Urban infrastructure

Urbanization is an integral part of the process of economic growth. As in most countries, India’s towns and cities make a major contribution to the country’s economy. With less than 1/3 of India’s people, its urban areas generate over 2/3 of the country’s GDP and account for 90% of government revenues.

Urbanization in India has expanded rapidly as increasing numbers of people migrate to towns and cities in search of economic opportunity. Slums now account for 1/4 of all urban housing. In Mumbai, for instance, more than half the population lives in slums, many of which are situated near employment centers in the heart of town, unlike in most other developing countries.

Fast Facts – Urbanization in India

  • Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 42.4%; Gujarat 37.4%
  • 3 out of world’s 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)
  • Large Cities: 23 in 1991; 40 in 2001
  • Urban Pop.: 25% of 850 mill in 1992; 28% of 1,030 mill in 2002.
  • Estimated Urban Pop. by 2017: 500 mill
  • % of Urban Residents who are Poor: About 25%
  • Slum Population:  About 41 million in 2001
  • Estimated Slum Pop. by 2017: 69 mill

Meeting the needs of India’s soaring urban populations is and will therefore continue to be a strategic policy matter. Critical issues that need to be addressed are:

  1. Poor local governance.
  2. Weak finances.
  3. Inappropriate planning that leads to high costs of housing and office space; in some Indian cities these costs are among the highest in the world.
  4. Critical infrastructure shortages and major service deficiencies that include erratic water and power supply, and woefully inadequate transportation systems.
  5. Rapidly deteriorating environment.



  1. Many urban governments lack a modern planning framework.
  2. The multiplicity of local bodies obstructs efficient planning and land use.
  3. Rigid master plans and restrictive zoning regulations limit the land available for building, constricting cities’ abilities to grow in accordance with changing needs.


  • Building regulations that limit urban density – such as floor space indexes – reduce the number of houses available, thereby pushing up property prices
  • Outdated rent control regulations reduce the number of houses available on rent – a critical option for the poor
  • Poor access to micro finance and mortgage finance limit the ability of low income groups to buy or improve their homes
  • Policy, planning, and regulation deficiencies lead to a proliferation of slums
  • Weak finances of urban local bodies and service providers leave them unable to expand the trunk infrastructure that housing developers need to develop new sites.

Service delivery:

  • Most services are delivered by city governments with unclear lines of accountability
  • There is a strong bias towards adding physical infrastructure rather than providing financially and environmentally sustainable services
  • Service providers are unable to recover operations and maintenance costs and depend on the government for finance
  • Independent regulatory authorities that set tariffs, decide on subsidies, and enforce service quality are generally absent.


  • Most urban bodies do not generate the revenues needed to renew infrastructure, nor do they have the creditworthiness to access capital markets for funds
  • Urban transport planning needs to be more holistic – there is a focus on moving vehicles rather than meeting the needs of the large numbers of people who walk or ride bicycles in India’s towns and cities.


  • The deteriorating urban environment is taking a toll on people’s health and productivity and diminishing their quality of life.

Other Infrastructure Bottlenecks in India

  1. Financing

Infrastructure projects are highly capital intensive and funding is considered as a major impediment in achieving the infrastructure goals.

The infrastructure broadly can be divided into two types,

  1. one which is very essential for the public at large and have no or very little revenue potential and
  2. other which has handsome revenue potential.

The first kind of infrastructure must be totally government financed whereas the later can be developed on PPP mode. Since resource constraints will continue to limit public investment in infrastructure, PPP-based development needs to be encouraged wherever feasible.

  1. Land Acquisition

Compensation fixed in terms of registered value is always the bone of contention.

There is always a substantial difference between the compensation offered and the actual value of the land. The land owners always feel aggrieved which results in dispute and litigation.

  1. Clearances from numerous agencies

Most of the infrastructure projects in India suffer from delays in completion. This is mainly due to an inadequate regulatory framework and inefficiency in the approval process. Infrastructure projects require multiple sequential clearances at various levels of government. There are various approvals needed at every stage which definitely delay the infrastructure projects.

  1. Environmental Impact Assessment (EIA)

Environmental safeguards and guidelines have proven to be one of the major reasons for delay in infrastructure projects, especially in the power sector. While new projects need to comply with these regulations, even a project under construction may need to comply with revised standards midway through the execution stage.

  1. Poor pre-construction planning

Due to the already adverse effect of various impediments like land acquisition, statutory approvals, delayed financial closure, etc. the pre-construction phase of infrastructure projects is pretty long. Therefore, there is delayed commissioning and completion of projects.

Suggestions and Way Forward

India’s Infrastructure which is an essential and most important component of Urban Development, is in a poor shape and needs an immediate attention and redress both from Government and Industry.

  1. There must be a more conducive environment for potential concessionaire. There is always a worry of early clearances and investors are stuck in the bureaucratic cycle.
  2. There is a necessity for improvements in the investment climate.
  3. Migration of large population to urban centers is causing new cities to emerge and existing ones to expand. This is causing rapid urbanization. Therefore, India needs to develop satellite cities for which the need is of mass-transport systems.
  4. There must be Single window statutory clearance which even includes Environmental clearance to projects.
  5. There are good competent people working in different departments of government, however they are working in silos, we need better and effective coordination for a fast project roll out.
  6. There is no doubt that fiscal support is the dominant factor for infrastructure development but equally important is enabling policies from the governments end. Then only the world class infrastructure dream of India can be realized and place India’s economy on a high growth trajectory.

