The disparity between available finance and municipal spends is posing a new risk to the Indian cities.

A new report by The Indian School of Public Policy (ISPP) and Dun & Bradstreet states that the Indian cities are at risk of becoming diseconomies. The report highlights the need for holistic urban planning strategies that prioritize inclusive growth, environmental sustainability, and social equity.

The report titled “The Economic Significance of Urban Areas,” suggests that by 2030, over 40% of India’s population will live in urban areas. It emphasizes the importance of cities in India’s economic development, with an annual influx of 13 million people to urban areas.

The study finds a 90% correlation between registered MSMEs and GDP, highlighting the symbiotic relationship between business dynamism and economic output in urban centres. Cities offer social mobility, with Tier-1 cities creating 28% of jobs and hosting 97% of India’s unicorns.

As India prepares for rapid urbanization, there should be an increased focus on basic infrastructure (including last-mile connectivity, health infrastructure, and availability of electricity and water), confidence to address shocks like pandemics and natural disasters, says Arun Singh, co-author of the report.