Reform is urgent, when rentals in Mumbai, Delhi exceed those in Shanghai and New York

Office rentals in Mumbai and Delhi top those in Shanghai and New York, despite a weaker rupee, growth slowdown and India's lower income levels. It underlines the crying need for urban reform in India, to purposefully augment infrastructure - and not merely built-up space, but also services like water supply, solid waste management and transport - and thoroughly overhaul governance structures for more responsive administration.

The challenges of resource mobilisation and capacity building are large, but the bigger challenge is to the policy mindset. We need more than urban renewal, we need new towns, built along modern concepts of town planning, land use, energy efficiency, citizen mobility. Census projections suggest that our urban population would increase by as much as 180 million in the next 14 years , to over 535 million. This could be an underestimate: it would put 38% of Indians in cities by 2026 (from about 32% today), while over half the world's inhabitants already live in towns.

Prolonged urban neglect has meant that the planning process has simply been overtaken by rapid, haphazard expansion of our cities. The way ahead is to build credibility of urban local bodies with transparency in administration and improved delivery of services. It is notable that the flagship urban budgeting scheme of the Centre, JNNURM, does require 22 mandatory and optional reform measures on the part of local bodies for funding to follow through.

For a virtuous cycle of reform and coagulation of funds, the required changes have to be instituted from the bottom up, rather than imposed from the top by the concerned state or central government. Thus far, the record is that urban centres in states such as Gujarat, Andhra Pradesh and Tamil Nadu have been more proactive. However, there remains insufficient political consensus in most states on releasing land from agriculture for urbanisation, municipal reform and user charges for diverse services. What is required is a conducive framework for reform-linked investment in urban infrastructure, along with appropriate policies for low-income households, for truly inclusive growth.