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The report, based on
nearly two years of research, projects that India would have around 590 million
people living in urban areas by 2030. The net increase in working-age population
will be 270 million, while 70% of net new livelihoods will need to be generated
in urban areas.
By 2030, there will be 68 cities with population of more than one million each,
and 91 million urban households will be middle class, who will expect much
better amenities than those existing today.
To manage the urbanisation process, the report projects investment of $1.2
trillion in real 2008 dollars (equivalent to $134 per person per annum) if the
current situation of low quality and inadequate urban amenities is to be
reversed.
In particular, it projects that 700-900 million square meters of paved roads
will be needed, 20 times the capacity added in the past decade. It also projects
the need for 7,400 kilometers of metros and subways, 20 times the capacity added
in the past decade.
The underlying persuasive and urgent message of the Report is that there will
need to be a qualitative and fundamental change in India’s operating model for
the urban areas.
The report focuses on five elements of urban operations. These are:
funding sources;
governance structures of urban areas;
land use and spatial planning by cities with a view to improving affordability,
accessibility, and quality of urban amenities and services affecting daily
activities of the population;
sector policies such as housing, transportation, health facilities, education
and environment management, including water and solid waste management; and
specific goals concerning how India’s population will be divided across the
country among urban and rural areas of differing sizes and proximity.
All five require competencies in urban management and policies, and willingness
by the politicians, bureaucracy and other stakeholders to initiate urgent
changes.
A high quality public policy debate in these areas has unfortunately been
conspicuously lacking. There is room for honest differences in the choices India
should make, but these must be based on strong empirical and analytical
foundations not solely ideologically or politically driven as appears to be the
case today.
It is in the above context that the funding sources for urban areas require
urgent attention. To meet their challenges, the cities in India need to
substantially improve their capabilities. But this requires that consistent with
international practices, including in the United Kingdom, South Africa and
China, the Indian cities must have reliable sources of funding.
The current financing arrangements, which leave cities with uncertain sources of
funds and limit their planning and policy autonomy, as well as accountability,
are simply not sustainable, and result in poor governance.
The cities are currently over-dependent on central or state government grants,
such as on JNNURM projects for urban infrastructure, or for slum improvement.
The report of the 13th Finance Commission, chaired by Vijay Kelkar, has strongly
urged that direct transfer fund mechanism be built into State and Central GSTs
(goods and services tax proposed to be introduced from April 2011) for the
cities. As the GST is expected to have a single treasury (an area, which
requires urgent strengthening if the GST is to be smoothly implemented), a
portion (10-20%) of the GST can be distributed to the cities through Government
Treasury at either the State Bank of India or the Reserve Bank of India, subject
to certain conditions. RBI may be preferred as it currently also analyses state
and local finances annually. Such a direct transfer is also strongly supported
by the report.
As the Centre and States reach final decisions on the design and implementation
of GST, it is imperative that the vital need for more secure funding for the
cities, through direct transfer of GST revenue to them (subject to conditions),
is not overlooked. Indeed, this is one of the criteria by which the final
agreement on GST should be judged.
The conditions could include accounting and management information system
reforms; compulsory e-tendering of projects with transparent norms and
procedures; and rate of progress in meeting education, health, urban sanitation,
transport and other needs. Progress towards implementing UID card project could
also be included.
Direct funding, however, cannot achieve the desired outcomes unless human
resource issues are addressed. In this connection, a group of urban management
officials with specialised training in city management needs to be developed at
the national level (and supplemented in states by state-level professionals) can
be positioned in cities to help implement urban projects, with specific
accountability. As in other areas, qualities of professionalism, and
citizen-centric nature of public service delivery systems needs to be enhanced.
Increasingly dysfunctional arrangements (such as specifying that certain
positions can only be held by officials from a particular service, such as the
Indian Administrative Service, needs re-examination. Unless India finds a method
to give much higher weight to “deserved trust”, i.e. competency plus integrity
in recruiting, allocating and promoting government officials, it will not be
able to meet urban (or rural challenges and expectations of its citizens. This
realisation has occurred even in countries such as Malaysia, which have in the
past exhibited rapid growth.
Creation of standardised software for the country for monitoring of urban
governance merits serious consideration. This is because the current urban
management, including JNNURM and other related projects, suffer from limitations
of poor availability of data and of rigorous analytical studies (such as for
projecting urban transport or water demand in cities such as Pune or Chennai).
It is time that India’s IT capabilities, so visible internationally, were used
to grasp India’s urban opportunities.
Direct funding through transferring a part of GST revenue to cities is only one
of the important methods for securing the needed funds. The others include
property tax reform, developing municipal bonds market, utilising state assets
more productively, better accessing clean development mechanism funds under
Kyoto agreement through say switching to more energy saving street lighting,
public private partnerships and more strategic use of cost recovery and user
costs. The possibilities are many.
But even with these combined resources, the need for economising on the use of
resources will remain as demand grows rapidly.
Source:
Daily News & Analysis, India, dated
11/05/2010
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