India’s urban policy must go beyond frameworks—stronger financial tools, reform pressure on states, and empowered city governance are urgent needs.
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In 2024, the United Nations’ city agency, UN-Habitat, and OECD (Organisation for Economic Co-operation and Development) published a report on national urban policies (NUP) of countries globally. The report was based on a survey of 78 countries that participated in the survey. Their study revealed that the NUP of each nation was progressively gaining in significance as a critical tool for managing urban challenges. This aligns with the rapid urbanisation trends observed in many of the countries surveyed.. As a consequence of such urbanisation, cities were dealing with larger percentages of national populations and, therefore, rising in political significance. Cities across the world were also increasingly becoming key drivers of their national economy. However, in the process, they also raised several challenges across—management, agglomeration costs in the form of traffic congestion, increased air pollution, and rising housing costs. There were also challenges in climate, demography, and digitisation.
The survey provided several key findings. First, many of the NUPs, such as those of France, Lithuania, and Saudi Arabia, were ‘multi-sectoral’. This was natural as cities would impact a whole range of policy areas and issues. The NUPs thus needed to be aligned with the objectives sought to be fulfilled in other areas. Nonetheless, the policies of some countries—such as those of Canada, Costa Rica, and Sweden—were ‘mono-sectoral’, emphasising general principles and touching upon a limited number of themes. Second, an overwhelming number of NUPs included ‘formal mechanisms for policy alignment and coordination across and among levels of government.’ Several experts have also endorsed horizontal coordination between urban local bodies (ULBs) and rural areas to balance territorial development and appropriate rural-urban linkages.
Most city projects were found to be financed by national direct investments, with insufficient own-source revenues at the subnational level and inadequate fiscal instruments to facilitate private investment.
The onslaught of climate-related events across cities globally revealed an indelible impact on NUPs. The attention accorded to climate resilience has remarkably increased, leading to a rise in climate-related policies. Similarly, there was a general acknowledgement in NUPs that affordable housing was a major challenge. This was against the backdrop of the fact that 23 percent of the global urban population continues to live in poor conditions with inadequate housing. In the context of housing, there were additional issues of high property prices, energy costs, and housing supply targets that were not sufficiently aligned with related policies of finance and land. The area of finance emerged as a huge challenge for urban development. Most city projects were found to be financed by national direct investments, with insufficient own-source revenues at the subnational level and inadequate fiscal instruments to facilitate private investment. Three-quarters of countries reported the presence of mechanisms for monitoring and evaluating NUP performance.
The survey’s observations resulted in a set of recommendations. The first was the need for sectoral ministries that deal with economic and social policies to have a more substantial involvement in NUPs and to help specific urban sectors overcome their mounting challenges, particularly housing.
Another recommendation was for the NUPs to support balanced territorial development. NUPs needed to recognise urban-rural linkages and assess that public investments and programmes were integrated in a manner that recognised these linkages. NUPs must also emphasise the need for adequate financial provisions for cities—through both own-source revenues and inter-governmental transfers—to effectively meet urban development goals. Concurrently, NUPs should also leverage private investment and promote public-private partnerships that are currently insufficiently utilised by cities. Lastly, there was a need to monitor the implementation of NUPs regularly and evaluate the impact they were achieving.
India does not figure as a part of the above-cited survey. However, the Ministry of Housing and Urban Affairs (MoHUA) published its National Urban Policy Framework (NUPF) around five years ago. Upon examining this document in the context of the cited global survey, the NUFP exhibits both significant similarities and differences in emphasis and focus. For instance, NUPF is quite cognisant of the tragic situation of affordable housing that Indian cities share with cities of other countries. Similarly, local finance appears as a major challenge and rural-urban linkages are especially recognised. However, while NUPF mentions the necessity of aligning urban objectives with those of other sectors, there is no definite and comprehensive treatment of multi-sectoral issues concerning urban challenges. While cities globally are prioritising climate-related problems as their top challenges, NUPF’s treatment of this challenge is brief and mentioned in passing.
The deteriorating condition of Indian cities is mainly due to the almost complete inaction by the states regarding urgent urban reforms.
NUPF presents a competent and comprehensive analysis of issues and challenges that Indian cities experience. It encompasses significant areas—such as the urban economy, urban planning, physical and social infrastructure, housing and affordability, transportation and mobility, urban finance, urban governance, urban information systems, and environmental sustainability. Its prescriptions concerning solutions are reasonably comprehensive and cogent. The suggested ‘Summary of Actions’ is rightly tri-sected into city, state, and central-level actions, thereby clearly recognising that each level of government has a substantive role to play in the welfare of cities.
However, at the end of the discussion, the NUPF states that state governments have the principal constitutional responsibility for urban development. It acknowledges that the most significant areas of reform and action lie primarily in the realm of the states. This is correct as far as the constitutional position is concerned, since urban development in India is slotted as a state subject. Nonetheless, it is deeply concerning that state governments across the country are resisting reforms suggested by the 74th Constitutional Amendment and also neglecting the directives of the Second Administrative Reforms Commission and National Commission on Urbanisation.
The deteriorating condition of Indian cities is mainly due to the almost complete inaction by the states regarding urgent urban reforms. If this is combined with rising urbanisation and mounting economic and demographic significance of cities, an important question arises: what action does the Government of India (GoI) contemplate to address the disempowerment of the urban local bodies? This includes concerns such as poor planning, lack of affordable housing, outdated governance architecture, and financial emaciation.
In the absence of such concerted action and pressure exerted by the GoI, pushing central schemes into urban areas with large financial outlays will continue to produce sub-optimal results and leave the cities further out of joint.
MoHUA has a much more active role to play in retrieving the situation. As the apex ministry in the country responsible for overseeing urban affairs, it has a dual role. It must engage with other GoI ministries, such as the Ministry of Finance, to implement its suggestions – a share of local Goods and Services Tax (GST) to be transferred directly to cities. At the same time, it has to engage with the states and urge them to implement the pending reforms. At its level, it can ask the GoI for larger budgetary outlays for ULB capacity building. All fund flows to states and cities linked to ULBs must be transferred on a performance basis by states and cities concerning the reform agenda laid down by the Constitution and the GoI. In the absence of such concerted action and pressure exerted by the GoI, pushing central schemes into urban areas with large financial outlays will continue to produce sub-optimal results and leave the cities further out of joint.
Ramanath Jha is a Distinguished Fellow at Observer Research Foundation.
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Dr. Ramanath Jha is Distinguished Fellow at Observer Research Foundation, Mumbai. He works on urbanisation — urban sustainability, urban governance and urban planning. Dr. Jha belongs ...
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