Former Prime Minister Manmohan Singh is often celebrated for his transformative role in liberalising the Indian economy or introducing pioneering rural welfare schemes like the MGNREGA. However, his contributions to the urban sector – a domain critical to India's socio-economic development – deserve equal recognition. His tenure as Prime Minister marked a paradigm shift in India's approach to urban development by recognising the crucial role of the cities in driving economic growth and employment generation. By launching India's first big-ticket urban sector initiative, Jawaharlal Nehru National Urban Renewal Mission (JNNURM), in 2005, the UPA government under Manmohan Singh took a bold step to modernise India's urban infrastructure while simultaneously empowering municipal governments.
Strengthening urban infrastructure
The JNNURM, by allocating substantial funding (Rs 1,00,000 crore over seven years), brought urban issues to the forefront of India's development agenda. The ambitious program sought to bridge the glaring infrastructure deficit plaguing Indian cities by providing financial support to urban local bodies to revamp their public bus services, water supply, sanitation, and waste management systems. The provision of essential civic services to the slums and poorer urban neighbourhoods received targeted attention under the Urban Basic Services for the Poor scheme—a sub-component of the JNNURM.
While there had been Union government-sponsored urban sector schemes before (such as the Integrated Development of Small and Medium Towns scheme launched in 1979-80), the JNNURM was far more significant in terms of financial allocation while simultaneously introducing modern urban management practices. These practices are now being widely applied under its successor programmes – AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and the Smart Cities Mission.
A specifically noteworthy reform introduced under the JNNURM was the credit rating of city governments. This initiative aimed to assess the financial health of municipal bodies and enable them to access market-based financing for infrastructure projects. The credit rating system marked a significant departure from traditional dependency on state and central grants by promoting fiscal discipline and encouraging municipalities to explore alternative funding mechanisms. Simultaneously, cities were encouraged to form public-private partnerships to execute large infrastructure projects.
The application of digital technology to streamline urban service delivery also received a fillip under Singh's administration. The National E-Governance Plan was launched in 2006, a key component of which was the e-Municipality scheme encouraging local governments to adopt e-governance initiatives and GIS-based urban planning to enhance transparency, achieve greater operational efficiency, and improve financial management. The scheme was operationalised by clubbing it under the JNNURM and was instrumental in rolling out online property tax collection methods—reducing long queues at municipal offices.
Institutional reforms and decentralisation
Beyond funding infrastructure projects, the JNNURM was designed as a reform-linked programme, compelling states and cities to undertake critical institutional changes. These reforms included rolling back license-permit Raj-era excesses like the Rent Control Act and the Urban Land Ceiling Act, which put a cap on individual property, rationalising stamp duties on property transactions, and making municipal accounting practices more transparent.
Most importantly, the JNNURM sought to enhance municipal governments' administrative and financial capacity by operationalising the provisions of the 74th Constitutional Amendment Act, 1992. The Act passed during the tenure of Prime Minister Narasimha Rao established the constitutional status of local urban bodies, officially making them the third tier of India's federal administrative structure. It provided a template for the state governments to devolve responsibilities related to 18 civic functions (such as water supply, sanitation, etc.) to municipalities. This emphasis on decentralisation was critical in fostering grassroots democracy, ensuring that urban planning and service delivery were more responsive to local needs.
However, for the first ten years, the 74th Amendment remained a non-starter due to the reluctance of state governments to cede control. Urban development is primarily a 'state subject' under the Indian Constitution, and despite the 74th Amendment, most states were reluctant to let go of their hold over the cities. The JNNURM attempted to overcome these challenges creatively—through conditional financial assistance tied to urban governance reforms. In other words, a proportion of the grants were only released to the states carrying out the mandatory reforms.
This strategy, however, met with only partial success, as many states resisted the full devolution of powers, limiting the autonomy and accountability of municipal bodies. Financial reforms, though initiated, faced delays due to entrenched bureaucratic practices and political opposition. The UPA government, dependent as it was on regional parties for support, was not in a position to push further.
It is essential to recognise urban sector reforms in the Indian context are an incremental and long-drawn process, as state governments are primarily responsible for urban issues. To put it in perspective, even now, state governments continue to hold overwhelming power over cities, although three decades have passed since the enactment of the 74th Amendment. According to a Comptroller and Auditor General audit report released in November 2024, states have, on average, effectively devolved only four out of 18 functions to the urban local bodies. Urban sector reform requires sustained political will, capacity-building, and a long-term commitment to empower local governments.
A vision for the future
In celebrating Manmohan Singh's contributions, it is necessary to acknowledge that JNNURM marked a crucial step in aligning India's urban development agenda with the constitutional mandate of decentralisation. By linking financial support with institutional reforms, it sought to address the historical neglect of cities and enhance their governance capacity. While it succeeded in catalysing significant urban infrastructure projects and institutional reforms, its implementation was uneven across states and cities. Nevertheless, the programme fostered a culture of urban reform and laid the groundwork for next-generation reforms under the AMRUT and the Smart Cities Mission.
Tathagata Chatterji is a Professor of Urban Management and Governance, School of Human Settlements at XIM University (formerly Xavier Institute of Management), Bhubaneswar. Views expressed here are the author’s own.