NITI Aayog has released a major report titled “Moving Towards Effective City Government – A Framework for Million-Plus Cities”, arguing that India’s largest cities cannot drive long-term growth without stronger local governance. With 47 million-plus cities expected to become the main engines of jobs, innovation, and investment, the report states that India still lacks “city governments in the true sense.” Weak mayoral authority, fragmented service delivery, and limited financial autonomy continue to restrict urban performance.
The report proposes a structural shift toward directly elected Mayors with fixed tenures and an empowered Mayor-in-Council system to improve political accountability and continuity. It argues that frequent leadership changes and overlapping institutional control prevent long-term planning and weaken responsibility for outcomes.
A major recommendation is the integration of parastatal agencies, such as development authorities, water boards, and transport agencies—under city government oversight. At present, these bodies often function independently of municipal governments, creating diffused accountability and poor citizen grievance resolution. NITI Aayog recommends that core urban services like water supply, sanitation, and public transport should come under a single city authority.
The report also stresses the need for stronger municipal finances, including better own-source revenue, predictable transfers through effective State Finance Commissions, and greater use of municipal bonds for infrastructure funding. For implementation, it calls on states to amend Municipal Acts and urges the Ministry of Housing and Urban Affairs to update the Model Municipal Law to support phased reform across states.
Key Recommendations for Urban Reform
Empowered Leadership: Introduction of a directly elected Mayor with a fixed tenure and an empowered Mayor-in-Council to eliminate leadership fragmentation.
Unified Service Delivery: Integration of core functions (water, sanitation, transport) under city government purview to ensure singular accountability.
Institutional Consolidation: Bringing multiple parastatal agencies (development authorities/boards) under the direct oversight of the municipal government.
Financial Autonomy: Strengthening own-source revenues and ensuring predictable transfers via robust State Finance Commissions.
Market Financing: Transitioning cities toward market-based mechanisms, including the issuance of municipal bonds to fund infrastructure.
Phased Implementation: A scalable approach allowing states to test and learn from governance pilots before statewide adoption.
What are "Parastatal Agencies"?
Parastatal agencies are state-owned organizations or boards that operate alongside the city government but are not directly accountable to it. Examples in India include Urban Development Authorities (like DDA or BDA) and Water/Sewerage Boards. Currently, these agencies often plan and execute major projects within a city without the Mayor’s involvement. NITI Aayog's report highlights that this creates "diffused accountability"—where the citizen doesn't know who is responsible for a broken pipe or a delayed road. The report proposes putting these "parastatals" under the city government's control so that there is one single authority responsible for the city's performance.
Policy Relevance
Powers the $30 Trillion Vision: By making cities more efficient and liveable, the framework aims to attract the global capital and talent necessary for India to reach its long-term economic targets.
Ensures Political Stability: A fixed tenure for Mayors prevents the frequent leadership changes that currently derail long-term infrastructure projects and urban planning cycles.
Boosts Municipal Creditworthiness: Consolidating finances and increasing own-source revenue are essential steps for cities to achieve the credit ratings required to tap into the Global Bond Market.
Streamlines Citizen Grievances: Moving to a "Unified Service Delivery" model means citizens have a single point of contact (the City Government) for all civic issues, significantly improving the Ease of Living.
Modernizes Legal Frameworks: The call to update the Model Municipal Law provides a standardized template for States to modernize 19th-century administrative structures for 21st-century urban challenges.
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