The Constitution of India has assigned the subjects
pertaining to the urban areas to the State Legislatures. In so far
as the urban issues are concerned, the legislative powers of the
Union are limited only to the following subject/ areas:
- Delhi and other Union Territories
- Property of the Union
- A subject of the state list which two or more state legislatures
authorise Union Parliament to legislate.
- Amendment of the Constitution of India.
In exercise of these legislative powers, the Parliament of India
has enacted legislations which are administrated by the Ministry
of Urban Development & Poverty Alleviation.
Housing and Urban Policy in India
The policies of urban development and housing in India have come
a long way since 1950s. The pressure of urban population and lack
of housing and basic services were very much evident in the early
1950s. In some cities this was compounded by migration of people.
However, the general perception of the policy makers was that India
is pre-dominantly an agricultural and rural economy and that there
are potent dangers of over urbanisation which will lead to the drain
of resources from the countryside to feed the cities. The positive
aspects of cities as engines of economic growth in the context of
national economic policies were not much appreciated and, therefore,
the problems of urban areas were treated more as welfare problems
and sectors of residual investment rather than as issues of national
In the First Five Year Plan (1951-56), the emphasis was given
on institution building and on construction of houses for Government
employees and weaker sections. The Ministry of Works & Housing
was constituted and National Building Organisation and Town &
Country Planning Organisation were set up. A sizeable part of the
plan outlay was spent for rehabilitation of the refugees from Pakistan
and on building the new city of Chandigarh. An Industrial Housing
Scheme was also initiated. The Central Government subsidised Scheme
to the extent of 50% towards the cost of land and construction.
The scope of housing programme for the poor was expanded in the
Second Plan (1956-61). The Industrial Housing Scheme was widened
to cover all workers. Three new schemes were introduced, namely,
Rural Housing, Slum Clearance and Sweepers Housing. Town & Country
Planning Legislations were enacted in many States and necessary
organisations were also set up for preparation of Master Plans for
The general directions for housing programmes in the Third Plan
(1961-66) were co-ordination of efforts of all agencies and orienting
the programmes to the needs of the Low Income Groups. A Scheme was
introduced in 1959 to give loans to State Governments for a period
of 10 years for acquisition and development of land in order to
make available building sites in sufficient numbers. Master Plans
for major cities were prepared and the State capitals of Gandhi
Nagar and Bhubaneswar were developed.
The balanced urban growth was accorded high priority in the Fourth
Plan (1969-74). The Plan stressed the need to prevent further growth
of population in large cities and need for decongestion or dispersal
of population. This was envisaged to be achieved by creation of
smaller towns and by planning the spatial location of economic activity.
Housing & Urban Development Corporation (HUDCO) was established
to fund the remunerative housing and urban development programmes,
promising a quick turnover. A Scheme for Environmental Improvement
or Urban Slums was undertaken in the Central Sector from 1972-73
with a view to provide a minimum level of services, like, water
supply, sewerage, drainage, street pavements in 11 cities with a
population of 8 lakhs and above. The scheme was later extended to
9 more cities.
The Fifth Plan (1974-79) reiterated the policies of the preceding
Plans to promote smaller towns in new urban centres, in order to
ease the increasing pressure on urbanisation. This was to be supplemented
by efforts to augment civic services in urban areas with particular
emphasis on a comprehensive and regional approach to problems in
metropolitan cities. A Task Force was set up for development of
small and medium towns. The Urban Land (Ceiling & Regulation)
Act was enacted to prevent concentration of land holding in urban
areas and to make available urban land for construction of houses
for the middle and low income groups.
The thrust of the planning in the Sixth Plan (1980-85) was on
integrated provision of services along with shelter, particularly
for the poor. The Integrated Development of Small and Medium Towns
(IDSMT) was launched in towns with population below one lakh for
provision of roads, pavements, minor civic works, bus stands, markets,
shopping complex etc. Positive inducements were proposed for setting
up new industries and commercial and professional establishments
in small, medium and intermediate towns.
The Seventh Plan (1985-90) stressed on the need to entrust major
responsibility of housing construction on the private sector. A
three-fold role was assigned to the public sector, namely, mobilisation
for resources for housing, provision for subsidised housing for
the poor and acquisition and development of land. The National Housing
Bank was set up to expand the base of housing finance. NBO was reconstituted
and a new organisation called Building Material Technology Promotion
Council (BMTPC) was set up for promoting commercial production of
innovative building materials. A network of Building Centres was
also set up during this Plan period. The Seventh Plan explicitly
recognised the problems of the urban poor and for the first time
an Urban Poverty Alleviation Scheme known as Urban Basic Services
for the Poor (UBSP) was launched.
