Indian Economy News

India’s cities need US$ 854.43 billion investment to support urban growth: Report

India will require nearly Rs. 80 lakh crore (US$ 854.43 billion) in urban infrastructure investment by 2037 to support rapid urbanisation and economic growth, according to a recent Brickwork Ratings report. The report highlighted that urban areas are expected to contribute close to 70% of India’s GDP by 2036, making sustainable city financing a national priority. To address this, the government has introduced the Urban Challenge Fund, a Rs. 1 lakh crore (US$ 10.79 billion) initiative aimed at shifting urban development from grant-based support to market-driven financing. The report stated that the scheme could mobilise nearly Rs. 4 lakh crore (US$ 42.72 billion) in urban investments over the next five years through blended financing mechanisms.

The report further noted that urban local bodies will be required to raise at least 50% of project funding through municipal bonds, bank loans or public-private partnerships before receiving central support. The Centre will contribute 25% of project costs, while the remaining share will come from state governments or urban local bodies. According to Brickwork Ratings, this model is expected to improve financial discipline, transparency, and city creditworthiness, particularly in Tier-II and Tier-III cities. The report also highlighted that only 17 cities have issued municipal bonds since FY18, raising around Rs. 4,540 crore (US$ 485 million), indicating significant growth financing potential. Additionally, smaller urban centres may benefit from the proposed Rs. 5,000 crore (US$ 534 million) Credit Repayment Guarantee Scheme.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.