Budget's inclusive urban development plan could not have been more timely

As India’s urbanisation picks up pace, with over 35 per cent of its population currently living in cities and over 50 per cent expected to urbanise by 2050, the government’s push towards prioritising urban development could not have been more timely. The Economic Survey and the Budget laid out the government’s vision for inclusive urban development, addressing needs such as affordable urban housing, job creation, specifically in the service sector, and improving the ease of living for both youth and the elderly. However, recent tragedies, including three young aspirants drowning in an illegal basement in the National Capital and numerous deaths due to heavy rainfall in the country, highlight the need for the government to also fix the administrative lapses in our cities.

Nonetheless, this year’s Budget has made significant strides towards urban development. First, 30 million additional houses under PM Awas Yojana in rural and urban areas have been promised as a step towards affordable housing for everyone. Specifically, PM Awas Yojana Urban 2.0 aims to address the housing needs of 10 million poor and middle-class families. Second, to transform cities into “growth hubs”, the government intends to formulate town planning schemes for orderly development of peri-urban areas. This is particularly important as peri-urban areas usually remain isolated from regular governance and planning. Third, urban sanitation is emphasised through partnerships with development banks to promote water supply, sewage treatment, and solid waste management across 100 cities. An interesting aspect of the Budget was the focus on the creative redevelopment of cities under the “brownfield” strategy for redevelopment, which involves repurposing land parcels previously used for industrial purposes. Beyond optimal land usage, such a strategy also has the potential for environmental restoration, as abandoned or underutilised land sites can also be used. Fourth, the government would also formulate a scheme to support street vendors by developing 100 weekly haats in selected cities.

In its bid to transform Indian cities into engines of economic growth, the government has placed a balanced emphasis on infrastructure, sustainability, inclusivity and governance reforms. During her Budget speech, Finance Minister Nirmala Sitharaman also highlighted mainstreaming the application of digital public infrastructure in urban governance. The government has also prioritised land management by enhancing land administration, planning, and management, as well as urban planning and the formulation of bylaws — goals set to be achieved within the next three years. Improving the fiscal burden on urban local bodies through an enhanced IT-based system for tax administration and land record management has also been highlighted. To make cities more liveable and promote citizens’ ease of living, transit-oriented development plans for 14 large cities with a population above 3 million will be formulated and implemented. Additionally, the development of transparent rental housing markets and increased availability is planned, including dormitory-type accommodations for industrial workers.

However, these concentrated efforts towards urban development must be well-rounded for a rapidly urbanising country like ours. There needs to be a reinvigorated focus on climate-resilient infrastructure, as adverse climatic conditions have often brought our cities to a standstill.

To promote ease of living for urban dwellers, the administrative leg of urban governance must be kept under tight check to avoid corruption. While discussing land management, illegal structures or forceful land occupation, which often lead to conflicts and violence should be debated. Rental housing reforms should be accompanied by laws that ensure transparency regarding landowners’ duties and the responsibilities of tenants. Affordable housing cannot be achieved without effective rent-control instruments. Although these aspects were not covered in the budget discussion, it does not mean that the stakeholders cannot take these up in the future. Urban development is one of the most vital aspects of the vision of India@100. The economic growth that we envisage for becoming a high-income country cannot be achieved if our cities are not planned in a way to reach their maximum potential. Such strategies also require us to invest in marginalised communities in urban spaces so that they are not isolated from economic gains.

As the World Bank points out, with over 80 per cent of global gross domestic product (GDP) being generated in cities, planned urbanisation can not only promote sustainable growth but also increase productivity and innovation. Additionally, with the World Bank noting that almost 70 per cent of urban infrastructure needed by 2047 is yet to be built, the government needs to promote sizeable investments averaging 1.2 per cent of GDP per annum. We are far behind that goal, and the way forward requires us to seek a mix of public and private investments in urban development.

The writers are, respectively, chair, Institute for Competitiveness, and chairman, Economic Advisory Council to the Prime Minister. With inputs from Jessica Duggal