class 7 - urban infrastructure in india

8/3/2019 Class 7 - Urban Infrastructure in India

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Infrastructure Planning and

ManagementClass 7 - Urban Infrastructure in India


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Agenda

Urban Infrastructure Scenario Models of Urban Governance

Municipal Finances Major municipal reforms

Framework for Urban Infrastructure

Delivery


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Urban Infrastructure Scenario Indias urban population will grow from 26% to 36% of total

population by 2011. By 2025, 50% of Indias population will live incities, half of them in slums

This will place great stress on existing infrastructure for water,power, urban transport, sanitation etc more infrastructure has tobe built and existing infrastructure has to be upgraded. Increase inthe sales of vehicles due to this trend is shown below


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Urban Water Supply Scenario

As the charts below taken from the IndiaInfrastructure Report indicate, water availabilityin urban settings has been decreasing over the

years


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Quality of Service


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Quality of Service

The chart on the previous page is also takenfrom the India Infrastructure Report and depictsthe urban water scenario in Bangalore

As the chart indicates, in addition to quantity,quality of service has also decreased over thelast decade. Per capita availability of water has

become lesser, leakages have increased etc


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Urban Governance 3 Tier System Traditionally, the state government had a

major influence on urban infrastructure.

No clear demarcation of powers existedbetween state and local (municipal) levelsand so state governments ended up takingmost of the decisions regarding urbaninfrastructure

The Central Government has also had arole to play, but this role mainly deals withproviding tax concessions, training andguidelines and dovetailing central planssuch as the National Urban TransportPolicy with schemes such as the

Jawaharlal Nehru National Urban Renewalmission The chart on the left graphically depicts

the level of influence held by various tiersof government, with the municipal

governments having the least powers

Center

State

Municipality

OLD

Leve

lofInfluen

ce

atlocall

evel


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Problems with the earlier model

Funding for urban areas comes from the centeror the state

Due to lack of on-the-ground knowledge on the

part of these agencies, the wrong groups orwrong projects often get funded

Conflicting programs at the state and central

level do not align, leading to misdirected flow offunds

Bureaucracy at these levels stymies progress


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New Model for Urban Governance In the earlier model, quality of

services are likely to suffer and a

preferable approach would be forUrban Local Bodies (ULBs) ormunicipalities to make their owndecisions based on their needs.

ULBs could be democraticallyelected and could raise their ownfunds to provide services such asurban planning, water supply,roads, bridges, Urban amenities

such as parks etc This new model is currently being

adopted in policy planning circlesand is depicted in the adjacent

figure

Center

State

Municipality

NEW74th Amendment

LevelofInfluen

ce

atlocall

evel


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74th CAA (12th Schedule)

The 74th

Constitutional Amendment Act, seeksdevolution of powers to local bodies.

ULBs will be in charge of the functions depictedin the box in the next slide, which has beentaken from the India Infrastructure Report

The 74th Amendment gives more power,responsibilities, and the ability to raise funds, to

control revenues and to deliver projects, tomunicipalities


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74th CAA (12th Schedule)


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Municipal Finance

Main sources of finance for municipalities are taxes(Land + Building taxes) State govt mandates the tax rates rates

Another source of finances are fund Transfers fromStates and the Center This can happen at the discretion of state govts

State Finance Commission (SFC) is a body withresponsibilities to ensure that municipalities haveadequate revenues for their operations

The diagram on the next page from the IndiaInfrastructure Report, shows various ways in whichcentral and state governments can fund ULBs. Fundingfrom the Center can be direct to the ULB, or can comethrough the state governments


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Money flow from the Center 12thFinance Commission

The diagram on the lefttaken from the IndiaInfrastructure Reportindicates the criteria usedby States to decide theamount of funds allocatedto various municipalitieswithin the state

Some of the parametersconsidered are size,population, economicstability, income sources


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Current Municipal Finances

Raised

funds

20%

Grants

80%

Salaries

60%

Maintenanc

e

40%


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State of Municipal Finances Despite the existence of the various financing

arrangements described earlier, the previous slideshows that municipal finances are on average in poor

shape Most municipalities rely heavily on grants to fund their

operations and raise only a small percentage of theirexpenses

They are therefore unable to spend adequately oninfrastructure and services

As the graph shows, a large portion of their expenditureis towards paying salaries

