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The Union Budget 2022-23 placed a significant emphasis on orderly urban development in India, recognising that cities are becoming increasingly important as growth centres, more than ever before.

Needless to mention, Indian cities are facing an array of challenges as the population continues to grow and urbanise. It is estimated that by 2050, around 68 per cent of the world’s population will be living in urban areas, the United Nations noted in 2018. In India, the urban population is projected to reach 600 million by 2031, according to the Union Ministry of Housing and Urban Affairs.

With this rapid urbanisation, Indian cities are facing a range of challenges, including housing shortages, inadequate infrastructure and environmental degradation. The government recognised the importance of addressing these challenges and placed a strong emphasis on urban development in the last budget.

It proposed a variety of measures to address these challenges. These included the creation of a high-level committee of urban planners, economists and institutions to guide the development.

Additionally, the budget emphasised the need to bring in a shift in the current development paradigm, with a specific focus on enhancing the capacity-building system of Indian cities.

Alongside focusing on megacities, the Union Budget 2022-23 also acknowledged the need to support the development of smaller tier 2 and 3 cities in order to improve the economic potential of the country and reduce the gap between urban centres of different sizes.

As India anticipates the release of the Union Budget 2023-24, it is expected that the government will continue to focus on the infrastructure sector, particularly in the areas of urban housing and transportation.

But it will be interesting to see how it is preparing to continue the trend of remodelling the urban development approach, particularly with a focus on capacity building in Indian cities.

Capacity building is crucial for the sustainable development of urban centres. It is defined as the process of enhancing the ability of individuals, institutions and communities to design, implement and manage development initiatives, the United Nations Development Programme (UNDP) observed in 2018.

In terms of budget allocation for capacity building in urban cities, the government has allocated significant funds towards urban development schemes such as the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Swachh Bharat Mission (SBM) and the Pradhan Mantri Awas Yojana-Urban (PMAY-U). However, the utilisation of these funds has been a cause for concern: A report by the Comptroller and Auditor General of India (CAG) highlighted delays in project implementation, inadequate planning and poor monitoring of progress.

To address these issues, it is important for the government to ensure the proper utilisation of funds allocated for capacity building in cities. This can be done by implementing effective monitoring and evaluation mechanisms, promoting transparency and accountability as well as encouraging active participation from all stakeholders, including state governments and local communities.

Urban local bodies such as municipal corporations and councils are pivotal for providing a range of services in India, including water supply, sanitation and solid waste management, the Union Ministry of Housing and Urban Affairs noted in 2018.

Building the capacity of these bodies to plan, implement and manage urban development schemes, thus, is of utmost significance.

Additionally, the government could also consider providing more financial autonomy to these local bodies regarding the schemes as this would help ensure a better alignment with development initiatives. Building the capacity of such bodies would help ensure that they can effectively manage urban development initiatives and provide essential services to citizens.

Additionally, the budget should also focus on building the capacity of citizens and communities to participate in urban development initiatives. This could include providing training and education programmes on urban planning and management as well as creating opportunities for public participation in the planning and implementation of development projects, according to the World Bank in 2017.

By involving citizens and communities in the planning and implementation of development projects, the government can ensure these projects are aligned with local needs and priorities.

If the government is truly committed to the idea of capacity building in cities, it should also prioritise basic services such as safe drinking water, sanitation and waste management in the forthcoming budget. This is in line with the argument that capacity building is not just about strengthening institutional capacity, but also about building the capacity of stakeholders at all levels which requires not only financial resources but also a more collaborative approach between the central government and state governments, allowing states to take a more active role in driving change and implementing needed reforms.

UNDP has outlined a five-step process for capacity building in its Strategic Plan for Development, which includes engaging stakeholders, assessing needs, formulating an approach, implementing the response and evaluating the results.

Global best practices, therefore, can be adapted to suit the specific needs of the country. But ultimately, it is important to empower and support individual states to drive change and create such sustainable development.

As stated by Union Finance Minister Nirmala Sitharaman, urban development in India requires a renewed focus on new-age approaches that take into account the changing nature of work, mobility and living situations of the population both locally and globally. This means adopting flexible and continuous processes, taking into account the changing nature of urban planning and the need for a re-imagination of the current approach.

A recent report from the World Bank on Financing India’s Urban Infrastructure highlighted deficiencies in the current system, particularly in terms of stakeholder engagement and participation from ministers, local authorities, non-governmental organisations, user groups, professional associations and other relevant parties.

The report also refers to the Oxfam inequality report of 2023, which highlighted how the inequality gap is widening in India’s urban areas, with the top 1 per cent of the population holding more wealth than the bottom 70 per cent.

India's Gini coefficient, a measure of income inequality, has increased to 0.37 in 2020 from 0.32 in 2016, according to the latest data from the World Bank. The government must address this issue in the upcoming budget if it wants to achieve sustainable urban development.

It is, thus, important for the government to take a comprehensive approach that includes not only allocating financial resources for various schemes but also granting resources to enable the engagement of all stakeholders to address the issues of urban development, capacity building and inequality.