NEW DELHI: India’s cities will require an estimated $2.4 trillion in investments by 2050 to become climate-resilient and low-carbon, but municipal corporations have mobilised only a fraction of the required capital, news ageny ANI reported on Tuesday quoting a joint report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and EY.
The report noted that only 20 municipal corporations have tapped capital markets so far, collectively raising around $476 million, underscoring the widening financing gap in the country’s urban development agenda.
According to ANI report, urban areas currently account for more than 60 per cent of India’s GDP while housing nearly one-third of the country’s population. Despite their growing economic importance, municipal corporations generate revenues equivalent to only 0.6 per cent of GDP, limiting their ability to fund infrastructure and essential public services.
The report estimated that India will require around $840 billion in urban infrastructure investments over the next 15 years, translating to nearly $55 billion annually. It also highlighted that nearly 70% of the urban infrastructure needed by 2047 is yet to be built.
India’s urban population is projected to reach nearly 600 million by 2036, contributing around 70% of GDP. By 2050, the urban population is expected to increase to 877 million, accounting for almost 75% of the country’s economic output, making sustained investment in urban infrastructure and governance increasingly critical.
The report identified financing (not infrastructure creation) as the primary challenge in achieving the government’s Viksit Bharat 2047 vision. Quoting Raj Menda, Chairman of the FICCI Committee on Urban Development and Real Estate and Chairman of the Supervisory Board at RMZ, ANI reported that India’s urban strategy must evolve beyond infrastructure development.
“India’s next phase of urban development must move beyond infrastructure creation to building economically competitive, investment-ready cities. Strong governance, innovative financing and integrated planning will be critical to unlocking the full potential of our cities and accelerating India’s journey towards Viksit Bharat 2047,” Menda reportedly said.
The report described the Centre’s Rs 1 lakh crore Urban Challenge Fund as a significant step towards strengthening the financial capacity of urban local bodies. The fund requires cities to mobilise 50% of project costs through capital markets and is expected to catalyse nearly Rs 4 lakh crore in investments. It also outlined six strategic priorities for urban development, including transforming cities into investment-ready entities, promoting a network of growth centres beyond major metros, improving governance, leveraging data-driven planning, enhancing economic competitiveness, and building climate-resilient urban ecosystems.
The report highlighted the concentration of economic activity in India’s largest urban centres, noting that the top 10 cities contribute nearly 30% of GDP, while many Tier-II and Tier-III cities remain underutilised despite accommodating a substantial share of the urban population.
It recommended adopting a polycentric urban growth model, supported by economic corridors and the PM Gati Shakti initiative, to unlock the potential of emerging cities.
The report also pointed to progress under flagship urban schemes. It said more than 8,000 projects worth over Rs 1.64 lakh crore have been completed under the Smart Cities Mission, while Rs 2.7 lakh crore has been committed under AMRUT across nearly 500 cities. Additionally, 1.25 crore houses have been sanctioned under the Pradhan Mantri Awas Yojana (Urban).
Stressing the role of cities in India’s long-term economic growth, Menda reportedly said the success of the Viksit Bharat 2047 vision would ultimately depend on the success of India’s urban centres, adding that cities with sound finances, transparent governance and investment-ready balance sheets would be better positioned to attract long-term capital.
Source: The Financial Express
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