Abstract

This study explores the pivotal role of Indian state governments in shaping urban development, contributing nearly half of the capital expenditure from 2011 to 2018. Examining five diverse states—Kerala, Madhya Pradesh, Odisha, Rajasthan, and Tamil Nadu—during the 2021-22 to 2023-24 period, the research reveals a recent surge in attention and financial commitment to urban development. Despite constituting 1-5% of total expenditures, centrally sponsored schemes (CSSs) have emerged as a crucial budgetary component, aligning state priorities with CSS agendas, particularly in infrastructure development.

The nuanced strategies of state governments, observed in the emphasis on CSSs and state schemes, underscore the existence of channels translating local demand into the budgetary process. Noteworthy variations among states—Madhya Pradesh’s focus on CSSs, Odisha’s significant investment in state schemes, Rajasthan’s substantial transfers to Urban Local Bodies (ULBs), Kerala’s unique approach with diversified state schemes, and Tamil Nadu’s ambitious plans for urban infrastructure loans—highlight the need for context-specific governance approaches. This study provides valuable insights into the evolving landscape of urban development in India, laying the groundwork for informed policy discussions and strategic interventions.