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Chapter # 39. Modernizing City Governance For Urban Transformation


City Governance For Urban Transformation

  • To transform our cities into economically vibrant and environmentally sustainable habitats that provide equitable access to basic infrastructure, public services and opportunities to all citizens and platforms for democratic participation.

Current Situation

Global experience indicates that cities are central to raising economic productivity, enhancing job creation and improving public finance at all levels. Successful and long-lasting urban transformation critically depends on reforming the way our cities are governed. Hence, city governance is a key enabler for urban transformation, and sustained economic growth and job creation.

India is urbanizing at a fast pace and it is expected that by 2050, close to 50 per cent of India’s population would be residing in urban areas, requiring the availability of sustainable infrastructure and services for a better quality of life.1 Such infrastructure and services can only be ensured through modern urban governance. Indian cities are in the process of modernizing their governance structures.

The government has undertaken various initiatives focusing on tourism (HRIDAY – Heritage City Development and Augmentation Yojana), infrastructure (Housing for All, Smart Cities Mission, AMRUT – Atal Mission for Rejuvenation and Urban Transformation) and sanitation (Swachh Bharat Mission), among others. The current status of urban governance can be assessed through an analysis of its constraints.


The key challenges plaguing urban governance in India include the following.

  • The absence of a modern spatial planning framework, public utility design standards and land titling in cities takes a huge toll on economic growth and productivity, environmental sustainability and living conditions in cities.
  • There is lack of human resource capacities in the urban sphere at all levels, especially in urban local bodies (ULBs). The municipalities are heavily under-staffed and there are significant gaps in the skills required for urban management.
  • Indian ULBs have huge scope to improve their financial autonomy and capacity to raise resources.2 Some of the key reasons behind the poor state of municipal finances are the narrow, inflexible and non-buoyant tax base, broken financial accounting and audit systems, and the inability of municipalities to levy and recover taxes and user charges.
  • Multiple institutions like parastatals, development authorities, public works departments, and ULBs themselves report to different departments of the state government and have been entrusted with overlapping responsibilities.
  • The distribution of power between elected officials at the city level (mayors and councillors) and central administrative service cadres at the city/ district levels are highly tilted towards the latter. The 74th Constitutional Amendment (CAA) to decentralise urban governance has not translated into reality, affecting citizen participation in cities.

Way Forward 

The following strategies are proposed to improve urban governance in India by 2022-23.

  1. Leveraging city economy
  • Each city needs to be recognized as a distinct unit of the economy. In larger cities, City Economic Councils can serve as a clearinghouse between business and governments to hasten the progress of specific projects, improve the ease of doing business and catalyse investments into the city.
  • Concomitantly, a quarterly city dashboard capturing city-level investments, GDP and employment growth, financial position and financial performance, and status of infrastructure projects can provide a framework for data-driven decisions.
  • This will measure transformation and encourage competition among cities. For this, the Ministry of Housing and Urban Affairs (MoHUA), the Ministry of Finance and the Ministry of Statistics and Programme Implementation may create frameworks for a dashboard subsuming scheme-specific performance MIS.
  1. Decentralization and metropolitan governance 
  • The multiplicity of agencies with overlapping jurisdictions and fragmented roles and responsibilities is common in Indian cities. This leads to delays in implementation of projects and inefficient service delivery. To achieve the decentralization goals of 74th CAA, there is an urgent need for articulating a framework for governance of cities that includes development authorities, other parastatals, special purpose vehicles (SPVs) and Census Towns.
  • Metropolitan governance systems are also needed in million-plus cities. There is a strong case for having a two-tier governance structure where all local functions are transferred to the ward committees and citywide services, such as transportation, water supply, sewerage, etc., are vested with the city council or regional authorities.
  • Moreover, state governments can be encouraged to transfer 12th Schedule funds, functions and functionaries to the ULBs. At the same time, governance should be devolved to the ward and area levels to enhance downstream accountability mechanisms. States can learn from innovative governance frameworks involving the ULB and the state government as seen in models like the Greater Shimla Water Supply and Sewerage Circle.
  1. Spatial planning and land titling
  • There is urgent need for a synchronous and modern national framework for the spatial planning of cities that replaces the current Urban Development Plans Formulation and Implementation (UDPFI) guidelines. This framework should factor in plan preparation, implementation and enforcement at metropolitan, municipal and ward levels. It should also include congruent endpoints, pre-defined success measures and a transparent mechanism for consultative modification.
  • Guaranteed land titling may also be evaluated to foster a transparent land market. In this regard, cities should lay out their own action plans to provide infrastructure and formalize existing settlements of the underprivileged.
  1. Strengthening finances of ulbs and civic agencies
  • Cities require a financial sustainability roadmap to be financially self-sufficient to support high-quality infrastructure and the delivery of services.
  • This comprises fiscal decentralization, medium-term fiscal plans, innovative models to improve revenue collection, optimizing return on assets especially land and buildings, value capture methods, market-oriented revenue models, PPPs in urban infrastructure and services, and financial accountability through audited balance sheets and performance MIS reports.
  • MoHUA, in consultation with the Ministry of Finance, may draw up model provisions for consideration by states in their municipal and civic agency acts.
  1. Capacity building by skilling for municipal jobs and strengthening institutions
  • There is huge potential for the creation of direct and indirect skilled jobs in ULBs to improve the quality of infrastructure and services and the management of ULBs. MoHUA will develop model municipal talent and in/outsourcing guidelines to leverage efficiencies generated by technology and outsourcing.
  • The National Skill Development Corporation (NSDC) should be leveraged to improve understanding of municipal jobs including job definitions, technical competencies and key result areas, which can be considered for inclusion in recruitment rules at the state level and for performance standards/accreditation for training institutes to foster a functional platform for knowledge sharing. A separate sector skill council for municipal services may be considered.
  1. Citizen participation
  • Enhanced citizen participation is needed for greater trust between citizens and governments, improved sustainability, better service delivery and accountability. Ward committees and area sabhas should be activated with a technology- enabled ‘Open Cities Framework’ and the use of digital tools for feedback and reporting.
  • ULBs should also encourage the participation of all community associations, including settlements of the underprivileged and civil society organizations. ULBs should engage with them frequently through city watch groups, public hearings and city consultations to create a framework for formal partnerships.

