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The Finance Commission is key to saving our cities from climate change

18 Sep 2025
2 min

Urban Climate Change Challenges in India

The narrative around cities and climate change typically revolves around traditional hazards like heatwaves, floods, and air pollution. However, Indian cities are facing a more complex set of systemic risks that redefine urban growth, infrastructure stability, and financial mobilization.

Migratory Shifts and Urban Challenges

  • The World Bank’s Groundswell initiative (2021) estimates climate-induced migration could displace 216 million people internally by 2050.
  • Urban areas are becoming magnets for climate migrants due to perceived opportunities, despite not being safer.
  • Proactive urban planning can transform migration pressure into opportunities for resilience and economic diversification.

Infrastructure Fragility and Systemic Risks

  • The IPCC highlights cities are now facing compound risks rather than isolated shocks.
  • Failures in infrastructure networks (power, water, transport) have a cascading effect.
  • Integrated and redundancy-based system designs are crucial for future adaptation.

Financial Barriers to Adaptation

  • The UNEP Adaptation Gap Report 2024 notes a significant gap in adaptation finance, with only $28 billion reached in 2022 against the $194-366 billion needed annually by developing countries.
  • Indian cities require $2.4 trillion by 2050 for infrastructure adaptation.
  • The 16th Finance Commission’s role is pivotal in integrating climate risk into fiscal policies.

Policy Recommendations

  • Institute for Competitiveness suggests a revised devolution formula incorporating a 5% climate-risk weight.
  • This adjustment aims to provide predictable support for climate-exposed states, enhancing resilience.

Conclusion

Migratory dynamics, infrastructure vulnerability, and financial constraints highlight the evolving landscape of urban climate risks. Addressing these challenges requires innovative institutions, infrastructures, and financing models. India's urban transition can serve as a model of resilience for the Global South, contingent upon effective adaptation planning and resource allocation.

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