From Urban Fragmentation to Integrated Growth Corridors

Study OAS Prism  |  3 August 2026

India's urbanisation model has long carried a structural flaw that planners acknowledge but administrations rarely fix: the boundary of governance rarely matches the boundary of growth. Cities spill beyond their municipal limits, yet planning, infrastructure investment, and administrative authority remain trapped within them. Odisha faces this challenge acutely. Its urbanisation rate stood at only 16.68% as per Census 2011 — against a national average of 31.16% — making it one of India's most rural states. Yet its economic dynamism is concentrated in a handful of multi-city corridors: the Bhubaneswar–Cuttack conurbation, the western industrial belt around Sambalpur and Jharsuguda, and the southern port cluster at Berhampur–Gopalpur.

The fundamental problem is institutional fragmentation. Paradeep Port — one of India's largest cargo ports — sits in a different administrative jurisdiction from the state capital it logistically serves. The IT campuses of Bhubaneswar and the commercial hub of Cuttack are separated by barely 25 kilometres, yet governed by two distinct Development Authorities with no overarching coordination mechanism. Infrastructure built on one side of a jurisdictional boundary is incompatible with plans being drawn on the other.

This is the institutional problem that the Odisha Cabinet chose to address when, at its 45th Cabinet meeting chaired by Chief Minister Mohan Charan Majhi on August 1, 2026, it cleared the Odisha Development Authorities (Amendment) Bill, 2026 — creating the legal scaffolding for Economic Region Development Authorities (ERDAs) to function as overarching statutory coordination bodies across multi-city economic corridors.

The Odisha Development Authorities Act, 1982 is the foundational state statute governing planned urban development. It established Development Authorities (DAs) as autonomous statutory bodies empowered to prepare Master Plans, regulate land use, approve building plans, develop housing schemes, and provide infrastructure. Five major Development Authorities currently operate in Odisha:

• Bhubaneswar Development Authority (BDA) — State capital; IT hub; selected under Smart Cities Mission
• Cuttack Development Authority (CDA) — Judicial capital; seat of Odisha High Court; commercial and silverware hub
• Sambalpur Development Authority (SDA) — Cultural and educational centre of western Odisha
• Rourkela Development Authority (RDA) — Industrial steel city; home of Rourkela Steel Plant (India's first integrated steel plant)
• Berhampur Development Authority (BeDA) — Southern Odisha's trade hub; known for silk sarees

Each authority operates strictly within its notified boundary. The BDA plans Bhubaneswar; the CDA plans Cuttack. Neither has any legal authority or mechanism to coordinate with the other, even though the two cities form a contiguous conurbation and share a police commissionerate. There is no statutory body capable of planning a cross-Bhubaneswar–Cuttack road, an inter-city transit system, or a unified industrial zone that straddles both jurisdictions. This is the institutional vacuum that ERDAs are designed to fill.

The 74th Amendment and Urban Self-Governance

The 74th Constitutional Amendment Act, 1992 — popularly called the Nagarpalika Act — inserted Part IXA (Articles 243P to 243ZG) and the 12th Schedule into the Constitution. It created a constitutional mandate for elected urban local bodies (ULBs), devolved 18 municipal functions through the 12th Schedule, and introduced two critical metropolitan governance mechanisms:

• Article 243ZD — Metropolitan Planning Committee (MPC): Mandates a planning committee for every metropolitan area (population above 10 lakh) to prepare a consolidated development plan. Two-thirds of MPC members must be elected ULB representatives.
• Article 243ZE — Ward Committees: Mandates ward-level committees within municipalities for participatory governance.

Development Authorities and the Democratic Gap

Development Authorities — including the new ERDAs — operate in a parallel governance track entirely distinct from the 74th Amendment framework. They are state statutory bodies, not elected local governments. This creates an important constitutional tension: the 74th Amendment's promise of democratic urban self-governance through elected MPCs and municipalities is structurally bypassed when technocratic development authorities exercise planning power over large urban areas without electoral accountability.

Most Indian states — including Odisha — have never constituted Metropolitan Planning Committees despite the constitutional mandate. The ERDA framework does not address this gap; it works around it by creating yet another layer of non-elected statutory authority. For OPSC aspirants, this distinction — between the elected ULB framework under the 74th Amendment and the statutory authority framework under state legislation like the ODA Act — is a critical conceptual point.

