What Happened
- A working paper titled "India's Hidden Urbanisation and its Policy Implications" authored by EAC-PM member Shamika Ravi (with consultants Manuj Joshi and Apurv Kumar Mishra) argues that India's urbanisation is substantially undercounted by current official classification methods.
- The paper proposes that Union scheme disbursements over the next five years be linked to ground-level needs rather than disbursed on a formula or template basis, shifting to an outcome-driven model.
- It recommends "trigger mechanisms" to automatically reclassify settlements from rural to urban once prescribed demographic and economic thresholds are crossed, addressing the current mismatch between de facto urban populations and official urban designations.
- The paper also calls for reform in urban financing, including greater reliance on city bonds, public-private partnerships, and performance-linked central transfers.
- India's cities contribute 60% of GDP while covering only 3% of the country's land area — yet many urban-functioning settlements remain classified as rural, depriving them of urban infrastructure investment.
Static Topic Bridges
Economic Advisory Council to the Prime Minister (EAC-PM)
The EAC-PM is an independent body constituted to provide advice on economic and related issues to the Government of India, specifically to the Prime Minister. It produces working papers, policy notes, and thematic reports under the EAC-PM Working Paper Series, but its recommendations are advisory and non-binding.
- Composition: a Chairman, 3 Full-Time Members, and 11 Part-Time Members; current notable members include Sanjay Kumar Mishra, Sanjeev Sanyal, and Shamika Ravi.
- EAC-PM is distinct from the NITI Aayog: NITI Aayog is a policy think-tank and planning body with a broader mandate, while EAC-PM specifically advises the Prime Minister.
- The EAC-PM has produced influential working papers on topics including data governance, income distribution, and education — its papers often precede policy announcements.
- The current paper is EAC-PM Working Paper 44/2026 (published March 2026).
Connection to this news: By publishing through EAC-PM, Shamika Ravi's recommendations carry significant policy weight and signal the government's direction on urban governance reform — outcome-linked disbursement and hidden urbanisation recognition are framed as national priorities.
India's Urban Policy Architecture: AMRUT and Smart Cities Mission
India's flagship urban schemes have historically operated on the basis of sanctioned projects and fund releases tied to administrative milestones, rather than on-ground service delivery outcomes. The EAC-PM paper critiques this approach.
- AMRUT (Atal Mission for Rejuvenation and Urban Transformation): Launched in 2015, AMRUT 2.0 runs from 2021-22 to 2025-26 with a total outlay of ₹2,77,000 crore (central share: ₹76,760 crore) covering 4,900 statutory towns. Focused on water supply, sewerage, and green spaces.
- Smart Cities Mission: Concluded by 2024, covered 100 cities with technology-integrated urban management. No direct successor mission was announced.
- Budget 2026-27 shift: The government moved away from both these centralised missions and announced City Economic Regions (CERs) — each receiving ₹5,000 crore over five years under a reform-cum-results-based financing model. This aligns closely with EAC-PM's outcome-linked approach.
- Hidden urbanisation problem: Official urban classification relies on Census data (last full Census: 2011), causing a growing divergence between places that function as urban areas and those officially classified as urban.
Connection to this news: The EAC-PM paper provides intellectual backing for the Budget 2026-27 shift toward outcome-linked, city-specific financing — and its call for trigger-based reclassification could shape how the next Census (due in 2025-26) defines urban India.
Urban Governance and the 74th Constitutional Amendment
Urban local bodies (ULBs) — municipalities and municipal corporations — derive their constitutional status from the 74th Constitutional Amendment Act, 1992, which added the 12th Schedule (18 functions for ULBs) and mandated the formation of State Finance Commissions (SFCs) and Ward Committees. However, devolution of functions, funds, and functionaries from state governments to ULBs has been uneven across states.
- 12th Schedule: lists 18 subjects that may be devolved to municipalities, including urban planning, regulation of land use, roads, public health, and slum improvement.
- State Finance Commissions: determine the share of state revenues to be shared with ULBs — but many SFC reports are delayed or not implemented.
- Most Indian cities rely heavily on central and state grants (tied transfers) rather than own revenue — property tax remains under-leveraged as a local revenue source.
- The outcome-linked disbursement model proposed by EAC-PM would require cities to demonstrate measurable service delivery improvements to access central funds — incentivising local governance reform.
Connection to this news: The EAC-PM paper's recommendations are designed to address the structural weaknesses in the 74th Amendment's implementation — untied, performance-linked funds could incentivise states to actually devolve powers to ULBs.
Key Facts & Data
- India's cities: 60% of GDP, 3% of land area.
- EAC-PM Working Paper 44/2026 author: Shamika Ravi (Member, EAC-PM).
- AMRUT 2.0: 4,900 towns, ₹2,77,000 crore total outlay, ₹76,760 crore central share (2021-2026).
- Smart Cities Mission: 100 cities; no direct successor mission launched.
- Budget 2026-27: City Economic Regions (CERs) with ₹5,000 crore/city over 5 years under results-based financing.
- 74th Constitutional Amendment Act, 1992: constitutionalised ULBs; 12th Schedule (18 functions).
- Official urban classification lag: last full Census was 2011 — significant hidden urbanisation has occurred since.