Cities need fiscal independence to improve governance, says NITI Aayog

Effective urban governance demands that cities be granted greater fiscal independence and institutional capacity to manage their own affairs, according to NITI Aayog leadership. The current model of administering urban centres from state capitals creates bottlenecks that prevent timely responses to local needs and priorities.

City administrations must be empowered with adequate financial resources, regulatory authority, and institutional frameworks to address challenges specific to their populations. This devolution of powers would enable urban local bodies to make decisions based on ground-level realities rather than centralized directives issued from state headquarters.

The structural reforms required to strengthen urban governance extend beyond simple budget allocations. Cities need genuine autonomy in resource mobilization, expenditure planning, and implementation of development projects tailored to local contexts. Without such institutional capacity, urban centres remain constrained in their ability to deliver services efficiently.

This approach aligns with constitutional principles of cooperative federalism and recognizes that urban centres represent distinct economic and social ecosystems requiring specialized administration. Granting cities greater control over their governance structures is viewed as essential for improving service delivery and addressing the unique challenges faced by rapidly growing metropolitan areas across the country.