India needs outcome-driven urban policy, says EAC-PM paper

India should undertake a structured approach towards urbanisation through financing, governance and land reforms along with reclassification of urban settlements, all aimed at improvement in residential life, transportation, public safety, greening and public health, a working paper by the Economic Advisory Council to the Prime Minister said.

“India needs an outcome-oriented, growth-focused urban policy in which the Centre plays a catalytic role by providing strategic guidance, technical support including clear outcome goals and timelines, financial incentives for reforms and fundamental reforms to the administration even though urbanisation is a state subject,” it said.

The paper titled ‘India’s Hidden Urbanisation and its Policy Implications’ written by EAC-PM member Shamika Ravi and its consultants Manuj Joshi and Apurv Kumar Mishra.


“The disbursement of funds under Union schemes over the next five years must be linked to needs on the ground with appropriate weight for newly urban and rapidly urbanising areas,” it said, adding the need for development of a new performance framework at the end of five years based on the outcomes achieved.

According to the paper, by mid-century India’s urban population is projected to cross 50%, adding nearly 400 million people to India’s cities as compared to 31.1% percent of Indians (377 million people) living in urban areas in 2011.

“To address the chronic underfunding of city administrations, we recommend expanding municipal bonds, outcome-based financing, and modernised systems for fines and user-fee collection,” it said, suggesting greater financial autonomy and a larger share in intergovernmental transfers that are essential to achieve the targeted objectives.

The paper calls for a revised methodology to classify and delineate urban settlements, leveraging daytime satellite imagery and built-up volume data, along with population density on the ground.

“This is helpful to create automated trigger mechanisms that formalise the urban transformation and minimise the mismatch between demand and supply for urban public goods across the country.” it said.

According to the paper, reforming land-use and ownership frameworks will enable growth while strengthening local institutions and empowering city-level leadership through urban local bodies and targeted administrative reforms will help achieve city-level outcomes distinct from general administration.

“India must now map investment flows to cities and align urbanisation with long-term economic strategy for the country and its urban citizens,” it said, adding urban development must be comprehensive, covering governance, infrastructure, housing, mobility, and environment in an integrated way.

As per the paper, most interventions by the Union government have been input-based. However, input focused strategy of the past has led to costs and delays, distracting away from outcomes.

“Instead, we propose that the implementation strategy and project flow under Urban Challenge Fund and other Union government initiatives should be based on outcomes which are practical and palpable, based on the five citizen-centric areas of welfare.” it added.