Cities are the engines that drive national economic growth. By clustering complementary economic activities, intellectual and financial capital, and entrepreneurial energy, they raise labour productivity and create the potential for sustainable growth through urbanization as low-productivity rural labourers move to the cities. The backbone of a well-functioning city is its urban infrastructure-the network of roads, distribution of electricity, water supply and waste removal-which allows residents and firms to work productively under high-density conditions. We in India have come to appreciate the critical nature of urban infrastructure. The floods in Mumbai reminded us that even as we frame fundamental economic reforms, the biggest gap in India's infrastructure remains urban infrastructure. The whole world envies the congregation of brilliant, entrepreneurial people in Bangalore, but the city is dying a slow death owing to a congested and dysfunctional infrastructural system. This growing 'urban infrastructure deficit' needs to be corrected as quickly as possible, because growing cities are India's future. From one perspective, the urban infrastructure challenge is a challenge for public finance; in a federal system, it's a challenge also for intergovernmental finance. As this volume makes clear, large sums will be required in all countries to invest adequately in urban infrastructure and to operate and maintain systems once they are built. For some advocates of fiscal federalism, the only solution lies in transferring greater revenue-raising powers to local governments. However, what are needed are reliable revenue streams that can be dedicated to infrastructure support. Much of the financing for electricity distribution, water supply, sanitation and waste removal can