PIB TrackerDirectly elected mayors, five-year terms, all eighteen functions
NITI Aayog used the urban conclave's closing session to say what its inauguration had not: cities cannot be run from State capitals, and the 74th Amendment's devolution has to be completed.
What happened
- At the valedictory session of the 2nd National Urban Conclave, NITI Aayog member Shri Rajiv Gauba called for reform of urban governance, planning and financing for Viksit Bharat @2047.
- Scale: population stabilising at about 165 crore around 2060, with nearly half urban by 2050 and the urban population rising from about 50 crore to 85 crore.
- Spending so far: a tenfold rise in the urban budgetary outlay, about Rs 3.7 lakh crore in metro rail and bus systems, the Rs 1 lakh crore Urban Challenge Fund of the 2025-26 budget and Rs 5,000 crore each for seven city economic regions over five years.
- Governance asks, from the NITI-MoHUA report Moving Towards Effective City Governance: directly elected mayors with five-year terms, a Mayor-in-Council system, timely municipal elections, and devolution of all 18 functions under the 74th Amendment including master planning, water supply, fire services and traffic.
- Finance and planning: Finance Commission grants to ULBs more than doubled with their share up to 45 per cent from 36 while State devolution stays low; State Finance Commissions to be constituted regularly; and reform of FARs, mixed-use zoning, land pooling and the Model Tenancy Act, through new municipal Acts.
For Prelims
- The 74th Amendment (1992) inserted Part IXA and the Twelfth Schedule, which lists 18 functions that States may devolve to municipalities - urban planning, regulation of land use, water supply, public health, fire services, slum improvement, urban poverty alleviation and more. Devolution is enabling, not mandatory, which is the whole of the problem.
- Why mayors are weak in India: most States elect mayors indirectly from among councillors, often for one-year or two-and-a-half-year terms, with executive power vested in a State-appointed Municipal Commissioner. A directly elected mayor with a five-year term and a Mayor-in-Council - a cabinet of elected councillors - is the reform model, used in some form in Kolkata and Chennai.
- Municipal finance: own revenue - property tax, user charges, advertisement and parking fees - funds only a modest share of municipal budgets; India's property tax collection is low as a share of GDP by international comparison. Article 243Y requires a State Finance Commission every five years to recommend transfers to local bodies, and its absence or non-implementation is the standing failure.
- The planning levers named: Floor Area Ratio caps how much can be built on a plot, so a low FAR constrains supply and raises prices; mixed-use zoning allows homes, shops and offices together, cutting commutes; land pooling assembles fragmented plots for planned development with owners taking developed land in return; transit-oriented development concentrates density around stations.
- Model Tenancy Act 2021 provides for written tenancy agreements, a rent authority and fast-track dispute resolution to revive formal rental housing; it is a model law States must adopt, and few have.
- Metropolitan and District Planning Committees under Articles 243ZE and 243ZD are constitutionally required for integrated spatial planning and are unconstituted or inactive in most States - which is why transport, water and land use are planned by separate parastatals.
- The Urban Challenge Fund of Rs 1 lakh crore, announced in the 2025-26 Budget, is designed as a 25 per cent contribution to projects that raise at least half their cost from bonds, bank loans or PPPs - a leverage instrument rather than a grant.
- NITI Aayog's Growth Hub initiative develops economic plans for large city regions - Mumbai, Surat, Varanasi and Visakhapatnam in the first set - which is the context for funding seven city economic regions.
For UPSC: NITI Aayog's asks: directly elected mayors, five-year terms, all 18 Twelfth Schedule functions devolved. Urban India 50 to 85 crore by 2050; Finance Commission city share 36% to 45%.
What it is NOT: No State-wise record of how many of the 18 functions have actually been devolved, no count of States with a functioning State Finance Commission, and no data on municipal own revenue to support the claim that it is low. Nothing on how many States hold municipal elections on time or how many mayoralties are directly elected today. The NITI-MoHUA report is cited but not published with the release, and no timeline is attached to any recommendation - these are proposals to States, which alone can legislate them.
For Mains
Syllabus: GS2.2 · GS2.15 · Linkage L1
Anchor
At the closing session of the National Urban Conclave, NITI Aayog called for directly elected mayors with five-year terms, a Mayor-in-Council system and devolution by States of all 18 functions under the 74th Amendment, arguing that cities cannot be governed from State capitals.
Substantiation (data)
India's urban population is projected to rise from about 50 crore to 85 crore by 2050, with the national population stabilising near 165 crore around 2060. The urban budgetary outlay has grown tenfold with about Rs 3.7 lakh crore in metro rail and bus systems, alongside the Rs 1 lakh crore Urban Challenge Fund and Rs 5,000 crore each for seven city economic regions. Central Finance Commission grants to urban local bodies have more than doubled with their share rising to 45 per cent from 36, while State-to-city devolution remains low.
Position
This is the right diagnosis from the right institution. India has spent a decade funding urban projects through central missions while leaving the cities that must run them without planning powers, revenue or an executive accountable to voters. Directly elected mayors and full devolution of the Twelfth Schedule would make someone answerable for water, traffic and planning in the place where those services are delivered - and the planning asks on floor area ratios and land pooling are the ones that actually move housing costs.
Counterpoint
None of it is in the Union's gift. Municipal Acts are State legislation, devolution under the 74th Amendment is enabling rather than mandatory, and States have declined these reforms for three decades precisely because they transfer patronage and revenue to city governments. Linking mission funding to reform is the only lever named, and conditional central funding has a poor record of changing State legislation. The release also supplies no baseline - how many functions are devolved where, or which States have a live Finance Commission.
Way forward
Publish the devolution scorecard - functions, finances and functionaries by State - and make it the basis for mission support. Require a constituted State Finance Commission as an eligibility condition, and begin with the two reforms that need no constitutional change: timely municipal elections and a published municipal budget with property tax collection efficiency.
Conclusion
The urbanisation numbers were on the record two days earlier; this is the sentence that was missing from them. Whether it travels from a valedictory session into a State municipal Act is the only question that matters.
Deploys into: The 74th Amendment and local government · Municipal finance and State Finance Commissions · Urban planning, FAR and land pooling · Rental housing and the Model Tenancy Act
NITI Aayog · 2026-10-25 · PRID 2328168 · PIB source ↗