The Economic Survey 2025-26 underlines that India is already deeply urban in economic and functional terms, even though official definitions continue to understate the true scale of urbanisation. Cities, the Survey stresses, are not merely places of residence but critical economic infrastructure that drive productivity, innovation, and national growth.
The Survey was tabled in Parliament by Union Finance Minister Nirmala Sitharaman on January 29, 2026.
“India’s cities are not merely places of residence but function as critical economic infrastructure. Density and proximity generate agglomeration economies that raise productivity, deepen labour markets, and enable innovation,” the Survey notes.
The core challenge ahead is therefore not whether India will urbanise, but how effectively urbanisation is managed to deliver better living standards and long-term economic efficiency.
Cities as Growth Engines
The Survey highlights that India’s urban footprint is far larger than what census classifications indicate.
- Satellite-based Global Human Settlements Layer (GHSL) data shows India was 63 per cent urban in 2015, nearly double the level reported in the 2011 Census.
- The World Bank estimates that by 2036, India’s towns and cities will house 600 million people, or 40 per cent of the population, up from 31 per cent in 2011.
- Urban areas are projected to contribute nearly 70 per cent of GDP.
Recognising cities as economic assets, rather than administrative units alone, is identified as a necessary first step toward aligning public policy, fiscal priorities, and planning frameworks with India’s development trajectory.
Mobility: Scaling Urban Transport Systems
The Survey notes substantial progress in expanding mass rapid transit systems over the past decade.
- As of 2025, around 1,036 km of Metro and RRTS corridors are operational across approximately 24 cities, with additional corridors under construction.
To strengthen city bus services, the Government launched PM e-Bus Sewa, which aims to deploy 10,000 electric buses under a PPP model, supported by:
- ₹20,000 crore in central assistance
- A Payment Security Mechanism (PSM) to ensure operator cash flows
Progress under PM e-Bus Sewa (FY 2024-25)
- 7,293 e-buses approved across 14 States and 4 UTs
- ₹983.75 crore sanctioned for depots and behind-the-meter power infrastructure
- ₹437.5 crore disbursed
To further improve urban mobility outcomes, the Survey recommends:
- Augmenting and digitising bus fleets
- Finance-first deployment of e-buses
- Mainstreaming last-mile and shared mobility
- Operationalising Transit-Oriented Development (TOD)
- Leveraging land-value capture around transit corridors
Urban Cleanliness and Waste Management
The Survey highlights major sanitation gains achieved under the Swachh Bharat Mission- Urban (SBM-U), complemented by investments under AMRUT and AMRUT 2.0. Key outcomes include:
- Elimination of open defecation across all cities
- Expansion of door-to-door municipal solid waste (MSW) collection from negligible levels in 2014-15 to 98 per cent of urban wards by 2025-26
- Deployment of over 2.5 lakh waste collection vehicles nationwide
These initiatives represent one of the largest urban sanitation and waste management efforts globally, the Survey notes.
City Upgradation Through Technology
Under the Smart Cities Mission (SCM):
- Over 90 per cent of the approximately 8,067 projects have been completed as of 9 May 2025
- Nearly ₹1.64 lakh crore has been invested
Completed projects include smart roads, cycle tracks, command and control centres, upgraded water and sewerage systems, and revitalised public spaces.
Housing and Urban Livelihoods
Affordable urban housing has been supported through direct tax and GST benefits, priority sector lending, and infrastructure status.
- Under the two phases of Pradhan Mantri Awas Yojana-Urban (PMAY-U), 122.06 lakh houses have been sanctioned
- 96.02 lakh houses have been completed or delivered as of 24 November 2025
The Survey also notes that PM SVANidhi has played a key role in restoring and strengthening the livelihoods of urban street vendors.
To improve day-to-day urban governance, the Survey stresses the need to:
- Align mandates across institutions
- Clarify ownership of outcomes
- Insulate routine enforcement from ad-hoc intervention
These measures are critical to making rule certainty credible in urban administration.
Planning, Governance and Urban Finance
To address financing gaps in urban infrastructure, the Government launched the Urban Infrastructure Development Fund (UIDF) in the Union Budget 2023-24, with an initial outlay of ₹10,000 crore. The UIDF:
- Operates as a revolving fund
- Is routed through financial institutions
- Supports Tier-2 and Tier-3 cities that lack creditworthiness but have viable projects
Survey Proposal on City Planning
The Survey proposes that every million-plus city should prepare a statutory 20-year City Spatial and Economic Plan, updated every five years, with three non-negotiable components:
- A transport network plan
- A housing supply plan with annual unit targets
- A land-value capture framework linked to infrastructure corridors
System-Based Civic Sense and Communication
The Survey emphasises that civic communication should reinforce predictable systems rather than substitute for them. Simple, local, and repetitive messaging focused on a small set of high-impact behaviours is most effective when delivered at the point of action.
Conclusion
The Economic Survey 2025-26 concludes that future urban policy must prioritise system performance over standalone projects, integrating housing, mobility, sanitation, climate resilience, and finance.
The promise of India’s urban future, the Survey states, lies in building cities that are: Economically dynamic, Socially inclusive, Environmentally sustainable and Institutionally capable. (Source: PIB PR ID 2219926)
Economic Survey of India 2025-26 dated 29/01/2026