Over the past two decades, India’s urban development narrative has been largely dominated by a focus on its major cities. Flagship programs like the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the Smart Cities Mission have directed attention, resources, and policy reforms primarily toward metro cities and state capitals. While these initiatives have certainly contributed to the modernization of large urban centers, they have not triggered the broader, more inclusive ripple effect that many policymakers had hoped for. Regional disparities continue to persist, with small and medium towns struggling to access even basic infrastructure, urban amenities, or sustainable economic opportunities.
The current model of urban development is increasingly showing its limitations. By focusing largely on a few urban nodes, we’ve created pockets of progress surrounded by vast stretches of underdeveloped urban and peri-urban regions. Small towns—often the first point of migration for rural populations and the backbone of regional economies—remain underfunded, poorly planned, and overlooked in national strategies. The lack of robust infrastructure, limited employment prospects, and weak municipal capacity in these towns force people to migrate further to large cities, thereby exacerbating pressure on already overburdened urban ecosystems.
This is where the Urban Challenge Fund (UCF) can play a transformative role. Rather than replicating the legacy approach of investing only in high-profile urban centers, the UCF has the potential to incentivize innovation, inclusivity, and local capacity-building in small and medium towns. By adopting a challenge-based framework that rewards practical, locally adapted urban solutions, the UCF can foster a competitive spirit among small towns to address their unique challenges — from waste management and clean water access to affordable housing, digital connectivity, and climate resilience.
Small towns in India are not homogenous — they vary in size, culture, economic base, and administrative capacity. Hence, they require tailored interventions rather than one-size-fits-all models. The UCF can be instrumental in unlocking this potential by enabling towns to pilot scalable, community-driven initiatives that align with their specific needs. For example, towns can experiment with decentralized solid waste systems, energy-efficient public lighting, or digital platforms for citizen engagement — innovations that are often easier to implement in smaller settings and can be scaled as success stories.
Additionally, investing in small towns will help reduce migration pressures on large cities. By improving the quality of life and economic opportunities closer to people’s roots, we create a more balanced urbanization model. Small towns can evolve into regional growth centers, creating employment through local entrepreneurship, supporting MSMEs, and tapping into their cultural and craft-based economies. With proper support, they can also become hubs for climate-adaptive infrastructure and low-carbon urban development.
In conclusion, if India truly wants to build inclusive and resilient cities of the future, it must look beyond the megacities and reorient its urban policy lens toward the vast network of small towns. The Urban Challenge Fund presents a golden opportunity to do just that — by empowering local governments, incentivizing innovation, and fostering collaborative, community-led urban transformation. The path to balanced urbanization runs through our small towns. Reimagining them is not just a policy imperative — it is a national necessity.