Adopt sub-federalism as a means to transform urban governance

Back in 2015, Prime Minister Narendra Modi had shared his vision of leveraging cooperative and competitive federalism to achieve all-round growth for India. The idea involves redefining the relationship between the Centre and states, such that different states compete with each other in achieving common national goals. At the same time, it stresses the importance of coordination and consensus-building between the Centre and states in achieving those goals. The mantra of cooperative and competitive federalism has been reshaping our governance mechanisms and policymaking across the board. To continue this momentum, the next necessary step would be to foster sub-federalism: that is, extend the idea of competitive federalism to competition between states and cities, and among cities.

India’s urban governance and programming can especially benefit from a framework that incorporates sub-federalism into the cooperative and competitive federal structure. Urban development is one of the priority areas of the government, given the rapid urbanization that India is undergoing. With the current pace of urban expansion, we are expected to have more than half our population living in urban areas after two decades. Undoubtedly, we have benefited from urbanization, as evidenced by our high economic growth, but it has also brought along a new set of challenges, such as congestion, pollution and increased energy use, to name a few. To combat these, India’s government, through its ministry of housing and urban affairs, launched a bouquet of programmes and schemes in the past 6-7 years. These include the Swachh Bharat Mission-Urban, Atal Mission for Rejuvenation and Urban Transformation, Smart Cities Mission, Pradhan Mantri Awas Yojana-Urban, Heritage City Development and Augmentation Yojana, and the Deen Dayal Antyodaya Yojana-National Urban Livelihood Mission.

These interventions recognize the importance of a macro vision that can guide states in their planning and governance, but they also depart from a ‘one size fits all’ approach to grant states greater authority in driving an urban transformation. Accordingly, each state is expected to tailor its approach to suit local needs, and also gear its policies towards a common national goal. Now, taking this idea down to the level of local governments, the Ease of Living (EoL) Index and the Municipal Performance Index (MPI) are two evaluative tools that quantify development outcomes in cities and thus promote competition among cities and municipal bodies, respectively.

The first edition of the EoL Index was launched in 2018, followed by the second in 2020. The MPI 2020, launched by the ministry of housing and urban affairs, is the first ever of its kind for India. The idea of sub-federalism informs the framework of both these evaluation tools. The EoL Index 2020 ranks 111 cities based on their development outcomes across four broad metrics of evaluation—Quality of Life, Economic Ability, Sustainability, and Citizens Perception Survey—covering 49 specific indicators examined under 14 categories. The MPI 2020, on the other hand, ranks 111 municipalities on the basis of their functioning evaluated across five verticals—governance, services, finance, technology and planning—which further subsume 20 sectors and 100 indicators.

The MPI 2020 was carved out of the EoL Index 2018 after discussions over the first edition led to a decision to disaggregate the assessment of outcomes and inputs into two separate indexes. Therefore, the EoL Index 2020 solely focuses on development outcomes keenly espoused by citizens, while MPI focuses on municipalities through an assessment of inputs that lead to the outcomes showcased in the EoL Index. It can be said that the EoL Index and the MPI are two sides of the same coin. The ranking system employed in both induces cities and municipalities to improve their performance and climb higher. While the EoL Index helps administrations identify gaps in development, the MPI can aid them in locating the contributory factors that are under the municipality’s functional coverage.

These ranking systems not only serve to promote competition, but also encourage peer-to-peer learning. Sectoral assessments enable cities to learn from the best practices of their peer cities in the areas they lag, and inversely, to serve as models of development in areas they excel in for their peers to emulate. This is where the complementary ideas of cooperative and competitive federalism are tied together and extend to the level of cities.

The MPI also helps strengthen the decentralization of governance by positioning municipalities as enablers of urban development. The 74th Constitutional Amendment accords Urban Local Bodies (ULBs) the status of India’s third tier of governance. However, because of the power of states to decide the devolution of powers to ULBs, urban governance has suffered from a lack of involvement and autonomy of local bodies in the formulation and implementation of urban policies. An assessment of the performance of municipalities shall shift the focus to local governments, enabling states to empower them more. It will also allow for accountability, transparency and autonomy in their functioning. In this way, the EoL and MPI can unlock the potential of India’s urban governance.

As more and more Indians opt for urban lives, our cities will have a much greater role to play in determining India’s growth trajectory. Against this backdrop, the re-imagination of our federal structure as one led by empowered cities could well be a crucial game-changer, the key to achieving our most important developmental goals.

Amit Kapoor & Kunal Kumar are, respectively, chair, Institute for Competitiveness, and joint secretary, Union ministry of housing and urban affairs