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Monday, 14 March 2011 00:00
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The first set of numbers are truly flattering, that India’s urban population will grow three-fourths in the next two decades, that 75% of India’s GDP will come from urban areas, that 70% of new jobs will get created here, that the difference between urban and rural salaries alone will result in a huge jump in India’s GDP, that India will create as many new cities in the next two decades as it has in the last several hundred years… You can almost hear the concrete mixers buzzing and see the crane becoming India’s national bird too.

Once you get over the initial buzz, the figures get a bit daunting: where will these people live and what happens to the cities when already a fourth of those living in them do so in slums (half in the case of bigger cities like Mumbai and Faridabad). The Isher Ahluwalia-chaired High Powered Expert Committee for Estimating the Investment Requirements for Urban Infrastructure Services, just out last week, puts much of this in perspective when it tells you just how much urban India isn’t working.

4,861 out of 5,161 cities/towns don’t have even a partial sewerage network (and all of you just went around singling out Gurgaon)l Less than 20% of the road network is covered by storm water drains (happy monsoons!)

l Lack of waste water treatment leads to $15 bn of spending each year on treating water-borne diseases (remember the President’s speech that just 103 habitations don’t have safe drinking water?!)

About 40% of the investment required is to meet the current unmet urban demand for services.

Imagine how bad things will be once you put in three-fourths more people in the same space, most of whom are getting more prosperous by the day—between 1951 and 2004, while the road network grew 8 times, the motor vehicle population rose 100 times; and that’s before the boom in vehicle ownership took place!

The Ahluwalia Committee’s job was to cost the urban development (R39.2 lakh crore over 20 years and an additional R19.9 lakh crore for O&M)—investment in cities needs to rise from 1.6% of GDP today to 2.1% of GDP in another two decades.

And then to figure out ways to finance this. Since the government already has an ambitious Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which is aimed at ensuring Indian cities make the kind of reforms needed, one of the things the Committee did was to evaluate its performance—an amount of R66,000 crore has been spent on it so far. After saying a major achievement of JNNURM has been to highlight the urban agenda of reforms, the Committee concludes “notwithstanding excellent results in some cities (they’re truly excellent, so read the report), the Mission has more generally exposed the lack of capacity at the local government level to prepare and implement projects in urban infrastructure … progress in implementing reforms under the JNNURM has been slow”—just 8 cities have been, for instance, able to charge enough to even cover their O&M costs for supplying water.

One of the points the report makes is that the reforms promised under the JNNURM are generally back-loaded (money now, reforms later) … so the government has been reluctant to hold back money for projects even when the promised reform never happened as this would mean leaving an investment incomplete!

Having reached this conclusion, the Committee then makes a pitch for what it calls a New Improved JNNURM (NIJNNURM), with a specific component for capacity building and with more service-level indicators, among others. It is not immediately clear why a JNNURM, even if new and improved should work when the old one didn’t, but the Committee has some good reasons for this. It points to how cities have been treated in a completely step-motherly manner, whether in terms of the funding available to them (if states can get an automatic share of central taxes, why can’t cities which generate the bulk of these taxes?), making plans for how to develop the city (today, politicians, with their eyes on rural votes make plans for cities)—a great chart on Bangalore shows 3 bodies are in charge of planning and land development, another 3 for city roads and about two each for things like water supply and sewerage.

So, the Committee concludes, genuine devolution of power to cities is critical if urban India isn’t going to become one giant Dharavi—that we are nowhere near doing this is obvious when you look at the football being played with Hyderabad and its future, or Delhi for that matter where the chief minister isn’t in control over many critical functions including what property tax rates should be (these have to be ratified by the Lieutenant Governor who is an appointee of the Central Government). In which case, here’s a suggestion: by all means, let’s go ahead with a NIJNNURM, but let’s not operationalise it till the genuine devolution takes place—else, as in the case of the JNNURM, politicians and bureaucrats will feel compelled to spend the money even without the reforms taking place, if only to fill up the ‘action taken’ column of some budget report.

It would also be interesting for the NIJNNURM to learn from the World Bank’s experience in lending to the energy sector. By the early 2000s, the Bank had a portfolio of $500 mn, the loans all given in return for a Bank-prescribed reforms agenda. By 2002, the Bank realised no states were doing any reforms, perhaps the amounts given as loans weren’t big enough to make a difference; for three to four years, the Bank stopped lending. By 2005, it was back, but with a difference—this time, it went in for reforms the states were prepared to do, all the Bank did was to get the states to commit to what they felt was possible and then examined whether it would like to give a loan.

Today, the Bank’s portfolio of power loans is $5bn.\

If various politicians are willing to do what the Committee recommends, that’s wonderful since the suggestions made are very important as many members of the Committee, such as Ramesh Ramanathan of Janaagraha, even have hands-on experience of revamping urban governance. The Committee does well to draw upon the 74th Amendment to the Constitution that was brought in to create the necessary political space for local governments in 1992, but has not really been implemented in the last two decades. The bottom line, however, is that if just 35% of urban India continues to vote, there’s only a small chance India’s politicians will give it the space it needs, a 14% chance (that’s the 35% voting-share multiplied by urban India’s projected 40% population-share in another two decades) on the outside! Odds that most betting men will balk at.

 

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