Cities occupy barely 3% of the land surface but generate close to 60% of GDP. For a rapidly urbanising country like India, this makes large-scale, well-planned investment in cities a simple economic imperative. The challenge is to do this while grappling with pollution, congestion, hygiene, safety, ageing populations, and rising expectations of convenience.
By 2030, India is expected to have at least seven megacities with populations above 10 million and over 60 cities with more than 1 million residents. All of them will demand affordable, fast, clean, and reliable public transport—just as fiscal space remains tight. Urban development is constitutionally a state subject, but the Union Government plays a critical role in enabling metro systems, electric buses, and other mass transit investments.
The question, therefore, is not whether the Centre should support urban transport, but what more it can do to accelerate sustainable, citizen-centric mobility. Five priorities stand out:
- The budgets should mandate transport models for all cities projected to be million-plus Cities by 2030 to ensure that dynamic and live, city-wide integrated transport and land-use models enable testing of the impact of proposed projects, simulate policy changes and prioritise investments based on measurable outcomes, and solve congestion by treating it not just as a transport problem but equally as a land-use and demand-management problem. For all million-plus cities, the Centre should make access to major urban transport funds contingent on:
- Establishing and regularly updating integrated transport and land-use models
- Using these models to appraise major projects (metros, BRT , elevated corridors, large road widening)
- Periodically reviewing and updating comprehensive mobility plans based on real-world performance, not just as one-time documents
- Create a Central ‘nudge unit’ for urban behaviour and design to understand what prompts civic discipline and safer behaviour, and then embedding those insights into standards, funding conditions, and capacity-building programmes. This will ensure that infrastructure is used as intended by studying how people actually use streets and public spaces, identifying design elements that improve compliance and safety (e.g. traffic calming, nudges for correct lane use, safer crossings), developing model design guidelines and low-cost interventions that cities can adopt, and evaluating existing assets (overpasses, subways, crossings) for usability and redesign where needed.
- Create five-year rolling capital commitments via non-lapsable funds: Large urban transport projects—metros, BRT corridors, depots, multimodal hubs—require long-term capital visibility. Yet, the current system of annual, stop–go budgeting creates uncertainty. Private contractors invest heavily in tunnelling machines, casting yards, and specialised equipment, and delayed or unpredictable payments increase their risk, which ultimately shows up as higher bid prices. To address this, the Centre should:
- Create a non-lapsable urban transport fund under the Ministry of Housing and Urban Affairs (MoHUA) with five-year rolling capital commitments
- Provide multi-year sanction letters for approved projects, clearly laying out expected central disbursements
- Enable faster, more predictable flow of funds directly to city or metro rail corporations, subject to agreed milestones and governance standards
- Create an operations and maintenance challenge fund: Indian cities invest heavily in creating new assets—roads, flyovers, metros, depots, electric bus fleets—but far less in maintaining and operating them well. The result is a ‘build–neglect–rebuild’ or ‘buy–neglect–repurchase’ cycle that destroys value and erodes public confidence. The Union Budget can help correct this bias by setting up an operations and maintenance (O&M) challenge fund for urban transport. The key features could include:
- Annual fund allocations tied to a standardised asset management index
- Eligibility based on transparent metrics: asset condition, preventive maintenance practices, safety performance, financial sustainability
- Incentives for cities that adopt robust asset management systems, ring-fence O&M budgets, and meet performance benchmarks
- Such a fund would signal that maintaining existing assets is as important as building new ones, and reward cities that treat O&M as a core responsibility rather than an afterthought.
- A common technology framework and skilling ecosystem: Urban transport technologies such as advanced traffic management systems (ATMS), intelligent transport systems (ITS), fare collection platforms, fleet management systems, and ADAS solutions are evolving rapidly. This brings opportunities, but also the risks of technological obsolescence, vendor lock-in, and fragmented, incompatible systems across cities. To manage this complexity, the Centre should promote a common technology framework that:
- Sets out reference architectures and standards for data, interfaces, and cybersecurity
- Encourages open, interoperable systems instead of proprietary silos
- Includes guidelines for lifecycle costing, upgrades, and integration with emerging platforms (e.g. mobility-as-a-service, open loop payments)
Complementing this, MoHUA should support regional skilling centres focused on installation, operation, and maintenance of urban transport technologies. This will help cities manage systems in-house or as informed clients, rather than being fully dependent on vendors.
