.

Our large cities are today crumbling under the population pressure. This can be guaged from the fact that the built-up area across top 8 cities more than doubled from 2136 sq km in 1995 to 4308 sq km in 2025. The situation will further deteriorate  as estimated 330 million new urban residents will be added by 2050. As a result of this, the civic infra will further degrade, making cities unsustainable. In view of this alarming situation , there is a dire need to develop new urban centres. 

The 15th Finance Commission had recommended INR 8000 crore of initial performance -based funding for incubating 8 new greenfield cities during 2021-26 period. This is highly inadequate. According to urban development experts, we need dozens of new greenfield cities, besides the requirement of expanding our secondary cities. Considering that developing an even small new city requires a modest funding of INR 20k crore for land acquistion, development of trunk infra and utilities, besides providing proper connectivity , there  will be requirement for  massive funding, running into lakh of crores of rupees. The World Bank has said that the existing Indian cities alone require about 20 lakh crore for developing climate-resilient urban infra over the next 25 years. 

So, in order to make our cities slum-free, sustainable and livable,  promising good quality of life for residents, we need a policy pivot towards making our ULBs financially sound with good governance and better utilisation of funds, besides creating new green field cities.