The Odisha Development Authorities (Amendment) Bill, 2026 makes two core changes to the 1982 Act:

New Statutory Definitions

The amendment introduces the terms 'Economic Region' and 'Economic Region Development Authority' into the statutory vocabulary of the ODA Act, giving them precise legal meaning for the first time. An Economic Region is defined as a multi-city area designated by the state government for integrated planning and coordinated economic development. An ERDA is constituted as the overarching statutory authority for such a region.

Chapter IIA — A Scalable Framework Provision

More significantly, the amendment inserts a new Chapter IIA into the ODA Act. Chapter IIA is a 'framework provision' — a legislative design that empowers the state government to notify any area as an Economic Region and constitute an ERDA for it by executive order, without requiring a fresh Act of the Legislature for each new region.

This is a deliberate administrative design choice. It gives the state executive the flexibility to expand the ERDA framework as economic needs evolve — adding new regions, extending boundaries, and constituting authorities — all through subordinate legislation (executive notifications). The legislature creates the framework once; the executive populates it repeatedly. Chief Secretary Anu Garg described this as providing 'a comprehensive statutory framework for the constitution, powers, and functioning of ERDAs for coordinated and integrated development.'

The Bill was cleared by Cabinet on August 1, 2026, and will be introduced in the Odisha Legislative Assembly for passage and assent.

Four economic corridors have been designated as the first wave of ERDAs. Their geographic spread is not accidental — it reflects the distinct economic geographies of Odisha's four broad zones:

The strategic design is notable: BKPPER anchors the eastern coastal and capital zone; the Baragarh–Jharsuguda–Sambalpur corridor secures western Odisha's mineral and energy economy; Brahmapur–Gopalpur develops the southern coastal economy; and the Jeypore–Koraput–Sunabeda ERDA attempts to integrate tribal southern Odisha's unique resources — HAL's aerospace manufacturing, forest-based livelihoods, and tribal agriculture — into a formal economic corridor.

Odisha's ERDA framework is the state's institutional response to a national policy architecture introduced in the Union Budget 2026-27. The Budget identified four City Economic Regions (CERs) as national economic engines — to be developed with integrated governance, infrastructure investment, and employment generation frameworks:

The central government committed ?5,000 crore over five years for all four national CERs. Conceptually, the CER framework has Chinese origins — it adapts the model of 'combined urban-rural units intended to be self-sufficient economic zones' — though NITI Aayog, which championed the framework in India, envisions CERs as investment vehicles rather than closed administrative zones.

Odisha's ERDA Bill positions BKPPER to draw down central CER funding. By constituting a statutory ERDA for BKPPER, the state demonstrates the institutional readiness that the central scheme requires — making it eligible for the ?5,000 crore outlay on priority basis.

What BKPPER Integrates

The Bhubaneswar–Kataka–Puri–Paradeep Economic Region is the most ambitious of the four Odisha ERDAs and the designated national pilot. It integrates four urban nodes with fundamentally different economic characters into a single governed corridor:

• Bhubaneswar — State capital, administrative hub, IT and services economy; one of two Odisha cities under Smart Cities Mission; home to STPI, NASSCOM chapter, Infocity
• Cuttack — Judicial capital; seat of Odisha High Court; traditional commercial hub for silver filigree, wholesale trade, and financial services
• Puri — India's fourth sacred dhama; Jagannath Temple driving one of Odisha's largest informal economies; Rath Yatra attracting 8–10 million pilgrims annually
• Paradeep — Deep-sea port on the Bay of Bengal; one of India's 12 Major Ports; handles coal, iron ore, fertiliser, crude oil; gateway to eastern Indian industry

Economic Targets and Funding

The BKPPER regional economy currently stands at approximately $22.4 billion. The ERDA framework, combined with Viksit Bharat 2047 investments, targets scaling this to $500 billion by 2047 — a 22-fold expansion over two decades. Over 80 designated infrastructure, industrial, and services projects have been planned across the corridor. For 2026-27, ?320 crore has been allocated under the Samruddha Sahara scheme specifically for BKPPER development. The corridor's master plan was developed in collaboration with NITI Aayog and transcends individual municipal or development authority boundaries.

The Jeypore–Koraput–Sunabeda ERDA presents the most constitutionally sensitive challenge of the four identified regions. Koraput district and its surroundings are notified under the Fifth Schedule of the Constitution — one of two constitutionally protected tribal governance frameworks (the other being the Sixth Schedule for northeastern states). Significant tribal communities in this zone include the Kondh, Gadaba, Bonda, Koya, and Saura peoples.

