Coping with Change: The Need to Restructure Urban Governance and Finance in India

Over 330 million people live in India’s 5,165 cities, and 35 cities have a population of over a million each. Three (Mumbai, Delhi, and Kolkata) of the 10 largest metropolises in the world are in India. Over two-thirds of India’s GDP originates in urban agglomerations in the country. However, urban governance and finance in India leave much to be desired in terms of providing services to the country’s burgeoning urban population while accommodating different needs and pressures and adapting to shocks, whether natural or human-caused. This paper draws on lessons from fiscal federalism theory and the experiences of governance institutions and financing systems around the world to identify some key reforms needed to ensure more citizen participation and greater accountability in urban governance, and to augment and strengthen the capacity of Indian cities to deliver more adequate services and provide needed urban infrastructure.