NEW DELHI: If someone were to ask which among Bengaluru, Chennai and Hyderabad is the richest city, it would be hard to say. This information gap is precisely what the government is setting out to fill.
The ministry of housing and urban affairs has set up an inter-ministerial committee to develop a standardized methodology to estimate the economic output of Indian cities, a first for the country, according to two people aware of the development.
Work has started on devising ways to calculate the City Economic Product (CEP), or the gross domestic product, of cities. The National Institute of Urban Affairs (NIUA), which helps frame policies and interventions to achieve the vision of Viksit Bharat (Developed India) by 2047, is leading the effort, according to the people and the ministry’s annual report for FY26.
“The ministry has constituted an inter-ministerial committee chaired by a member of Niti Aayog to develop a standardized methodology for estimating CEP in India. NIUA serves as the secretariat to the committee. The methodology is currently under development and has not yet been finalized,” one person said, requesting anonymity because the project is ongoing.
The CEP will help quantify the economic contribution of cities to state and national economic growth, support evidence-based planning, investment prioritization, fiscal planning and resource allocation by identifying sectoral strengths, productivity patterns, growth opportunities and infrastructure needs to frame targeted policy interventions, the person said.
As part of the exercise, government officials are compiling and studying employment, labour and economic output data, among other metrics, to develop the city economic output data set for helping develop city economic regions, according to the ministry’s annual report.
City-level output
India has 496 cities with a population of more than 100,000 people and 53 cities with a population over 1 million. The finance ministry said in its Economic Survey for FY26 that India’s urban areas contribute to almost 70% of the country’s total economic output. India’s real GDP growth rate is estimated at 7.7% during FY26 compared with 7.1% in FY25, the statistics ministry said on 5 June.
“There is currently no official system for measuring economic output at the city level,” the ministry said in the annual report.
However, some companies estimate the GDP of Indian cities using a combination of state-level data, industrial output, service sector growth and employment statistics.
According to Bajaj Finance, the richest Indian cities are Mumbai, with an estimated GDP of ₹24 trillion in 2026, the National Capital Region ( ₹21 trillion), Bengaluru ( ₹14 trillion), Chennai ( ₹12 trillion) and Hyderabad ( ₹10 trillion). This data is not officially published by the government and is derived from “reliable sources and studies,” Bajaj Finance said on its website.
Queries emailed to the spokespersons of the ministries of finance, housing and urban affairs, statistics and programme implementation, Niti Aayog and NIUA on 25 June remained unanswered.
The push to map the economic output of cities comes against the backdrop of the Centre identifying cities as growth engines and pushing reforms to accelerate urbanization.
In her July 2024 budget speech, finance minister Nirmala Sitharaman announced transit-oriented development plans for 14 cities with populations above 3 million, among other measures, for urban housing and development of peri-urban areas. The FY25 budget introduced the ₹1 trillion Urban Challenge Fund for cities as growth hubs, while the FY26 Budget identified cities as growth engines with a focus on emerging tier-II and tier-III urban centres.
Evaluation and development
Urban planning experts said such city-level figures have been used in evaluation progress and development in some cases.
“In China, when provincial and city-level GDP figures played a role in evaluation of local elected and appointed officials like mayors and governors, the sum of provincial GDPs would appear larger than the national GDP,” said Partha Mukhopadhyay, a senior fellow at the Centre for Policy Research (CPR) and an expert in urban development.
Factors such as population and its density, labour and employment figures, tax collection figures can be used to estimate the total economic output of a region, according to economists. However, they also noted the ‘headquarters effect’ in using tax collection as a metric.
“If a large manufacturing corporation has its headquarters in one city, but a bulk of the operation in another city or town, it pays its corporate tax in the headquarters city. This means that the collection of government revenue from that city is disproportionately higher than the place where the actual manufacturing is taking place,” said Devendra Pant, chief economist at India Ratings & Research, a Fitch Group ratings company.
Skewed measures
Pant said that in calculating the GDP of cities in India, the sample size to be considered will grow multifold if intra-city incomes are measured, which could potentially be a hurdle.
CEP figures can also be used in comparisons with state GDP figures to assess the economic contribution of cities, said Mukhopadhyay of CPR.
“If it is found that one city contributes to a majority of the state’s GDP, it does show inequality. In this case, there are two ways in which policy can be used—one is to raise the contribution of the other areas in the state and the other is to keep making the city bigger to further exploit agglomeration economies and generate as much economic output as possible. It depends on policymakers how they respond to the data,” said Mukhopadhyay.
Roughly 50% of the country’s population—about 850 million people—are expected to live in urban areas by 2050, according to Niti Aayog’s annual report for FY26, which noted that the contribution of urban areas to the country’s GDP is estimated to rise from 63%, according to 2011 Census figures, to as much as 75% by 2040.