GUWAHATI: Indian cities will require trillions of dollars in investment by 2050 to become climate-resilient and reduce their carbon footprint, yet only a handful of municipal corporations have ever accessed the capital markets, according to a report jointly released by FICCI and EY.
ALSO READ: Assam CM Defends Bill Allowing Only Local Residents to Buy Land Near Heritage Sites
According to the report, released this week, only 20 municipal corporations have ever accessed the capital markets, raising a cumulative total of nearly USD 476 million.
The report finds that urban areas generate more than 60 per cent of India's GDP despite accounting for only about one-third of the country's population. However, municipal corporations collectively raise revenues equivalent to just 0.6 per cent of GDP.
The financing gap is widening, the report noted.
India's urban infrastructure requirements are estimated at approximately USD 840 billion over the next 15 years, or nearly USD 55 billion annually. It also states that almost 70 per cent of the urban infrastructure the country will need by 2047 has yet to be built.
Urban India is projected to house nearly 600 million people by 2036, contributing almost 70 per cent of GDP. By 2050, the urban population is expected to reach 877 million, accounting for nearly 75 per cent of GDP.
Raj Menda, Chairman of the FICCI Committee on Urban Development and Real Estate, said “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.”
The report describes the Union Cabinet's ₹1,00,000 crore Urban Challenge Fund as more than just a funding scheme. It notes that the fund, which requires urban local bodies to mobilise half of each project's cost through capital markets, is expected to catalyse nearly ₹4 lakh crore in investments.
India's top 10 cities contribute nearly 30 per cent of the national GDP, while 36 mid-to-large cities and around 450 smaller urban centres remain underleveraged despite accommodating a much larger share of the urban population.
The report argues for a polycentric system linked by economic corridors and the PM Gati Shakti, with Tier-II and Tier-III cities designated as regional growth hubs.
According to the report, the way forward is to reimagine cities as integrated economic platforms anchored in governance, land management, planning, financing, institutional capacity, and economic positioning.