The world now lives in cities. According to the United Nations Population Fund (UNFPA) report released recently, the world population has decisively turned urban. About 3.3 billion people live in urban areas and by 2030 that would increase to about 5 billion. This amounts to more than half of the world's population. The level of urbanisation in India, in comparison, appears much lower. Urban India accounts for about 30 per cent of the total population and its share i s expected to rise to about 40 per cent by 2030. However, the absolute numbers tell quite a different story. At present, the urban population is about 300 million and it is expected to reach 590 million by 2030. Indian cities cannot take comfort from the U.N.'s observation that urbanisation is a positive feature and cities offer the best opportunity to escape poverty. Urban poverty, housing deficit, poor quality of city planning, and weak governance are challenges to be addressed. As of now, the list of unfinished and unattended urban agenda in India is long and daunting. By 2015, about $90 billion needs to be invested in urban infrastructure excluding metro railway projects. But what would be available, on the basis of 2004 figures and projections, is only $10 billion. The national transport policy stresses the need for large investments in public transportation and the need to establish metropolitan authorities that will integrate different modes of transport and promote sustainable options. This still remains a far cry. In spite of a national slum policy and housing policies being in place, the housing deficit in Indian cities is on the rise. In 2007, the housing shortage was about 24 million units and it is expected to touch 26 million by 2012. About 99 per cent of this deficit pertains to lower income groups. The UNFPA report identifies urban governance as the key challenge in planning for quality cities. This appears to be one of the weaker links in the Indian urban context. The Constitution, through its amendments, has devolved more powers to local bodies, but they are yet to be empowered in full. Their capacity needs to be built and financial powers strengthened before we can expect them to adopt best practices in governance. Such issues are even more pressing in smaller cities, which are expected to take most of the growing urban population. Urbanisation may be inevitable but whether it will turn into a positive force or an environmental and social disaster depends on how quickly we put plans and governance in place.