The finances of municipalities in India are in a highly unsatisfactory state, adversely affecting, on the one hand, the productivity of cities and towns and, on the other, the quality of life. Moreover, the fiscal implications of rapid urbanisation stare us in the face and failure to take appropriate action on this front will have adverse consequences for India's growth and development trajectory. The Finance Commission's grants-in-aid over the years have not been able to bridge the vertical fi scal gap of municipalities. How may the Fourteenth Finance Commission deal with the fi scal challenge?