Rules and procedures need to be simplified for faster implementation of constructive recommendations.

Chapter # 41. Data Led Governance and Policy Making

Objectives Evidence based policy making should be made integral to the overall governance structure in New India, 2022-23. To achieve this, timely gen

Chapter # 40. Optimizing the Use of Land Resources

Optimizing the Use of Land Resources-Ensuring that land markets function smoothly, through efficient allocation of land across uses, provision of secu

Chapter # 39. Modernizing City Governance For Urban Transformation

Objective  City Governance For Urban Transformation To transform our cities into economically vibrant and environmentally sustainable habitats that p

Chapter # 38. Civil Services Reforms

Objective  civil-services-reforms To put in place a reformed system of recruitment, training and performance evaluation of the civil service to ensur

Chapter # 37. Legal, Judicial and Police Reforms

Objective To ensure the safety and security of citizens and ensure access to effective legal systems and speedy delivery of justice. Current Situation

Chapter # 36. The North-East Region

Objectives The North-East Region (NER) should: Have adequate road, rail and air connectivity, waterways, internet connectivity and financial inclusion

Chapter # 35. Balanced Regional Development: Transforming Aspirational Districts

Objective  Balanced Regional Development: Transforming Aspirational Districts Achieve balanced development in India by uplifting 115 districts, curre

Chapter # 34. Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Other Tribal Groups and Minorities

SCs, STs, OBCs, De-Notified Tribes (DNTs), Nomadic Tribes (NTs) and Semi-Nomadic Tribes (SNTs) Objective  To accelerate the socio-economic developm

Chapter # 33. Senior Citizens, Persons with Disability and Transgender Persons

SENIOR CITIZENS  Objective To ensure a life of dignity, social security and safety for senior citizens, enabling them to actively participate in econ

Chapter # 32. Gender

Objective  To create an enabling environment, sans institutional and structural barriers. To enhance the female labour force participation rate to at

Chapter # 31. Nutrition

Objectives  Under POSHAN Abhiyaan, achieve the following outcomes by 2022-23, compared to the baseline of 2015-16 (National Family Health Survey-4):

Chapter # 30. Universal Health Coverage

Objectives  On the strong platform of Pradhan Mantri – Jan Arogya Yojana (PM-JAY): Attain a coverage of at least 75 per cent of the population

Chapter # 29. Human Resources for Health

Objectives  Achieve a doctor-population ratio of at least 1:1400 (WHO norm 1:1000) and nurse-population ratio of at least 1:500 (WHO norm 1:400) by 2

Chapter # 28. Comprehensive Primary Health Care

Objectives  Under Ayushman Bharat, scale-up a new vision for comprehensive primary health care across the country, built on the platform of health an

