Bhubaneswar: The budgetary outlay for the urban sector has grown 10-fold post-2014 with the launch of concerted efforts through several large missions like Smart Cities, AMRUT, Pradhan Mantri Awas Yojana, Swachh Bharat, and the Urban Livelihoods Mission to accelerate development in Indian cities, NITI Aayog member Rajiv Gauba said on Sunday. 

Huge investments of about Rs 3.7 lakh crore have also been made in metro rail and bus systems.

Addressing the valedictory session of the 2nd National Urban Conclave, Gauba, a former Cabinet Secretary, outlined NITI Aayog’s growth hub initiative, pointing to the Rs 1 lakh crore Urban Challenge Fund announced in the 2025-26 budget to develop cities as growth hubs, and this year’s budget allocation of Rs 5,000 crore each for 7 city economic regions over five years.

He underscored that having empowered city governments, in the true sense of the term, is essential to improve service delivery and ensure effective citizen participation. Referring to the report 'Moving Towards Effective City Governance', jointly developed by NITI Aayog and the Ministry of Housing and Urban Affairs (MoHUA), he called for cities to have directly elected mayors with 5-year terms, introduce a Mayor-in-Council system and ensure timely municipal elections.

He emphasised the need for states to devolve all 18 functions to urban local bodies in line with the 74th Amendment, including master planning, water supply, fire services, and traffic. He stressed that cities cannot be effectively governed from state capitals and city governments must have the authority and institutional capacity to respond to local needs. This alone will ensure meaningful citizen participation.

Gauba said that municipal revenues remain low and called for improving property tax and user-charge recovery. He pointed out that while Central Finance Commission grants to ULBs have more than doubled the previous allocation, with their share increasing to 45 per cent from 36 per cent, fund devolution from states to cities remains low. He said that State Finance Commissions should be regularly constituted and that adequate fiscal transfer to urban local bodies must be ensured.

Addressing urban planning and housing, Gauba highlighted the need to overhaul the current planning paradigm. He called for reforms to remove restrictive FARs and building norms that constrain land supply and drive up costs for residential and commercial users. He stressed the need for adoption of mixed-use zoning, development around transit hubs and land pooling to increase land supply and reduce costs for housing as well as for economic activities.

He pointed to the importance of affordable rental housing for migrant workers, industrial labour, students and young professionals and urged States to adopt the Model Tenancy Act in order to increase rental housing supply.

Gauba said all these reforms can be implemented by states bringing in new Municipal Acts and urged MoHUA to get the reforms implemented by linking them to support under urban missions. He emphasised that empowered city governments are essential to unlocking India’s urban growth potential and realising the vision of Viksit States and Viksit Bharat.