This paper examined the impact of political economy on urban governance and planning in India through the lens of historical institutionalism. It analysed the economic reforms of 1991 and their implications on the evolving role of government across different levels, particularly in reshaping institutional responsibilities within the domain of urban development. The case studies of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the National Urban Transport Policy (NUTP) provided insights into how governance reforms and policy frameworks evolved within an existing institutional structure. A comparative analysis of these case studies suggested that the adoption of urban governance reforms in India has been gradual and path dependent, rather than transformative. The paper concluded by highlighting key institutional shortcomings, including constrained decentralisation and limited fiscal capacity at the city level, and identified areas where further improvement is necessary.