As a follow-up of the Global Shelter Strategy (GSS), National
Housing Policy (NHP) was announced in 1988. The long term goal of
the NHP was to eradicate houselessness, improve the housing conditions
of the inadequately housed and provide a minimum level of basic
services and amenities to all. The role of Government was conceived,
as a provider for the poorest and vulnerable sections and as a facilitator
for other income groups and private sector by the removal of constraints
and the increased supply of land and services.
The National Commission of Urbanisation submitted its report.
The Report eloquently pointed out the reality of continuing and
rapid growth of the urban population as well as the scale and intensity
of urbanisation, the critical deficiencies in the various items
of infrastructure, the concentration of vast number of poor and
deprived people, the acute disparities in the access of shelter
and basic services, deteriorating environmental quality and the
impact of poor governance on the income and the productivity of
In the backdrop of this report the Eighth Plan (1992-97) for the
first time explicitly recognised the role and importance of urban
sector for the national economy. While growth rate of employment
in the urban areas averaged around 3.8% per annum, it dropped to
about 1.6% in the rural areas. Therefore, the urban areas have to
be enabled to absorb larger increments to the labour force.
The Plan identified the key issues in the emerging urban scenario:
• the widening gap between demand and supply of infrastructural
services badly hitting the poor, whose access to the basic services
like drinking water, sanitation, education and basic health services
• unabated growth of urban population aggravating the accumulated
backlog of housing shortages, resulting in proliferation of slums
and squatter settlement and decay of city environment
• high incidence of marginal employment and urban poverty
as reflected in NSS 43rd round that 41.8 million urban people
lived below the poverty line.
The response of the Plan to this scenario was the launching of
Urban Poverty and Alleviation Programme of Nehru Rojgar Yojana (NRY)
Plan Outlay in Housing and Urban Development
Rs. in million
& Urban Development
share in the total
Annual Plan (1966-69)
Annual Plan (1977-80)
Annual Plan (1990-92)
The Urban Land (Ceiling & Regulation) Act,
The Urban Land (Ceiling and Regulation ) Act, 1976 came into force
on 17.02.1976. The States of Andhra Pradesh, Haryana, Gujarat, Himachal
Pradesh, Karnataka, Maharashtra, Orissa, Punjab, Tripura, Uttar
Pradesh and West Bengal initially adopted the Act. Subsequently
it was adopted by six more states namely Assam (25.03.76), Bihar
(01.04.1976), Madhya Pradesh (09.09.76), Manipur (12.03.76), Meghalaya
(07.04.76) and Rajasthan (09.03.76). The Act was being implemented
in the urban agglomeration having population of more than two lakhs
as per the 1971 Census (64 urban agglomerations).
The Urban Land (Ceiling and Regulation) Act, 1976 was replaced
by an Ordinance promulgated on 11.01.1999 after the State Governments
of Haryana and Punjab passed a resolution for repeal of the Act.
The Ordinance was replaced by Urban Land (Ceiling & Regulation)
Repeal Act, 1999 0n 22.03.99. Initially the repeal Act was applicable
in Haryana, Punjab and all the Union Territories. Subsequently,
the Repeal Act has been adopted by the State Governments of Uttar
Pradesh, Gujarat, Karnataka, Madhya Pradesh Rajasthan and Orissa.
The State Government of Andhra Pradesh, Assam, Bihar, Maharashtra
and West Bengal have not adopted the Urban Land (C & R) Repeal
Act, 1999 so far.
The Urban Land (Ceiling & Regulation) Repeal
The Urban Land(Ceiling & Regulation) Act 1976 has been repealed
by the Urban Land (Ceiling and Regulation) Repeal Act, 1999. The
Repeal Act has been notified on 23.3.99. It shall come force in
the Union Territories and the States of Punjab and Haryana where
the State Legislatures have already approved the repeal.
to popular concepts of a predominantly rural India, an increasingly
larger percentage of Indian population lives in the Urban areas.
Today, India's urban population is second largest in the world after
China, and is higher than the total urban population of all countries
put together barring China, USA and Russia. Over the last fifty
years, while the country's population has grown by 2.5 times, in
the urban areas it has grown by five times. It is estimated that
by the turn of the millennium 305 million Indians shall be living
in nearly 3,700 towns and cities spread across the length and breadth
of the country. This would be nearly 30 per cent of country's total
to the 1991 census, 3.7 per cent of Indian population lived in the
mega cities Mumbai (Bombay), Delhi, Calcutta and Chennai (Madras).
