Flaws in India’s urbanisation policies
#GS-03 Infrastructure, Urbanisation
Funding of Urbanisation in India
- A World Bank report released in November last year, on financing India’s urban infrastructure needs, focuses on private investments to reduce urban problems.
- 48%, 24% and 15% of the funds needed to fund urban capital expenditures are derived from the central, State, and city governments respectively.
- Meanwhile public–private partnership projects only contribute to 3% and commercial debt to 2%.
- Isher Judge Ahluwalia report says that by 2030, nearly ₹39.2 lakh crore would be required for funding urban infrastructure.
- The 11th Plan estimates a need for ₹1,29,337 crore for the four basic services, ₹1,32,590 crore for housing and₹1,32,590 crore for urban transport.
- The McKinsey report on urbanisation gives an expected expense of $1.2 trillion, or ₹90 lakh crore.
- The World Bank estimates that nearly ₹70 lakh crore ($840 billion) would be needed for investment in urban India to meet the growing demands of the population.
- It also estimates that another $55 billion would be required annually.
- The government measures including the Smart City mission, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Pradhan Mantri Awas Yojana (PMAY), etc., amount for no more than ₹2 lakh crore which is distributed for a period of five years.
What can be done
- Cities must create a buoyant revenue base and be able to recover the cost of providing its services.
- This means increasing property taxes, user fees and service charges and other avenues of income generation.
- Instead of a top down method, plans for urban development must be made from below by engaging with the people and identifying their needs.
- Regular elections to the municipal councils should be held in cities and there must be empowerment through the transfer of the three Fs: finances, functions, and functionaries.
K.C. Sivaramakrishnan Taskforce suggested measures such as
- empowering the people,
- transferring subjects to the city governments,
- 10% of the income-tax collected from cities be given back to them and
- ensuring that this corpus fund was utilised solely for infrastructure building.
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