Pointing out to the dangers of urbanization, the Economic Survey warns that India will be among the most land scarce countries in the world by 2050, putting too much pressure on Indian cities which are smaller in size and bigger in terms of population.
"By 2050, its land-to-population ratio will have declined fourfold relative to 1960, and India will be amongst the most land-scarce countries in the world," the survey pointed out.
The survey has a separate chapter dedicated for cities titled as From Competitive Federalism to Competitive Sub-Federalism: Cities as Dynamos. The survey said that due to increasing urbanization, city infrastructure is already overburdened and its land market are distorted which render rents unaffordable.
"That is, India's urbanisation rate should begin to converge with those in similar emerging markets, rising to 40 per cent by 2030. And much of this urban growth is likely to take place in the bigger cities, possibly bringing the country in line with Zipf 's Law. This will create opportunities - and risks," it said.
To overcome these challenges, the survey has advocated for greater financial and political independence to the municipalities.
"Twenty-five years on, there are glaring inter-state disparities in terms of devolution of functional and financial powers to the ULBs. Some states have not even allowed the municipalities to levy property taxes," the survey said which is posing major challenge to urbanisation.
Increasing property tax and utilizing existing tax base can help the municipalities to improve the basic service delivery.
"Municipalities that have generated more resources have been able to deliver more basic services. The states should, therefore, empower cities to levy all feasible taxes," the survey said and recommended the ULBs to make the most of the existing tax bases.
Municipalities also need to make the most of their existing tax bases. Property tax potential is large and can be tapped to generate additional revenue at city level," it added.
The survey has also advocated for creating data for the urban local bodies, which can bring transparency to the system.
"MoUD should give greater priority to compile and publish comprehensive data on ULBs and urban sector. Perhaps, grants to ULBs should be more tightly linked to comprehensive and updated data disclosure and transparency by ULBs. NITI Aayog should compile comparative indices of municipalities' performance annually based on the actual accountability and administrative capacity to deliver the core public services," it added.
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