India has the second largest urban population in the world and by 2050, around 50% of India’s population ie., 814 million is expected to live in urban areas.

Given this scenario, the present infrastructure and amenities in cities and towns are not adequate to address the expanding urbanization process.

Several initiatives were launched by the government to promote urban infrastructure in the country. Major initiative is the twin effort of Smart Cities Mission and the AMRUT scheme.

(1) The Smart Cities Mission

The Smart Cities Mission is a major urban renewal program launched by the Government to develop and upgrade living conditions and infrastructure in selected 100 cities all over the country.

Objective of the programme is to modernize cities by providing core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions. The programme was officially launched on 25th of June 2016 and in the first phase, 20 cities will get funding for converting them into smart cities. In the next two years, the remaining cities will also participate in the project. Ministry of Urban Development is the anchoring agency for the implementation of the project.

The main focus of the project is the area based development of cities by transforming existing areas through retrofitting and redevelopment. Another component of the smart cities project is the development of new areas or greenfield areas. Similarly, adoption of Smart Solutions with the use technology, information and data are expected to improve infrastructure and services under the project.

Financing of smart cities mission

Financing of the mission will be collaboratively done by the Centre, state and local bodies. Fund from the private sector will be invited and Public Private Partnerships will support the project financially.

The most vital contribution will be provided by the centre as it will provide Rs. 48,000 crores over five years i.e. on an average Rs. 100 crore per city per year. Matching the center’s contribution, an equal amount will be made by the State/ULBs. Altogether nearly one lakh crore rupees from government sources will be available for Smart Cities Project. For the implementation of the project each city should form a dedicated Special Purpose Vehicle (SPV).

(2) Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Project

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) along with smart cities were jointly planned and launched by the government to transform urban living conditions through infrastructure upgradation. AMRUT is aimed at transforming 500 cities and towns into efficient urban living spaces over a period of five years. Ministry of Urban Development has selected the five hundred cities with the help of state governments.

A project oriented development approach is adopted under the scheme in contrast to the area based approach of Smart Cities Mission. The Cabinet approved Rs 50,000 crore for this mission which is to be spent over a period five years. This is a centrally sponsored scheme with 80% budgetary support from the Centre.

Mission of AMRUT is to

  • ensure that every household has access to a tap with assured supply of water and a sewerage connection;
  • increase the amenity value of cities by developing greenery and well maintained open spaces (e.g. parks); and
  • reduce pollution by switching to public transport or constructing facilities for non-motorized transport (e.g. walking and cycling).

(3) Pradhan Mantri Awas Yojana (Urban) or Housing for All by 2022 Mission

The ‘Housing for All by 2022’ under the scheme of “Pradhan Mantri Awas Yojana – Housing for All (Urban)” launched by the central government aims to provide housing to all urban people by 2022. It provides central assistance to States and UTs for constructing houses to all eligible sections by concentrating on urban slums and economically weaker sections. Hence, slum rehabilitation and affordable housing to Economically Weaker Sections are the major features of the project.

The programme has following components: –

  1. a) Slum rehabilitation of Slum Dwellers with participation of private developers using land as a resource;
  2. b) Promotion of Affordable Housing for weaker section through credit linked subsidy;
  3. c) Affordable housing in partnership with Public & Private sectors and
  4. d) Subsidy for beneficiary-led individual house construction or enhancement.

(4) Heritage City Development and Augmentation Yojana (HRIDAY)

The HRIDAY scheme is launched fro the holistic development of heritage cities. It amis to preserve and revitalize the unique character of heritage cities in India. for the first phase of the programme Rs , 500 crore is allocated with full funding by the central government. Twelve cities—including Ajmer, Amaravati, Amritsar etc are identified for the project.

(5) Jawaharlal Nehru National Urban Renewal Mission

JNNURM was launched in 2005 as the flagship scheme for urban development. The programme had two components viz., Basic Services for Urban poor (BSUP) and Integrated Housing and Slum Development Programme (IHSDP). Civic amenities were improved under the programme including urban transportation. The programme aimed at integrated development of slums through projects for providing shelter, basic services and other related civic amenities. 

(6) Urban transportation

Several initiatives were taken to enhance public transport system including the Bus Rapid Transit Systems (BRTS) approved for 11 cities under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The transportation system will be equipped with Intelligent Transport System (ITS) and Metro Rail Projects.

(7) Swachh Bharat Mission (SBM)

A major associated urban development programme is making India’s urban centres clean. For this, the SBM targets to achieve 100 per cent scientific management of municipal solid waste in 4041 statutory towns/ cities in the country by 2019.

Besides the above initiatives, several associated development programmes like industrial corridors, NHDP, Jawaharlal Nehru National Urban Renewal Mission, National Urban Livelihood Mission etc., aims to add infrastructure and other amenities to the urban areas.