India's aam aadmi is urbanising, but can the city systems keep up

India’s cities are expanding fast. The built-up areas across the eight largest urban centres –- Delhi NCR, Mumbai MMR, Bengaluru, Hyderabad, Chennai, Kolkata, Ahmedabad, and Pune -- have grown from roughly 2,136 sq km in 1995 to an estimated 4,308 sq km in 2025, according to real estate platform Square Yards.

But this isn’t just concrete and flyovers. It reflects a deep economic and demographic shift. By 2050, India is expected to add around 330 million new urban residents -- roughly the size of the entire US population. Accommodating them will require nearly 100 million new homes, along with major expansions in transport, water, power, and public services.

Funding the urban boom
Money is a major challenge. Bloomberg reports that India still faces a significant funding gap, and its fast-growing urban population could strain existing public systems. To address this, the government has stepped up, launching programs to attract long-term investors such as pension funds and life insurance companies, aiming to secure steady funding for urban infrastructure.

Also Read: Urban built-up footprint in India’s top eight cities doubles since 1995


Government spending reflects this push. Gross budgetary support for infrastructure has doubled from an estimated ₹5 lakh crore in 2014 to around ₹10 lakh crore by 2024. As a share of GDP, it has risen from 0.9% in 2014 (flat until 2017) to 3.3% in 2024, showing a sustained effort to expand infrastructure alongside India’s urban and economic ambitions.

Opportunities and emerging hubs
Cities aren’t just population centres, they’re economic engines. Globally, cities generate over 80% of GDP, and India’s development path runs through its urban centres. “We are already seeing this play out in major cities of India, where skyscrapers, dense business districts, and vibrant commercial hubs are reshaping how we live and work,” said Tanuj Shori, CEO and founder of Square Yards.

While metros dominate the narrative, Shori points out the real excitement is in Tier 2 and 3 cities, where better infrastructure and capital flows are powering the next wave of growth.

Sanjay Dutt, MD & CEO of Tata Realty and Infrastructure Ltd, agrees. He told ET that India’s next phase of urbanisation will focus on “balanced and inclusive city growth.” Traditional metros like Mumbai, Bengaluru, and Delhi will continue evolving, but new hubs, Chennai, Navi Mumbai, Thane, Noida, and Gurgaon, are emerging, supported by expanding infrastructure, connectivity, and industrial corridors.

Tier 2 and 3 cities, he adds, also show strong potential thanks to improved governance, infrastructure investment, and a growing knowledge economy.

Also read: Modi inaugurates ₹19,650 crore Navi Mumbai International Airport to rival Heathrow, Incheon

Skilled workforce and integrated cities
Dutt highlighted the role of skilled professionals and NRIs returning to India, noting that cities like Bengaluru and Gurgaon have over 70% local workforce participation. This reduces reliance on foreign migrants and supports sustainable demand in residential and commercial real estate.

Global immigration trends also play a role. Stricter policies in the United States, such as higher H-1B visa fees and large-scale deportations under the Trump administration, affect the movement of skilled professionals and NRIs.

These shifts indirectly influence India’s talent pool, which is crucial for urban growth and real estate demand in cities like Bengaluru and Gurgaon.

“To sustain growth, cities must become integrated live-work-play ecosystems, combining aspirational housing, transit connectivity, and social amenities," Dutt said.

He added that planning must be data-driven and sustainable, integrating mixed-use developments, mobility infrastructure, and climate-resilient design.

Projections and megacities
The United Nations projects India’s urban population, currently around 37% of 1.46 billion, will rise to 53% by 2050, roughly 876 million people. By then, the country will have seven megacities with over 10 million residents: Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, Ahmedabad, and Kolkata.

Dutt sees this urban growth reshaping real estate. “Developers are now creating self-sustaining ecosystems that combine work, living, and leisure in one integrated environment,” he said, noting rising demand for premium and aspirational housing across both metros and emerging cities.

The strain beneath the skyline
India’s rapid urbanisation comes with challenges. High-rises, dense cores, and busy business districts are transforming real estate, but traffic congestion, pollution, and aging infrastructure are already pushing urban systems to their limits. Residents spend 1.5–2 hours daily stuck in traffic, according to mobility studies.

Mid-sized cities illustrate the problem. Ranchi, Jharkhand’s capital, has just 41 city buses for 1.46 million people, highlighting gaps in public transport. Inefficiencies in urban transport, poor logistics, and weak infrastructure cost India up to $22 billion annually, the Asian Development Bank estimates.

Pollution is another pressing issue. The 2023 World Air Quality Report by IQAir found 42 of the world’s 50 most polluted cities are in India, up from 39 the year before. Water scarcity compounds matters, with nearly half of India’s rivers polluted and outdated pipelines causing cities to lose 40–50% of piped water before it reaches households.

Housing remains a major concern. Knight Frank India and NAREDCO estimate India’s urban affordable housing shortage of 9.4 million units could rise to 30 million by 2030, pushing millions into informal settlements lacking basic sanitation.

Municipal finances make things harder. India collects less than 0.2% of GDP from property taxes, compared with 1.1% in OECD countries, leaving cities reliant on state and central transfers that are often delayed or insufficient.

Transforming connectivity
India’s urban infrastructure push isn’t just about fixing problems; it’s driving growth. International airports like Navi Mumbai, Jewar (Noida), Mopa (Goa), and upcoming hubs in Dholera and Parandur are improving access while easing pressure on existing airports.

Also Read: Navi Mumbai Airport ready to open: Jeet Adani recounts the difficult time leading up to this big new landmark

The Mumbai–Ahmedabad bullet train, the country’s first high-speed rail corridor, will cut travel time and boost growth in intermediate cities.

Metro networks in Bengaluru, Delhi NCR, and Hyderabad are expanding rapidly, supported by expressways, smart city projects, riverfront redevelopments, and renewable energy infrastructure, attracting investment and opening new industrial and commercial corridors.

Government initiatives
India is taking steps to address these gaps:

• Swachh Bharat Mission for sanitation
• Smart Cities Mission to modernise infrastructure
• PM SVANidhi for street vendors
• PM Awas Yojana (Urban) for affordable housing
• AMRUT for water and sewerage reforms

Yet execution remains a challenge. Experts say urban infrastructure should be treated as core national infrastructure, just like highways, ports, and energy grids, rather than purely local civic issues.

Looking ahead
Dutt emphasises integrated urban planning: “India’s cities must evolve into live-work-play ecosystems supported by premium housing, transit connectivity, and social amenities.”

The World Bank is backing India’s vision of livable cities. Auguste Tano Kouamé, the Bank’s Country Director for India, writes that cities should be engines of productivity, innovation, and inclusion, with infrastructure enabling livable, climate-resilient, and inclusive growth.

The next 25 years will determine whether India’s urban boom becomes a demographic dividend or a development disaster.