"Cities cannot continue to develop in the manner in which they have done during the last few decades," he said after laying the foundation stone of the Rs 19,500-crore (Rs 195 billion) Mumbai Metro Rail Project.
"We urgently need new investment in world-class public infrastructure for our cities," Singh said.
"We have to invest in public transport, roads with space for bicycles and pedestrians, in sanitation and in other amenities of modern life.
"Our cities have to become more liveable and more people-friendly," Singh said.
The United Progressive Alliance government had reversed the trend of neglecting urban areas, and their renewal had become the prime focus for the Centre, he said.
"We have launched the national urban renewal mission for this very purpose, for which we are committing almost Rs 50,000 crore (Rs 500 billion) for the next five years," Singh said.
This amount will be supplemented by additional resources from state and municipal bodies and through public-private partnership.
"I am happy that Mumbai metro is the first metro in the country under the public-private partnership mode," he said.
The prime minister also said that the Maharashtra government should set up a Unified Metropolitan Authority for Mumbai soon to enable a seamless and efficient integration of modes of transport.
"Given the wide veriety of transport systems that would co-exist in Mumbai, the state government should set up the authority", Singh said.
"Mumbai symbolises India to the external world. It is a city of dreams and I am happy that it is reinventing itself", he said.
Projects like Mumbai metro would propel Mumbai into one of the premier cities of Asia and the world, he said. "I wish everyone well in their efforts to make Mumbai the capital of Asia", he said.
"Mumbai Metro Project is the fulfilment of an important promise made to the people of Mumbai, a promise made by the Maharashtra government and supported by the central government", Singh said.
-- PTI
Photograph: Arun Patil