OPINION | Union Budget ideas to transform India’s cities

India has transformed its highways and achieved excellent rural road connectivity

India’s cities have finally become politically salient over the last decade. Governments are now investing in cities like never before. The last decade has witnessed historically unprecedented investments in India’s cities.

At the Union level alone, expenditure over the twelve-year period from 2014–15 to 2025–26 has exceeded ₹9 lakh crore (c. USD 100 bn). Of this, 63%—over ₹5 lakh crore (c. USD 63 bn)—has been incurred during the five-year period from 2021–22 to 2025–26.

State governments, too, have ramped up investments in urban development over the past decade, though it is much harder to collate actual expenditure across states due to inconsistencies in reporting formats. Taken together, this signals a massive shift in the trajectory of public expenditure for India’s cities.

Why Has Quality of Life Not Improved?

The question that begs a response is: why, despite such large investments in our cities, does the average citizen not enjoy a better quality of life, and the average business a better quality of doing business?

The answer lies in three pieces (or “city systems”) of the urban transformation puzzle, over and above budgetary outlays: urban planning and design; the skills and competencies of city officials; and the biggest piece of them all, the degree of empowerment of local governments.

These three pieces need to come together with the positive shift in financing for visible transformation to occur in India’s cities. All of these reform areas predominantly lie within the domain of state governments. Yet, there are four specific ideas on how Union Budgets should move to the next gear in facilitating the transformation of India’s cities.

A National Mission for Urban Roads

First, while India has transformed its highways and achieved excellent rural road connectivity, city roads remain in shambles. The Union Budget 2026–27 should allocate funds for a 10-year national mission for urban roads aimed at transforming city streets across India. It should mandate the adoption of best-in-class design standards such as Tender SURE (Specifications for Urban Roads Execution), currently being implemented in Bengaluru and through the Chief Minister’s Green Roads Infrastructure Scheme in 17 cities of Uttar Pradesh.

Tender SURE roads provide continuous, even footpaths; uniform travel lanes; pipe-and-chamber stormwater drains; and ducted underground utilities. Studies in Bengaluru have indicated a 200%+ increase in pedestrians and a 100%+ increase in women pedestrians on Tender SURE roads. Funding should be linked to states legally mandating superior design, implementation and maintenance standards for urban roads; adopting quality- and cost-based procurement rather than least-cost tendering; recruiting urban designers in all cities to ensure design adoption and compliance; and implementing digital works management systems, including the mapping of underground utilities.

Building a Shelf of Bankable Urban Projects

Second, the Union Budget 2026–27 should support the creation of a shelf of projects for India’s cities. Currently, no city in India has a five-year strategy (or plan), a Capital Investment Plan (CIP) laying out funding requirements to execute that strategy, or clear visibility on the resources needed.

The discourse on urban planning in India largely focuses on long-term spatial plans, without adequately addressing medium-term strategic priorities. Cities now commonly conceive projects arbitrarily, based on available funding, rather than working backwards from citizen needs and city-wide objectives. The Union Budget 2026–27 could provide funding for the preparation of city strategies or plans, a shelf of projects, CIPs, and detailed project reports (DPRs) for individual projects, alongside partial funding for implementation. This would help build much-needed institutional capacity within urban local governments.

Unlocking the Value of Public Land in Cities

Third, the Union Budget 2026–27 should fund the identification, mapping and valuation of all public land in cities. Vast tracts of urban land are owned by the Union Government (primarily defence and railways), state governments and their parastatals (notably revenue departments), Union and state public sector undertakings, and city agencies. Much of this land is grossly underutilised.

There is an urgent need to develop an aggregate view of these landholdings, ascertain their market value, and assess current utilisation. Making land available at affordable prices for socio-economic growth must be a priority, and this process should begin by unlocking the supply of public land.

Reimagining Urban Infrastructure Finance

Fourth and finally, there is a need for more imaginative and pragmatic policy frameworks to unlock the c. ₹115 lakh crore (USD 1 trillion) of assets under management in insurance funds, the Employees’ Provident Fund Organisation, and pension funds for the benefit of India’s cities. Aggregate municipal bond issuances in India have not even crossed USD 1 bn over three decades, and overall municipal borrowings outside bonds are also incredulously low.

The Union Government needs to review and upgrade the policy and institutional framework governing municipal borrowing. It should also partner with state governments to reimagine urban infrastructure financing entities at the state level and develop metropolitan asset management companies. Reform-linked performance grants from the Union Government for cities with populations above half a million could help unleash municipal borrowing, based on these reforms.

(Srikanth Viswanathan, Chief Executive Officer, Janaagraha.)

Views are personal, and do not represent the stand of this publication.