Sanjeev Sanyal & Aakanksha Arora, respectively member and joint director in the Economic Advisory Council to the Prime Minister
A major source of India’s urban management problems is a philosophical mistake. Both, policymakers and the general public have a view that India’s urban problems are due to being “overcrowded” and “congested”. This leads to the obvious conclusion that the primary solution is to “decongest”. The approach is embedded in our regulations—be it National Building Codes, master plans, or building bye-laws of states. Yet, after decades of trying this approach, almost all our cities continue to feel over-congested! Surely, there is a need to rethink the issue afresh.
The reality is that the experience of congestion is only relative to available infrastructure. Thus, successful cities like Singapore, Hong Kong, New York, and Tokyo are very densely populated but have built infrastructure to support the density. This is why density is not the same as over-crowding. Indeed, this goes to the very heart of why cities exist in the first place—to concentrate human activity. If concentration did not have high social and economic value, we would all be living in large, affordable houses in remote locations with no traffic jams.
Given the power of agglomeration, cities require efficient infrastructure that allows for concentration. Instead, what we do in India is the exact opposite. We restrict compact development, thereby spreading the population outwards and thinning out the infrastructure. This misses the point that it is cheaper and more efficient to build infrastructure in a compact area. Take the example of ribbon development all along the Delhi-Jaipur highway. It is simply not possible to provide urban amenities (water supply, sewage etc.) in such a spread-out area.
The decongestion approach, therefore, leads to many problems. First, we have cities with large-scale wastage of productive land, which creates an artificial scarcity of space and inflates prices. Indian building regulations such as floor area ratio (FAR) and setbacks are among the world’s most restrictive. For instance, regulations on ground coverage, setbacks, parking, and FAR mean that Indian factories are unable to use almost half of their land.
Second, we must realise that “decongestion” is just a euphemism for urban sprawl. Rapid outward expansion of cities leads to encroachment of productive agricultural and forest land. Moreover, it makes provision of infrastructure more difficult since the infrastructure requirements grows at the square of urban expansion. This renders many urban utilities uneconomical—be it public transport, water supply, sewage pipelines, waste disposal, etc.
Third, in the name of decongestion, restrictive zoning laws have led to absurd land-use outcomes. For instance, worker housing is not allowed in industrial areas. The consequence is that either workers live “illegally” within the factories, or slums emerge near industrial areas. Alternatively, companies have to ship in workers to distant locations. None of these are desirable urban outcomes.
Fourth, the multiplicity of regulations to enforce decongestion means that no construction is viable without violating some norm. This leads to rent-seeking, harassment and/or flagrant violation of even sensible norms.
Finally, and most fundamentally, de-clustering reduces the social and economic value being generated by urban agglomeration. Urban managers would be much better served if they allowed for the concentration and built infrastructure to support it.
The good news is that policymakers have begun to recognise some of these problems. Uttar Pradesh recently passed the Model Building Construction and Development Byelaws and Model Zoning Regulations for Development Authorities of Uttar Pradesh, 2025. It is an example of a welcome shift towards compact development.
First, companies are allowed to maximise ground coverage after ensuring the minimum setbacks, as compared to just 40-60% for industrial and commercial areas, and 40% for hotels previously. This change should roughly allow for 20-40% more ground coverage (except in a few heritage and restricted zones).
Second, FAR has been increased for most categories. For instance, for roads from 18-45m, FAR has been increased from 1.5 to 10.5 for industrial areas, from 2.5 to 8.75 for hotels, etc. on purchasable basis, and the limit has been removed for roads with width greater than 45m. Similarly, building height restrictions have been removed. It will now be determined based on utilised FAR, except for specific cases.
Finally, regulations have been changed to improve land utilisation. The setback requirements have been rationalised even as minimum plot-size requirements have been reduced for various categories such as hotels, shopping malls, convenience stores, etc. All of these are steps to promote compact development in cities.
Simultaneously, outdated zoning requirements are also being relaxed. The land-use categories have been standardised across the state and mixed-use zoning is being promoted. For instance, non-hazardous industries can now be built anywhere that road width and other infrastructure allow it (with reasonable restrictions for forest/heritage/public areas). The removal of rigid zones means that worker housing will now be permitted in industrial areas (again, restrictions remain for hazardous industries).
Overall, these changes are a good example of how our building and town-planning laws need to evolve. It is important, nonetheless, to note that such compact development succeeds only when it is accompanied by concentrated urban amenities and infrastructure. Our point is that density should make this easier since infrastructure will now have to be built for a more compact area, and there are now provisions to charge for the density (for instance by purchasable FAR). In short, anticipate and build for density.