Urban Governance: Understanding Neo-Liberal Shifts and Market-Driven Cities

Walk through any Indian city today and you’ll notice something odd. A municipal corporation office sits a few streets away from a private township with its own security, water treatment plant, and power backup. A slum settlement gets a demolition notice while an unauthorised colony nearby quietly gets regularised. None of this happens by accident. It’s the result of decisions made through a web of institutions, companies, and political actors that anthropologists and urban planners call urban governance.

What exactly is urban governance? 🔗

Urban governance refers to how socio-political and economic institutions work together to run a city. It covers the relationship between local politics, municipal administration, and bureaucracy, as well as how a city connects to state-level politics and to non-state agencies that shape urban planning and development.

This is not an abstract academic idea. It plays out in very concrete ways: who gets a steady water and electricity connection, which neighbourhoods face demolition for “encroaching” on public land, and how migrant populations are allocated housing and services. Every one of these outcomes is a governance decision, even when no single person seems to have made it.

From government to governance: a shift in how cities are run 🔗

The word “governance” became common in policy and academic circles in the 1990s, tied closely to neoliberalisation and what scholars describe as the “hollowing out” of the state, where central and state governments gradually stepped back from direct control over public functions.

Government versus governance 🔗

Government is built on hierarchy. There’s a clear line between the state and society, with elected representatives and bureaucrats making decisions that flow downward. Governance looks different. At the local level, it’s marked by blurred boundaries between public and private actors, growing networks of stakeholders, and a bigger role for entities outside the traditional government machinery in delivering what were once purely public goods.

Why markets moved into city hall 🔗

Most cities globally, India included, are now shaped as much by market forces as by elected governments. As neoliberal reforms opened space for private investment, the state’s direct role in running cities kept shrinking. Urban governance today involves developers, corporate consultants, non-profits, and international financial institutions, alongside the municipal corporation.

The 74th Amendment’s unfinished promise 🔗

India tried to move in the opposite direction back in 1993. The 74th Constitutional Amendment Act gave urban local bodies, municipal corporations, councils, and nagar panchayats, constitutional status and pushed for decentralisation, with ward committees and district planning committees meant to bring decision-making closer to residents.

In practice, this decentralisation has been incomplete. Research on Indian cities has found that instead of transferring authority downward to municipalities, many urban reforms have created a new, networked form of governance that shifts authority and resources toward the private sector and civil society groups rather than toward elected local bodies. These arrangements often end up serving the priorities of the more the affluent sections of the urban population, since decision-making stays insulated from ordinary residents.

Smart cities and the SPV model 🔗

The Smart Cities Mission, launched in 2015, is a good example of this shift. Rather than routing funds and decisions through the elected municipal corporation, each participating city set up a Special Purpose Vehicle (SPV), a company registered under the Companies Act and typically led by a bureaucrat, to plan and execute projects. This structure was designed to bring in private capital and technical expertise more efficiently than traditional municipal processes allow.

Public-private partnerships have played a central role here, with private players brought in to deliver services such as water supply, sanitation, sewage, and transport in exchange for user charges. Critics point out that this approach to public service delivery has been part of India’s broader development model since liberalisation in the early 1990s, and that it sidesteps the very local bodies the 74th Amendment was meant to empower.

What urban governance is supposed to achieve 🔗

Strip away the politics for a moment, and the basic objectives of urban governance are straightforward: managing how land is used, providing basic services like water, sanitation, and electricity, ensuring people can move around the city safely, and maintaining public health.

Cities also function as concentrations of power. Most major political and economic institutions have their headquarters in urban centres, which is why cities double as hubs of cultural and administrative life. The presence of secretariats, government offices, and police headquarters in city centres isn’t incidental. It reflects how urban space itself becomes a marker of where power sits.

When governance deepens inequality instead of fixing it 🔗

Here’s where the anthropology gets interesting. Urban governance isn’t neutral. The way resources get distributed through governance structures often ends up reinforcing existing inequalities rather than reducing them. Decisions about where to place a new sewage line, which colony gets prioritised for road repair, or which community gets consulted before a project begins, all reflect underlying political priorities and power dynamics.

The two faces of water access 🔗

Water access in Indian cities illustrates this well. In Mumbai, slum residents who can prove they lived in a settlement before a specific cutoff date are legally recognised as “protected occupiers” and are entitled to some water access, while those who moved in later remain legally excluded from formal water connections altogether. Courts have even ruled that residents of non-notified slums have a right to water because it flows from the right to life, but not necessarily a right to the same standard of service that other residents receive. Meanwhile, planned colonies and gated societies rarely face this kind of legal ambiguity over their basic connections.

Who gets displaced, and why 🔗

Displacement follows a similar pattern. Common justifications for slum demolitions include city beautification, infrastructure projects, or simply labelling a settlement as an “encroachment.” In Bhubaneswar, for instance, families were evicted from the Salia Sahi slum without prior written notice or a household survey, leaving senior citizens, women, and children without shelter overnight, a situation that disproportionately affected Scheduled Tribe families who had lived there for decades.

Compare this to how unauthorised colonies built by middle-class residents are frequently regularised over time rather than demolished. The difference isn’t really about legality. It’s about whose claims to urban space get treated as legitimate by the institutions running the city, and whose don’t.

What do you think? 🔗

What do you think? When private companies and Special Purpose Vehicles take on roles once handled by elected municipal bodies, who is actually accountable to residents when something goes wrong? And if two neighbourhoods in the same city face completely different standards of water access or protection from eviction, can we still call that a fair “urban” governance system?

References

1. https://mahadma.maharashtra.gov.in/en/74th-constitutional-amendment-and-urban-local-bodies-in-india/
2. https://journals.sagepub.com/doi/abs/10.1177/1464993417716355
3. https://www.drishtiias.com/daily-updates/daily-news-analysis/smart-cities-mission-4
4. https://amp.scroll.in/article/1086134/why-is-indias-smart-city-plan-pushing-the-dubious-public-private-partnership-model
5. https://pmc.ncbi.nlm.nih.gov/articles/PMC10237587/
6. https://www.downtoearth.org.in/governance/as-indian-cities-experience-rapid-population-growth-slum-areas-are-becoming-increasingly-marginalised