Arvind Panagariya, Chairman of the 16th Finance Commission, on Wednesday declared urbanisation a critical driver of India's economic transformation, arguing that the country's ambition to become a developed, globally competitive $30-trillion economy by 2047 cannot be achieved without productive, resilient, and efficiently governed cities. He was speaking at the sixth edition of the Lok Bhavan Conversations in Thiruvananthapuram, organised by the Raj Bhavan on the theme 'Urban Areas as Growth Engine for Viksit Bharat 2047'.

Cities as Engines of Growth

Panagariya noted that virtually every developed nation in the world has high levels of urbanisation, and argued that India — with its own long history of urban development — should pursue this path without hesitation. He stressed that the focus of urbanisation must extend beyond improving living conditions for existing city dwellers. Cities, he said, must become business- and job-friendly environments capable of drawing people from rural areas and generating large-scale employment.

"Economic activity drives urbanisation," Panagariya said, adding that employment generation would help transform rural settlements and the peripheral zones of major cities into vibrant urban spaces.

Land Reforms at the Core

The Finance Commission Chairman identified the scarcity and high cost of urban land as among the most significant constraints on economic activity in Indian cities. He pointed out that acquiring large parcels of land for industrial or business use remains extremely difficult, given that land holdings are highly fragmented and definitive land titles are frequently unavailable.

Panagariya cited the Singur project in West Bengal — where thousands of individual land parcels had to be acquired — as a stark illustration of this challenge, contrasting it with large-scale land acquisition in countries such as the United States, where ownership is far less fragmented. He called for comprehensive reforms to make land more readily available for productive economic activity and to reduce bottlenecks in land acquisition and urban development.

Governance and Municipal Administration

Beyond land, Panagariya underlined the need for stronger municipal administration and better coordination among the multiple agencies responsible for urban development. He argued that cities require governance systems capable of supporting economic activity, infrastructure development, and job creation. Urban planning and land-use policies, he said, should actively foster entrepreneurship while simultaneously improving citizens' living conditions.

Governor Cautions Against Westernisation

Governor Rajendra Arlekar, also speaking at the event, drew a distinction between urbanisation and Westernisation. "Urbanisation should be initiated through our roots," the Governor said, emphasising that India's urban development must evolve from its own culture, traditions, and thought processes rather than simply replicating Western models. He affirmed that urbanisation would make a significant contribution to the country's economic development and the realisation of the Viksit Bharat vision.

What's Next

With the 16th Finance Commission currently deliberating on devolution frameworks, Panagariya's remarks signal that urban governance and land reform could feature prominently in its forthcoming recommendations. The push for a $30-trillion economy by 2047 will increasingly hinge on whether Indian cities can be restructured into engines of investment, employment, and innovation.