Unless municipal governments have greater control overraising money and deploying it, it will be difficult toimprove the urban infrastructure scenario

The 74th CAA and other policy approaches are a step inthis direction


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Municipal Reforms

A Model Municipal Law (MML) has been mooted. Underthis law, municipalities should be granted powers andresponsibilities for the following items: Municipal bodies must have elected representatives and not

nominees

Municipal bodies must have executive powers Guidelines for financial management such as preparing balance

sheets, training on debt limitation policies should be provided.Accounting for different sectors should be maintained separately

Raising funds through taxes

Implementing infrastructure and services Approving small projects Regulatory oversight


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Other reforms E-governance initiatives have been introduced in several

states to make the process of interaction withgovernment easier, and to increase transparency andaccountability of the government

UIDSSMT Urban Infrastructure Development Schemefor Small and Medium Towns was initiated to improveurban infrastructure

JNNURM - Jawaharlal Nehru National Urban RenewalMission was launched recently to enable cities toimprove their urban infrastructure. This program providesboth funding and incentives for improvement


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JNNURM The major themes of JNNURM are Infrastructure

renewal, improved governance and pro-poor

policies The scheme currently covers 63 Cities spread

over 3 Tiers. An outlay of INR 1,00,000 Cr is

envisaged The Infrastructure Mandate extends to the

following public services

Urban transportationWater supply

Sanitation

City beautification and so on


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JNNURM Financing The Ministry of Urban Development can fund projects in

the selected cities under the JNNURM scheme As indicated in the previous slide, the amount of funding

is dependant on the size of the project and the city inquestion

Tier 1 cities will be funded only up to the tune of 50% and willhave to raise the remaining funds by themselves

For Tier 2 cities it is 30% and 10% for Tier 3 cities

This funding is contingent on enacting a set of reforms

Cities are therefore incentivized to raise fundsthemselves and are encouraged to explore the private-public partnership route in this regard


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Mandatory Reforms to be enacted by

States/ULBs in order to be eligible forJNNURM grants

1. Use of Modern accounting systems2. Use of E- governance, GIS

3. Reform of property tax so that ULBs get more revenue

4. Levy of user charges for services

5. ULBs must be made in charge of local infrastructuredelivery

6. Decentralization and implementation of 74th CAA

7. Enactment of a Public disclosure law8. Enactment of a Community participation law

9. Introduction of regulators

10. Repealing of Urban land ceiling acts, rent control etc


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Optional Reforms that need not be enactedimmediately but must be undertaken in thenear future

Streamlining approvals and permitprocedures.

Rainwater harvesting bye laws

Encouraging PPPs

Administrative and structural reforms


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Process for approving projects andobtaining funding under JNNURM

First an overall city development plan is created.

Based on this, a series of detailed project

reports for specific projects are created Based on these projects an MoA under

JNNURM can be signed between the center, thestate and the city for funding contingent onreforms

CDP(RCA)

DPRMoA between

City, Stateand Center


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Preliminary views on JNNURM

Many cities are raising money required throughissuing bonds (e.g. Ahmedabad)

Others are looking at PPP (e.g. Onyx for Solid

Waste Management in Chennai). However suchcases are relatively fewer

Overall Municipal finances are still in pretty

poor shape and the 74th

CAA and other reformshave still not had much effect.


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The Road Ahead SystemicChange is required Mere reforms on paper are not enough

We need to ensure that

Too many agencies do not handle the same sector(no duplication or fragmentation)

Regulator, implementer and policy makers exist andthey are independent

Stakeholders are involved

Capacity is built at Municipal level Performance incentives and org. restructuring are

emphasized

Reforms and Municipal independence are promoted


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There needs to be independence between the policymakers, the implementors and the regulators to ensuretransparent functioning. Overlaps such as those shown

below are not desirable when structuring urban agencies


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Duplication wherein the same service or function isperformed by several bodies, as described in thefigure below is not desirable


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An ideal framework can be the following which is adapted from the

India Infrastructure Report. Fiscal flows are assured, institutions arestrengthened, the public is involved, and services are decentralized


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Thank You

class 7 - urban infrastructure in india

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