[Answered] Can secondary cities pioneer low-carbon growth without separate climate funds? Analyze spatial planning, fiscal reallocation, and municipal governance reforms.

Introduction

With over half of India’s urban population in cities below one million and over 50% of 2070 housing unbuilt, secondary cities can pioneer low-carbon growth by aligning existing budgets, planning and governance.

Why Secondary Cities Matter

1. Avoiding Carbon Lock-In: Smaller cities can influence where housing, roads and industries develop before car-dependent layouts and energy-intensive buildings become expensive to retrofit. The Economic Survey 2025–26 estimates that India’s urban population could reach 600 million by 2036, making better planning urgent.
2. Climate Co-Benefits: Heat, flooding and water scarcity share underlying land-use causes. Protecting wetlands, increasing tree cover and preserving natural drainage can simultaneously reduce heat exposure, recharge groundwater and limit flood damage.

Secondary City Climate Resilience Model                  

1. Spatial & Active Mobility Integration: Enhancing street-level walkability, shaded corridors, and transit-oriented development preserves low-carbon commuting habits without massive capital costs. Example: Complete streets design.
2. Nature-Based Drainage & Urban Sponge Asset Integration: Reallocating existing municipal maintenance funds toward restoring urban water bodies (lakes, stepwells) builds flood resilience naturally Example: Urban wetland rejuvenation.
3. Institutionalizing Net-Zero Action Plans: Utilizing frameworks like the Climate Resilient City Action Plan (CRCAP) under the CapaCITIES initiative enables smaller ULBs to embed net-zero priorities directly into daily civic operations.

Spatial Planning for Low-Carbon Growth

1. Transit-Oriented Growth: Integrating housing with public transport, walking and cycling infrastructure can reduce vehicle dependence. The Economic Survey 2025–26 advocates transit-oriented development and stronger public transport rather than isolated infrastructure projects.
2. Climate-Sensitive Land Use: Updated master plans should map floodplains, wetlands, groundwater recharge zones and urban heat hotspots. Telangana’s cool-roof initiatives and Gorakhpur’s exploration of peri-urban agriculture illustrate how building regulations and land preservation can reduce climate risks.
3. Circular Urban Systems: Rainwater harvesting, treated wastewater reuse, permeable surfaces and decentralised waste treatment can reduce resource consumption while improving resilience.

Fiscal Reallocation: Existing Budgets as Climate Instruments

1. Climate-Tagged Municipal Spending: Municipalities can classify expenditure by mitigation and adaptation outcomes, redirecting routine road maintenance, drainage, water supply and greening budgets towards multiple benefits. Ahmedabad’s climate-responsive municipal budgeting offers a practical precedent.
2. National Grants as Leverage: AMRUT 2.0, Finance Commission urban grants and PMAY-U investments can support water efficiency, wastewater reuse, energy-efficient buildings and accessible streets when project appraisal incorporates climate outcomes. The Union Budget 2026–27 provides an opportunity to align urban investment with this approach. The ₹1 lakh crore Urban Challenge Fund, approved in 2026, envisages ₹4 lakh crore in urban investment, with climate-responsive infrastructure and reform-linked financing among its priorities.

Governance & Fiscal Reallocation Bottlenecks

1. Untapped Non-Motorized Transport (NMT) Baselines: Smaller cities naturally possess high walking and cycling modal shares, yet municipal budgets disproportionately prioritize road-widening for motorized vehicles over pedestrian safety. Example: Pedestrian infrastructure deficit.
2. Fiscal Misalignment of Scheme Grants: Intergovernmental transfers (such as 15th Finance Commission urban grants and AMRUT 2.0) are often spent on high-emission gray infrastructure rather than nature-based solutions. Example: Gray infrastructure bias.
3. Weak Municipal Revenue Autonomy: Urban Local Bodies (ULBs) in secondary cities depend heavily on state transfers, lacking revenue autonomy, property tax rationalization, or municipal bond leverage to fund green projects. Example: Stagnant property taxation.
4. Lack of Climate-Integrated Spatial Planning: Master plans in smaller cities frequently rely on outdated land-use zoning, ignoring micro-climate heat islands, urban wetlands, and natural drainage paths. Example: Floodplain encroachment mapping.

Way Forward

1. Mandate Climate-Smart Budgeting at the ULB Level: Adopt formal climate-tagging across all municipal line-item expenditures under statutory Finance Commission grant conditions.
2. Leverage the Urban Challenge Fund (UCF): Direct seed money from the national Urban Challenge Fund to Tier-II/III cities to incentivize innovative, spatial-resilience projects.
3. Upgrade Local Cadre Technical Capacity: Establish dedicated urban planning and climate engineering cells within smaller municipal corporations to eliminate reliance on external consultants.
4. Prioritize Green Infrastructure Co-Benefits: Direct AMRUT 2.0 and PMAY-U housing grants toward energy-efficient building materials, solar rooftop mandates, and decentralized wastewater treatment units.

Conclusion

As highlighted in NITI Aayog’s Urban Planning Reform Guidelines, sustainable urbanization depends on empowering secondary cities before high-carbon patterns lock in. Reorienting existing fiscal flows and embedding climate awareness into local spatial planning will enable smaller cities to lead India’s low-carbon transition.