Cities shape people’s lives—they’re the places where people work, get educated, migrate to, raise families, earn a livelihood, and more. Beyond this, cities are central to economic growth. Yet, India’s cities are mostly known for congestion, traffic jams and poor civic amenities.
The 2026 Economic Survey observes that India is far more urban in economic, functional and spatial terms than conventional definitions suggest, but cities lack the institutional, fiscal and planning foundations required for them to unlock their full potential, providing both quality of life for residents and economic benefits for the country.
By 2036, going by World Bank estimates, India’s towns and cities will be home to 600 million people, or 40% of the population, up from 31% in 2011, with urban areas contributing almost 70% to gross domestic product (GDP). “Urbanisation has concentrated productivity, innovation and labour markets in our cities, but it has also concentrated congestion, informality, and complexity of governance,” observes the survey. “Recognizing cities as economic infrastructure is a necessary first step toward aligning public policy, fiscal priorities, and planning frameworks with India’s development trajectory.”
To counter this, it is necessary to unlock urban land by providing clear titles, and increasing density norms such as floor space index (FSI) and floor area ratio (FAR). This will free up land for development not only for affordable housing and public transport, but also for other amenities such as sanitation, sewage and garbage disposal, and circular water systems. For traffic management, the survey urges urban bodies to prioritize people over vehicles and to improve public transport to raise productivity while improving liveability.
Another key area of change is urban governance: Electoral, fiscal, and administrative responsibilities in Indian cities are distributed across multiple tiers in an unwieldy administrative structure, which constrains city governments’ ability to mobilise revenues, coordinate planning, and take long-term investment decisions.
“There is a case made for aligning authority and accountability, because even as Indian cities are administered, global cities are governed,” observes the survey. City governments also require better financial planning, access to grants, and consequent accountability.
However, these physical investments will pay off only if accompanied by the introduction and enforcement of rules and regulations that ensure residents also participate in making urban areas livable, as the survey terms “a credible civic compact that aligns incentives” between citizens and the state. “When cities are planned, financed, and governed around this purpose, urbanisation can become a source of shared prosperity and a better quality of life for all citizens,” the survey notes.