Updating urban definitions could optimize our resource allocation
India’s local governments are weak despite the 73rd and 74th Constitutional amendments. They effectively serve as extended implementation arms of state governments, rather than as an independent tier of government. If India has to deliver on its promise of Viksit Bharat by 2047, we must radically change how we view our local governments.
Most economies that have graduated to developed status, including a totalitarian China that is fast moving towards it, have done so through the economic growth generated in and by cities, catalysed in turn by strong local governments. A paltry 4% of the divisible pool is allocated to local governments by Finance Commissions (FCs), with cities getting a minuscule 1.4%. India’s investment in cities averaged 0.6% of GDP during 2011-2018 as against 2.8% of GDP for China during 2000-2014 (World Bank, 2022).
If India has to develop rapidly, we need to empower cities and transfer resources commensurate with 18 constitutionally identified functions to realize the vision of the 74th Amendment of the Constitution. One of the first challenges is defining a city. We have 88 municipal acts across 28 states and seven Union territories, and five different criteria to define a city—comprising population, density, employment, revenue generation and those from guidelines under Article 243Q of the 74th Amendment.
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