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The Economic Survey 2025–26, tabled in Parliament on Thursday by Finance Minister Nirmala Sitharaman, highlighted that India is significantly more urban in economic and functional terms than reflected in official definitions. Citing satellite-based data from the Global Human Settlements Layer (GHSL), the Survey noted that India was already 63 per cent urban in 2015 — nearly double the urbanisation rate recorded in the 2011 Census.

Emphasising the central role of cities in India’s growth trajectory, the Survey said urban areas generate the majority of national output and function as critical economic infrastructure. “India’s cities are not merely places of residence but function as critical economic infrastructure. Density and proximity generate agglomeration economies that raise productivity, deepen labour markets, and enable innovation. The economic role of cities is therefore central to India’s growth trajectory,” said the Economic Survey 2025-26.

According to World Bank estimates referenced in the Survey, India’s urban population is expected to reach 600 million by 2036, accounting for nearly 40 per cent of the population, with cities contributing close to 70 per cent of GDP.

The Survey showed that urban transportation systems achieved major improvements because 1,036 kilometres of Metro and Regional Rapid Transit Systems (RRTS) currently serve approximately 24 cities, while multiple new corridors undergo construction.

The government introduced the PM e-Bus Sewa scheme to develop city bus networks by implementing a public-private partnership model, which will deploy 10,000 electric buses. The initiative receives backing from central assistance worth Rs 20,000 crore, together with a Payment Security Mechanism which guarantees stable cash flows to operators. During FY25 alone, over 7,200 e-buses were approved across multiple states and Union Territories.

The Survey recommended digitisation of bus fleets, mainstreaming shared mobility, enhancing last-mile connectivity, and implementing transit-oriented development to improve urban transport outcomes.

Highlighting the impact of the Swachh Bharat Mission–Urban, the Survey said India has achieved one of the world’s largest sanitation transformations. Open defecation has been eliminated across urban areas, while door-to-door collection of municipal solid waste has expanded to 98 per cent of urban wards by 2025–26, supported by more than 2.5 lakh waste collection vehicles nationwide.

The Smart Cities Mission has achieved more than 90 per cent completion of its 8067 planned projects, which received funding of approximately Rs 1.64 lakh crore. The projects encompass smart roads, command and control centres, better water and sewerage systems, and renovated public areas.

The Survey also demonstrated the effectiveness of affordable housing programs. The Pradhan Mantri Awas Yojana-Urban (PMAY-U) program has approved more than 122 lakh housing units through its two operational phases, with over 96 lakh units already finished and given to their rightful recipients.

Street vendors in urban areas regained their business operations through better access to low-cost financing, which the PM SVANidhi program provided.

To address urban infrastructure financing gaps, the Survey referred to the Urban Infrastructure Development Fund (UIDF), launched in the Union Budget 2023–24 with an initial corpus of Rs 10,000 crore. The revolving fund supports infrastructure projects in Tier-2 and Tier-3 cities that lack traditional creditworthiness.

The Survey proposed that every city with a population of over one million should prepare a statutory 20-year City Spatial and Economic Plan, updated every five years. These plans should mandatorily include a transport network blueprint, housing supply targets, and a land-value capture framework linked to infrastructure development.

The Survey stressed the importance of system-driven civic behaviour and predictable urban governance frameworks. The Survey demonstrated that local communication systems achieve optimal results through their overall system accessibility, which requires dependable public service systems rather than temporary solutions.

The Economic Survey recommended that future urban policies should focus on assessing the whole system performance instead of evaluating separate projects because this approach will create cities that combine housing, mobility, sanitation, climate resilience and financing for sustainable urban development.

The Survey found that India's urban development needs to create cities which combine economic prosperity with social equality, environmental protection and strong governance systems because these features will make urban areas work as the essential element for India's national development.