NEW DELHI: In a report --“Moving Towards Effective City Government – A Framework for Million-plus Cities” by NITI Aayog on Saturday, it emphasised the importance of strengthening institutional foundations alongside sectoral improvements and prioritised India’s million-plus cities as key economic centres contributing significantly to national growth.
The report identifies persistent governance issues including weak and fragmented leadership structures, constrained fiscal capacity, and capacity gaps that limit service delivery and urban performance.
It also calls for a shift towards empowered city governments through a clear realignment of authority, responsibility, and resources at the city level.
Such a transformation is essential for cities to function as effective engines of growth and responsive service providers, read a statement by the Aayog.
One of the key recommendations in the report stresses upon strengthening city leadership through the introduction of a directly elected Mayor with a fixed tenure, supported by an empowered Mayor-in-Council system to ensure continuity, clarity, and accountability in decision-making.
It also proposed integration of urban service delivery by bringing key functions such as water supply, sanitation, and public transport under the purview of city governments to improve coordination and accountability.
The Aayog further suggested enhancement of municipal finances by strengthening own-source revenues, ensuring more predictable and timely fiscal transfers through robust State Finance Commissions, and enabling access to market-based financing mechanisms such as municipal bonds.
The report also proposed to undertake institutional restructuring by bringing multiple parastatal agencies involved in service delivery under city government oversight, with clearly defined roles and stronger coordination frameworks.
"For effective implementation, the report recommends that states amend their Municipal Acts to reflect these governance reforms. It also calls on the Ministry of Housing and Urban Affairs to update the Model Municipal Law and provide guidance and incentives to support reform adoption," the statement also said.
The report proposes a phased approach to implementation, enabling testing, learning, and the development of scalable frameworks. This approach ensures that reforms are both practical and sustainable. Overall, it offers a comprehensive roadmap for strengthening urban governance in India, recognising that the country’s next phase of growth will be driven by economically vibrant, well-governed, and liveable cities. Strengthening city governments, therefore, is not only an administrative priority but a strategic imperative for achieving national development goals.
Member, NITI Aayog Rajiv Gauba, highlighting the salient features of the Report, stated that the report was the outcome of extensive deliberations, evidence-based analysis, and a study of global best practices undertaken with a group of experts.
He noted that “Moving Towards Effective City Government” highlights the need to establish city governments in the true sense, which remains a critical gap. He emphasised that without empowered city governments, India cannot fully unlock the economic potential of its cities, and that effective implementation of the recommendations will be key to realising the vision of Viksit Bharat.
Union Minister of Housing and Urban Affairs Manohar Lal released the report.