In 1947, only 60 million people (15 per cent of the total population
at that time) lived in urban areas. The steep growth in number of
people living is partly due to the skewed development that has led
to proliferation of commercial activities and great job opportunities
in towns and cities. Facilities like health and Education and infrastructure
like roadways, telecommunication, airports, railways and ports are
also many times better in urban areas. The degree to which development
is skewed in India can be assessed from the fact that 40 per cent
of all overseas phone calls are to or from Mumbai.
Urban India Population
Population Percentage of Urban
(million) to total Population
rate (per cent)
Levels of Urbanization
is a broad term and there are wide variations amongst the States
and regions in the level of urbanisation. National Capital Territory
of Delhi with 92.73 per cent urbanization and the Union territory
of Chandigarh with 93.63 per cent urbanization are the most urbanized
cities while Dadra and Nagar Haveli at 8.47 per cent urbainization
is the least urbanized city in the country. The states with greater
urban concentration are Maharashtra with 38.73 per cent of
its population living in urban areas, followed by Gujarat (34.40
per cent) and Tamil Nadu (34.20 per cent).
has been urban growth in some states, in other states and cities
there has also been deceleration. Inter-state variation in the annual
growth of urban population and urban-rural growth differential (URGD)
throws more light on the development of urban India and its underlying
characteristics. Except in Kerala, Gujarat and Maharashtra, the
URGD is lower in all other states during 1981-91 than in 1971-81.
Conspicuous deceleration in urban growth during 1981-91 has taken
place in Bihar, Orissa and Uttar Pradesh.
the 1991 census, two-third of the country's urban population lived
in Class-I cities with more than 1,00,000 population.
of PopulationRange No. of Towns
1,00,000 & above
50,000 to 99,999
20,000 to 49,999
10,000 to 19,999 1,167
5,000 to 9,999
less than 5,000
It is interesting
to note that the population growth is more in cities that are big.
About one-third of Urban India (71 million) lives in metropolitan
cities (million plus). The number of such cities in India has increased
from 1 in 1901 to 5 in 1951 to 23 in 1991. It is estimated that
the number will go up to 40 by 2001. Out of the total increase in
the country's urban population of 58 million between 1981 and 1991,
44 million were added to Class I cities alone. 28 million persons
were added in metropolitan cities.
Million-plus cities of India
Population (in million)
four mega cities, namely Mumbai, Calcutta, Delhi and Chennai, with
a population of more than 5 million each in 1991, account for almost
one-fourth of the population living in Class-I cities.
Role of Urban India in Indian economy
the commercial activity perhaps other than agriculture and village
merchandise takes place in Urban areas. Therefore, to a large extent,
urban India is the engine of productivity and growth in the country.
This is manifest in the increasing contribution of urban sector
to national income.
Percentage of Urban
to total population
to national income
employment (main workers) in urban India during 1981-91 was recorded
at 38% against 16% in rural areas and 26.1% in the country as a
The Infrastructure Problem
In spite of its prominent role in Indian economy, urban India faces
serious problems due to population pressure, deterioration in the
physical environment and quality of life. According to estimates
nearly one third of the urban India lives below poverty line. About
15 percent of the urbanites do not have access to safe drinking
water and about 50 percent are not covered by sanitary facilities.
Traffic congestion has assumed critical dimensions in many metropolitan
cities due to massive increase in the number of personal vehicles,
inadequate road space and lack of public transport. There is a huge
and widening gap between demand and supply of essential services
and infrastructure. Urban poor in India are forced to live under
unhygienic conditions in slums, lacking in basic amenities. Slums
have grown in almost all major cities due to inability of major
chunks of population to afford accomodation in planned areas
of the cities.
sector investment for provisions of urban infrastructure can not
take place unless a proper legal and regulatory framework for such
investment is created and developed which ensures a full cost plus
recovery of such investment. This calls for innovative reforms in
municipal tax structure and user charges, taking into account poor
paying capacity of a sizeable section of urban population. Various
modes of Private-Public-Partnership (PPP) are being experimented
by different urban local bodies in the country. Municipal
Bond, Tradable Development Rights, Urban Shelter and Infrastructure
Fund, use of Land as a Resource are some of the new techniques that
are being applied by the city authorities.
(74th) Amendment Act 1992 has unleashed a new era of dynamism and
reform in Urban India.
Constitution (Seventy-Fourth Amendment) Act 1992
This is a revolutionary piece of legislation by which Constitution
of India was amended to incorporate a separate Chapter on urban
local bodies, which seeks to redefine their role, power, function
and finances. The salient features of this Act are:
• Urban local bodies, to be known as Municipal Corporations,
Municipal Councils and Nagar Panchayat depending on the population,
shall be constituted through universal adult franchise in each
notified urban area of the country.
• These shall be constituted for a period of five years and if
dissolved earlier, an election to reconstitute it shall be completed
before the expiration of a period of six months from the date
of its dissolution.
