“We can’t run cities from state capitals”: Shri Rajiv Gauba, Member, NITI Aayog at 2nd National Urban Conclave, calls for empowered city governments to Unlock India’s Growth Potential

An empowered city government has the authority, money and institutional capacity to respond to local needs. It can plan services, make decisions and involve residents meaningfully. The article argues that cities cannot be governed effectively from state capitals.

A directly elected mayor would give citizens a clear choice and a clear person to hold accountable. A five-year term could support longer projects. Under a Mayor-in-Council system, the mayor would work with a council of elected representatives to guide city administration and decisions.

The proposed changes come from NITI Aayog and MoHUA’s report, Moving Towards Effective City Governance. The article also calls for timely municipal elections and devolution of all 18 functions under the 74th Amendment. Together, these reforms could make city leadership more stable, locally responsive and easier for citizens to monitor.

India is undergoing a major urban transition. The article projects that the urban population will grow from approximately 50 crore now to 85 crore by 2050. Nearly half of India’s population is expected to live in urban areas by then. This means cities will absorb tens of crores of additional residents.

The practical challenge is enormous. New and existing residents will need homes, water, sanitation, transport, jobs and other basic services. Planning systems that work for today’s population may not handle the future demand. The article says India’s population could stabilise at about 165 crore around 2060, showing that demographic pressure will continue for decades.

The scale also explains the push for stronger city governments and new financing. NITI Aayog’s Growth Hub initiative and the ₹1 lakh crore Urban Challenge Fund aim to support cities as engines of growth. Without better planning, governance and finance, rapid urbanisation could deepen service shortages and housing costs.

The 18 functions listed in the Constitution’s Twelfth Schedule are urban planning; regulation of land use and building construction; planning for economic and social development; roads and bridges; water supply; public health, sanitation and solid waste management; fire services; urban forestry and environmental protection; protection of weaker sections; slum improvement; urban poverty alleviation; parks and gardens; cultural, educational and aesthetic promotion; burial and cremation grounds; cattle pounds and prevention of cruelty to animals; vital statistics, including births and deaths; public amenities such as street lighting, parking and bus stops; and regulation of slaughterhouses and tanneries.

The article names master planning, water supply, fire services and traffic as examples.

It argues that States should transfer these responsibilities, with authority and capacity, to city governments. This list is established constitutional context beyond the article’s detailed enumeration.

Municipalities need regular money to build infrastructure, operate services and maintain what already exists. Water networks, public transport, housing programmes and sanitation all require continuing spending, not just one-time construction. When municipal revenues are weak, cities may delay projects, reduce service quality or depend heavily on higher governments.

For example, a city expanding its water system needs funds for pipes, treatment, staff and repairs. The same principle applies to buses, roads and housing. Property taxes and user charges can provide local income, while transfers can support needs that local collections cannot cover. Without predictable funding, long-term planning becomes difficult.

The article says Central Finance Commission grants to urban local bodies have more than doubled, with their share rising to 45% from 36%. Yet transfers from States remain low. It calls for regular State Finance Commissions and adequate fiscal transfers to cities, alongside better local revenue collection.

Property taxes are recurring payments linked to properties within a municipality. They give city governments a local revenue base. User charges are payments collected from people who use municipal services, such as water supply or waste services. Together, these sources connect urban income to local assets and service use.

State Finance Commission transfers work differently. A State Finance Commission reviews how State revenues and responsibilities should be shared with local governments, then recommends transfers and other fiscal arrangements. These funds can help municipalities provide services when local taxes and charges are insufficient. Regular commissions make the process more predictable.

The article says municipal revenues remain low and calls for better property-tax and user-charge recovery. It also says State Finance Commissions should be regularly constituted and adequate transfers ensured. Central Finance Commission grants have increased, but the article stresses that State devolution to cities remains limited.

Floor area ratio, or FAR, controls how much building floor space can be created on a plot. Restrictive FARs limit supply even when demand is high. Single-use zoning separates homes, jobs and services, while limited land supply makes suitable sites scarcer. Together, these rules can raise land and housing costs for residents and businesses.

Mixed-use development places homes, shops, offices or services closer together. Transit-oriented development concentrates growth around transport hubs, making land and infrastructure more efficient. Land pooling combines separate plots for planned development, then returns developed plots or benefits to owners. These approaches can increase usable supply and reduce travel and development costs.

The article urges reforms to restrictive FARs and building norms. It also supports mixed-use zoning, development around transit hubs and land pooling. The aim is to reduce costs for housing and economic activity while supporting better planned urban growth.

Migrant workers, industrial labourers, students and young professionals often need homes soon after arriving in a city. Their work or study may be temporary, changing or uncertain. Affordable rentals offer flexibility and reduce the need to buy a home before they can afford one. They also support access to jobs, education and urban services.

The key mechanism is a larger, more reliable rental market. If States adopt the Model Tenancy Act, the article expects rental housing supply to increase. More formal and available rental homes could give newcomers additional choices and help cities accommodate workers and learners near economic opportunities.

The need will grow alongside India’s urban transition. The article projects urban residents rising from about 50 crore to 85 crore by 2050. It specifically urges States to adopt the Model Tenancy Act for migrant workers, industrial labour, students and young professionals, as part of wider housing reforms.