PESA Act, 1996 and its Implications for ERDA

The Panchayats (Extension to Scheduled Areas) Act, 1996 (PESA) — enacted under the enabling provision of Article 244(1) and Article 40 of the Constitution — extends the Panchayati Raj framework to Fifth Schedule areas with special powers for gram sabhas. Under PESA, gram sabhas in Scheduled Areas have the right to be consulted on land acquisition, to manage natural resources, and to exercise control over local development decisions. No development authority — including an ERDA — can legally override gram sabha powers in Fifth Schedule areas.

For the Koraput ERDA, this means: any infrastructure project or land acquisition decision must undergo mandatory gram sabha consultation. HAL's Sunabeda facility — which produces aircraft components including for the LCA Tejas programme — operates within this region, adding a national security dimension to what is otherwise a tribal governance issue. The ERDA framework as currently described does not specify how PESA obligations will be incorporated into the authority's functioning — this is a significant unresolved question that will face legislative scrutiny when the Bill comes to the Assembly.

The Democratic Accountability Gap

ERDAs are technocratic statutory bodies, not elected governments. Their planning powers — which will effectively supersede those of elected municipalities within an economic region — are exercised without electoral accountability. The 74th Amendment's prescribed solution to this problem — the Metropolitan Planning Committee under Article 243ZD, with a two-thirds majority of elected ULB representatives — has never been constituted in Odisha. ERDAs risk deepening this gap rather than closing it.

Institutional Overlap and Hierarchy Confusion

Five existing Development Authorities (BDA, CDA, SDA, RDA, BeDA) will continue to operate alongside ERDAs. ERDAs are described as 'overarching coordination bodies' — but the precise legal hierarchy between an ERDA and the BDA within the BKPPER zone has not been publicly clarified. Which plan prevails when ERDA's regional master plan conflicts with BDA's existing Bhubaneswar Development Plan? This ambiguity will create litigation and project delays unless addressed in the implementing regulations.

Financial Sustainability

The ?5,000 crore central commitment is spread across four CERs over five years. Per ERDA, this translates to ?1,250 crore annually — modest relative to the infrastructure deficit of corridors targeting $500 billion economies. State fiscal capacity in Odisha, which has historically depended significantly on Central transfers and mineral royalties, constrains the ability to supplement central funds at the scale required.

The Implementation Gap

NITI Aayog observers have noted that 'the necessary institutional infrastructure is not yet in place, making the execution of a city-regional investment vehicle a primary concern' for the national CER framework. A bill creating the legal architecture is necessary, but not sufficient. The right personnel, planning processes, data infrastructure, and financial instruments must follow — and these typically take years to build after legislation is passed.

• Legislate a Clear Hierarchy: The ERDA regulations must specify that ERDA regional plans are supreme in cross-jurisdictional matters, while DA plans govern project-level implementation within their territories. Without this clarity, legal disputes will paralyse projects.
• Embed PESA Safeguards Statutorily: For the Jeypore–Koraput–Sunabeda ERDA, PESA-compliant gram sabha consultation protocols must be written directly into the ERDA regulation — not left to administrative discretion — before any land acquisition or forest diversion decision by the authority.
• Create a Dedicated ERDA Trust Fund: Central CER funds and state contributions should be pooled into an independently audited ERDA Trust Fund per region. Funds should be disbursed project-by-project against verified milestones, with a Comptroller and Auditor General (CAG) audit annually.
• Mandate Time-Bound Master Plans: Regional Master Plans for each ERDA should be prepared within 18 months of constitution, with a mandatory public consultation period of at least 60 days. People's participation — particularly of urban poor, informal sector workers, and tribal communities — must be built into the consultation framework.
• Explore Municipal Bond Financing: Land value capture mechanisms — development charges on land whose value rises due to ERDA-funded infrastructure — can generate sustainable internal revenues without burdening state or central budgets. Tamil Nadu's TIDCO and Maharashtra's MMRDA have precedents for this model.

 

Mains Practice Question

OPSC OAS Mains – General Studies Paper I (Governance & Polity) / UPSC GS Paper II — 250 Words

The Odisha Development Authorities (Amendment) Bill, 2026 creates Economic Region Development Authorities (ERDAs) as overarching statutory bodies for integrated planning across multi-city corridors. Critically examine (a) how the ERDA model addresses the limitations of the existing Development Authority framework in Odisha, (b) the constitutional tensions between ERDAs and the 74th Amendment's mandate for elected urban governance, and (c) the specific safeguards necessary to protect tribal rights in Fifth Schedule areas falling within the Jeypore–Koraput–Sunabeda Economic Region.