• Not less than one-third of total number of seats in each urban
local body shall be reserved for women.
• The Legislature of a State may by law entrust on these bodies
such power and authority as may be necessary to enable them to
function as institution of local self government, including those
listed in the Twelfth Schedule.
• The Twelfth Schedule of the Constitution has listed the following
functions of the urban local bodies:
• Urban Planning including town planning.
• Regulation of land-use and construction of buildings.
• Planning for economic and social development.
• Roads and bridges.
• Water supply for domestic, industrial and commercial purposes.
• Public health, sanitation, conservancy and solid waste management.
• Fire services.
• Urban forestry, protection of the environment and promotion
of ecological aspects.
• Safeguarding the interests of weaker sections of society,
including the handicapped and mentally retarded.
• Slum improvement and upgradation.
• Urban poverty alleviation.
• Provision of Urban amenities and facilities such as parks,
• Promotion of cultural, educational and aesthetic aspects.
• Burials and burial grounds; cremations, cremation grounds
and electric crematoriums.
• Cattle pounds; prevention of cruelty to animals.
• Vital statistics including registration of births and deaths.
• Public amenities including street lighting, parking lots,
bus stops and public conveniences.
• Regulation of slaughter houses and tanneries.
• In order that the urban local bodies can perform the functions
assigned to them, the Legislature of a State shall assign them
specific taxes, duties, tolls and levies and anthorise them to
impose, collect and appropriate the same.
• Each State shall also constitute a Finance Commission which
shall review the financial position of the urban local bodies
and recommend the principles which should govern the devolution
of resources, including grant-in-aid from the Consolidated Fund
of the State of these bodies.
• The superintendence, direction and control of the preparation
of electoral rolls for, and the conduct of, all elections to the
urban local bodies shall vest in the State Election Commission.
• In each district a District Planning Committee shall be constituted
to consolidate the plan prepared by the urban and rural local
• Similarly for each metropolitan area a Metropolitan Planning
Committee shall be constituted to prepare a development plan for
the metropolitan area a whole.
All the State Governments have either enacted new Municipal Law
or amended the existing laws to conform these to the Constitution
(74th Amendment) Act, 1992. All the States (except Jharkhand and
Pondichery) have conducted the election to the local bodies. All
the States (except Arunachal Pradesh) have constituted State Finance
Commissions and most of the Commissions have submitted their reports
to the State Governments, recommending significant devolution of
resources to the urban local bodies. The national Eleventh Finance
Commission has also recommended devolution of Rs 2000 crores as
grant-in-aid from the Central Government to the urban local bodies.
Constitution (74th Amendment) Act 1992 has made the urban local
bodies into vibrant self governing institutions. This has ushered
in a new era of urban governance and urban management in India.
is full of possibilities and excitement for investors, planners,
administrators, economists and above all 300 million urban dwellers
Investment Needs in Urban India
fold explosive growth in Urban India has resulted in serious infrastructure
constraints. Water, transport, housing, electricity, health &
sanitation and education are some of the areas of concern. Infrastructure
to meet these requirements calls for huge investments. Investment
requirement for housing in urban areas has been estimated at Rs.
526,00 crores (US $ 12.5 billion) in the IXth plan. The India Infrastructure
Report (1996) estimates the annual investment need for urban water
supply, sanitation and roads at about Rs. 28,035 crores (US $ 6.67
billion) for the next ten years.
Public Health Engineering (CPHEEO) has estimated the requirement
of funds for 100 percent coverage of the urban population under
safe water supply and sanitation services by the year 2021 at Rs172,905
crores (US $ 41.16 billion). Estimates by Rail India Technical and
Economic Services (RITES) indicate that the amount required for
urban transport infrastructure investment in cities with population
100,000 or more during the next 20 years would be of the order of
Rs. 207,000 crore (US $ 49.28 billion).
To catalyse development of urban infrastructure, 100% FDI under
the automatic route has been permitted in housing and urban infrastructure
National Urban Renewal Mission to Improve
Civic Amenities in Mega Cities
The Indian Government plans to launch the National Urban Renewal
Mission to help large metropolises in the country to tackle the
fast pace of urbanization and migration from rural areas which put
immense strain on civic amenities. The Mission will cover all cities
with a population of over a million and some other towns. The Government
has proposed an outlay of Rs.5,500 crore in 2005-06, including a
grant component of Rs.1,650 crore for the Mission.
The Mumbai Metro Rail Project, the Mumbai Trans Harbour Link, the
Mumbai Western Expressway Sealink and the Bangalore Metro Rail Project
are some of the projects which could be supported through the Mission.