Chapter # 27. Public Health Management and Action

Objectives  To revamp radically the public and preventive health system in the nation through the following strategic interventions: Mobilize public

Chapter # 26. Skill Development

Obejctives  For harnessing the demographic advantage that it enjoys, India needs to build the capacity and infrastructure for skilling/reskilling/up-

Chapter # 25. Teacher Education and Training

Objectives There cannot be a quality education system without quality teachers. Therefore, a thorough revamp of the entire ecosystem of teacher educat

Chapter # 24. Higher Education

Objectives  Increase the gross enrolment ratio (GER) in higher education from 25 per cent in 2016-17 to 35 per cent by 2022-23. Make higher education

23. School Education

Objectives Universal access and retention: o Hundred per cent enrolment and retention at elementary education and secondary education levels; achieve

Chapter # 22. Sustainable Environment

Objective  The objective is to maintain a clean, green and healthy environment with peoples’ participation to support higher and inclusive economic

Chapter # 21. Water Resources

Objectives By 2022-23, India’s water resources management strategy should facilitate water security to ensure adequate availability of water for l

Chapter # 20. Swash Bharat Mission

Objectives The key objectives of the Swachh Bharat Mission include: 1. Making India Open Defecation Free (ODF) by October 2, 2019. 2. Carrying out ext

Chapter # 19.Smart Cities for Urban Transformation

Objectives  Leverage the ‘Smart Cities’ concept in select urban clusters to: Drive job creation and economic growth. Significantly improve effici

Chapter # 18. Digital Connectivity

Objectives Given the relevance of digital connectivity to economic growth and the need to eliminate the digital divide by 2022-23, India should aim to

Chapter # 17. Logistics

Objectives Achieve multi-modal movement of cargo on par with global logistics standards. Reduce the logistics cost to less than 10 per cent of GDP fro

Chapter # 16.Ports, Shipping and Inland Waterways

Objectives  Double the share of freight transported by coastal shipping and inland waterways from 6 per cent in 2016-171 to 12 per cent by 2025. Incr

Chapter # 15. Civil Aviation

Objectives Enhance the affordability of flying to enable an increase in domestic ticket sales from 103.75 million in 2016-171 to 300 million by 2022.2

Chapter # 14. Railways

Objectives By 2022-23, India should have a rail network that is not only efficient, reliable and safe, but is also cost-effective and accessible, both

Chapter # 13. Surface Transport

Objectives Increasing the coverage and quality of roads and highways is critical to enhancing connectivity and internal and external trade. By 2022-23

Chapter # 12. Energy

Objectives The government’s on-going energy sector policies aim “to provide access to affordable, reliable, sustainable and modern energy”. At t

Chapter # 11. Minerals

Objectives Double the area explored from 10 per cent of obvious geological potential (OGP) area to 20 per cent.1 Accelerate the growth of the mining s

Chapter # 10. Travel, Tourism and Hospitality

Objectives  Increase India’s share in global international tourist arrivals from 1.18 per cent to 3 per cent. Increase the number of foreign touris

Chapter # 9. Housing For All

Objectives Provide every family with a pucca house, with a water connection, toilet facilities, and 24×7 electricity supply and access. Build 2.9

Chapter # 8. Financial Inclusion

Objectives Banking for the unbanked  o Bank accounts: Ensuring universal access to bank accounts, which are a gateway to all financial services.  o

Chapter # 7.Doubling Farmers’ Income (III): Value Chain & Rural Infrastructure

Objectives • Transform the rural economy through the creation of modern rural infrastructure and an integrated value chain system. • Leverage the

Chapter # 6.Doubling Farmers’ Income (II): Policy & Governance

Objectives Create a policy environment that enables income security for farmers, whilst maintaining India’s food security. Encourage the participati

Chapter # 5.Doubling Farmers’ Income (I): Modernizing Agriculture

Objectives • Modernize agricultural technology, increase productivity, efficiency and crop diversification. • Generate income and employment throu

Chapter # 4.Industry

Objectives Double the current growth rate of the manufac-turing sector by 2022. Promote in a planned manner the adoption of the latest technology adva

Chapter # 3. Technology and Innovation

Objectives India should be among the top 50 countries in the Global Innovation Index by 2022-23.1 Five of our scientific research institutions should

Chapter # 2.Employment and Labour Reforms

Objectives Complete codification of central labour laws into four codes by 2019. Increase female labour force participation to at least 30 per cent by

Chapter # 1 Growth (India @ 75)

Objectives Steadily accelerate the gross domestic product(GDP) growth rate to achieve a target of about 8 per cent during 2018-23 This will raise the


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