Why Industrial Townships Like Noida Are Lacking Citizen-Centric Governance
Sunil Kumar
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The New Okhla Industrial Development Authority (Noida) is celebrating 50 years of its establishment. Noida was constituted under the Uttar Pradesh Industrial Area Development Act, 1976 as an industrial township, reportedly at the behest of the late Sanjay Gandhi, who wanted to shift polluting industries to Delhi’s outskirts as part of his Emergency-era beautification drive.
Today, Noida has grown into a bustling hub of over one million people covering 81 revenue villages and about 20,136 hectares of land.
On August 13, 2025, a Supreme Court bench comprising Justices Surya Kant and Joymalya Bagchi directed the Uttar Pradesh government to consider converting Noida into a Municipal Corporation to ensure citizen-centric governance, as this was the only major Indian city to not have an elected local government.
This direction came while the court was hearing a bail plea by two Noida Authority officials accused of authorising excessive compensation payments worth more than Rs 12 crore in 2021.
The court accepted the report of a three-member committee that was led by then UP Additional Director General of Police (ADGP) S.B. Shirodkar to investigate whether more such cases exist and to recommend reforms.
How this episode will play out remains to be seen as Noida, Greater Noida and now Yamuna Expressway Industrial Development Authority (YEIDA) reflect a complex interplay of political, bureaucratic and commercial interests.
Noida’s development
It is widely accepted that Noida has developed more as a residential and commercial hub than an industrial township. Just about 18.37% of the total area of Noida is being used for industrial activities and over 37.45% is for residential use. There is no single ‘mother’ industry around which the city has grown. There is a severe shortage of affordable housing for workers and daily wage labourers in Noida. In contrast, an industrial township would prioritise their housing, as was the case with industrial townships like Jamshedpur and Bokaro.
The ‘industrial development authority’ model is being implemented by the Uttar Pradesh government to undertake ‘greenfield’ urbanisation. New cities are emerging at suitable locations, initially connected by road and later integrated with rail and air networks.
As part of this model, vast tracts of agricultural land are acquired by the authority through direct negotiations with landholders, avoiding the stringent provisions of the Land Acquisition, Rehabilitation and Resettlement Act, 2013.
Preparation of master plans, change in land use, development of public infrastructure including roads, sewerage, drains, drinking water pipelines, electricity supply and other basic civic facilities are then undertaken by the authority.
While agricultural land is acquired, the abaadi area of the village is generally left untouched. The obligation of the authority to the original residents (villagers) ends with the disbursement of agreed sum in lieu of their agricultural land.
Since the price offered is two to four times the market price, the majority of the landholders accept it. It is another matter that the authority makes a neat profit by selling the developed land (after changing the land use) to industrialists, entrepreneurs and builders at a huge premium.
The state government chips in with suitable policy interventions, including stamp duty and tax rebates, to attract investors. The Industrial Development Authority under the Chief Executive Officer (CEO) functions as an arm of the Industrial Development Department. The board mainly comprises bureaucrats and is headed by the Industrial Development Commissioner.
What sets the UP model apart
What sets the UP model apart is the governance structure put in place in these new urban centres. Following the 73rd and 74th Constitutional Amendment Acts, rural areas have Gram Panchayats, and urban areas are administered as Town Areas, Municipalities, or Municipal Corporations based on population.
However, Uttar Pradesh has craftily used the exception clause (1) in Article 243Q to subvert the constitutional direction regarding setting up of rural and urban local governments.
Through State Act 4 of 2001 and State Act 10 of 2016, among several other amendments, sections 12A and 12B have been inserted in the Uttar Pradesh Industrial Area Development Act, 1976 to provide for immediate cessation of Gram Panchayats and urban local self-governments once their area is notified.
It is thus obvious that successive governments of Uttar Pradesh have taken the legislative route to thwart the spirit of both 73rd and 74th CAA.
Since a two Judge bench of the Allahabad high court has reportedly upheld the insertion of section 12A in the said Act of 1976 through State Act 4 of 2001, the direction of the Supreme Court to the UP government to consider setting up a Municipal Corporation in Noida is most likely to remain unimplemented.
The Supreme Court would need to consider and give its judgment on the following points before a citizen-centric governance structure can come up not only in Noida but all other industrial authority areas in Uttar Pradesh:
- Examine constitutional and legal validity of the definition of ‘industrial development area’ and ‘industrial township’ and whether all areas declared as such under the proviso to clause (1) of Article 243Q of the Constitution of India qualify to be declared ‘industrial township’.
- Examine and decide on the constitutional validity of sections 12A and 12B of the Industrial Area Development Act, 1976. This becomes important as a new urban centre takes decades to evolve. Noida and Greater Noida have come up over a period of five and three decades respectively. Can citizens be denied ‘local self-government’ as provided by the 73rd and 74th CAA for decades altogether?
- The Supreme Court has consistently held that federalism and democracy are integral parts of the ‘basic structure’ of the Indian Constitution. In such a scenario, can any state government cause Gram Panchayats and urban local self-government institutions (third tier of government) to cease to exist through a notification issued under a state legislation?
- Can the constitutional right of citizens to vote and elect one’s representative in local government be taken away by any state legislation?
- Is the governance structure provided in these industrial townships in conformity with the democratic ideals enshrined in the Constitution?
Until these questions are conclusively determined by the Supreme Court, all calls for the state government to provide citizen-centric governance are likely to be ignored.
The existence of a powerful ‘builder-politician- bureaucrat’ nexus in Noida and surrounding areas has been well established through judicial pronouncements, reports of CAG and various investigative agencies.
The time seems to be ripe for taking a fresh look at the governance structure in Noida and other industrial townships in Uttar Pradesh. The present arrangement is highly bureaucratic in nature and fails the test of accountability, transparency and democracy. The road ahead would depend on the judicial pronouncement by the Supreme Court on the questions raised above.
Sunil Kumar is a member of Pune International Centre and a former civil servant. Views expressed are personal.
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