The Economic Survey 2025–26, tabled in Parliament by Finance Minister Nirmala Sitharaman, presents a compelling argument: India is already far more urban in economic and functional terms than official definitions suggest. Rather than viewing cities merely as demographic concentrations, the Survey reframes them as critical economic infrastructure—central to productivity, innovation, and long-term growth. This conceptual shift has important implications for how India plans, finances, and governs its urban future.

The Economic Survey 2025–26 projects India’s real GDP growth for FY27 in the range of 6.8 per cent to 7.2 per cent, reinforcing the country’s position as the fastest-growing major economy. This growth trajectory is underpinned by resilient domestic demand, steady recovery in private investment, and broad-based sectoral expansion across agriculture, industry, and services. The Survey estimates India’s potential growth rate at around 7 per cent, reflecting gains from structural reforms, deregulation, and improved macroeconomic stability. While global headwinds—such as geopolitical tensions, trade fragmentation, and volatile capital flows—continue to pose risks, India’s relatively low external vulnerability, strong balance sheets, and ongoing public capital expenditure are expected to cushion growth. The Survey underscores that sustaining growth above 7 per cent on a durable basis will require continued policy focus on productivity enhancement, urban efficiency, labour-market flexibility, and integration into global value chains.

Cities as Engines of Economic Growth

A central insight of the Survey is that India’s economic activity is disproportionately concentrated in urban areas. Using satellite-based evidence from the Global Human Settlements Layer, the Survey notes that India was nearly 63 per cent urban in economic terms as early as 2015, far exceeding Census-based measures. Looking ahead, urbanisation is set to accelerate further. By 2036, India’s towns and cities are expected to house around 600 million people, or 40 per cent of the population, while generating close to 70 per cent of GDP.

This matters because cities enable agglomeration economies—the productivity gains that arise when firms, workers, and markets cluster together. Dense urban environments deepen labour markets, reduce transaction costs, and foster innovation. Recognising cities as economic assets rather than administrative units, the Survey argues, is a prerequisite for aligning fiscal priorities, planning frameworks, and institutional capacity with India’s growth ambitions.

Mobility and Urban Infrastructure

Urban productivity depends critically on mobility. The Economic Survey highlights India’s rapid expansion of mass rapid transit systems over the last decade. As of 2025, approximately 1,036 kilometres of Metro and Regional Rapid Transit System (RRTS) corridors are operational across around 24 cities, with many more under construction.

Complementing rail-based systems, the government’s PM e-Bus Sewa scheme aims to revitalise city bus transport through the deployment of 10,000 electric buses under a public-private partnership model. Backed by ₹20,000 crore in central assistance and a Payment Security Mechanism to ensure predictable cash flows, the programme reflects a finance-first approach to urban mobility. The Survey emphasises that future gains will depend not only on asset creation, but also on digitisation of bus operations, better last-mile connectivity, shared mobility solutions, and the operationalisation of Transit-Oriented Development (TOD) around transport corridors.

Sanitation and Urban Liveability

The Survey also documents significant improvements in urban cleanliness and sanitation. Under the Swachh Bharat Mission – Urban, supported by AMRUT and AMRUT 2.0, India has undertaken one of the largest urban sanitation drives globally. The most striking achievement has been the elimination of open defecation across all cities.

Equally important is the expansion of door-to-door municipal solid waste collection, which has risen from negligible coverage in 2014–15 to 98 per cent of urban wards by 2025–26. This has been supported by a nationwide fleet of over 2.5 lakh waste collection vehicles. These improvements have tangible effects on public health, environmental quality, and urban dignity, reinforcing the Survey’s emphasis on outcomes rather than mere spending.

Technology, Housing, and Informal Livelihoods

Technology-enabled city upgrading has been another pillar of urban reform. Under the Smart Cities Mission, over 90 per cent of the 8,067 approved projects—ranging from smart roads and cycle tracks to command-and-control centres and upgraded water systems—have been completed, with investments of nearly ₹1.64 lakh crore.

Affordable housing has also seen major scale-up. Under the two phases of Pradhan Mantri Awas Yojana – Urban (PMAY-U), 122.06 lakh houses have been sanctioned, with over 96 lakh homes already completed or delivered. Complementary measures such as tax incentives, priority sector lending, and infrastructure status have strengthened private participation in urban housing supply.

The Survey also highlights the role of PM SVANidhi in restoring and stabilising the livelihoods of urban street vendors, underscoring the importance of integrating informal workers into the urban growth story rather than marginalising them.

Governance, Planning, and Financing Reforms

A recurring theme in the Survey is the need to move from fragmented projects to system-level performance. To this end, it proposes that every million-plus city prepare a statutory 20-year City Spatial and Economic Plan, updated every five years. These plans must include three non-negotiables: an integrated transport network, a housing supply roadmap with annual targets, and a land-value capture framework linked to infrastructure investments.

On financing, the Urban Infrastructure Development Fund (UIDF)—with an initial outlay of ₹10,000 crore—aims to support Tier-2 and Tier-3 cities that lack creditworthiness but have viable projects. By routing funds through financial institutions and operating as a revolving facility, UIDF seeks to crowd in capital while improving project discipline.

The Economic Survey 2025–26 makes a clear case that India’s urban future will determine its economic trajectory. The challenge is no longer whether India will urbanise, but how well it manages that urbanisation. By prioritising system performance over standalone projects, strengthening institutions, and recognising cities as engines of growth, India can build urban spaces that are economically dynamic, socially inclusive, environmentally sustainable, and capable of supporting long-term prosperity.