JNNRM&Reform Framework Overview RTP MOD

8/12/2019 JNNRM&Reform Framework Overview RTP MOD

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JNNURM Rapid Training Programme Governance & Reforms

I. JnNURM Overview and Reform Framework

Page #.

Foreword 2

1. Urbanization Trends 3

2. JnNURM An Overview 7

3. Reform Framework 17

4. Implementation of the 74th

Consti tut ional Amendment Act (S1) 18

5. Integration of City Planning and Delivery Functions (S2) 24

6. Rent Control Reforms (S3) 25

7. Rationalization of Stamp Duty (S4) 27

8. Administrative Reforms (O8) 29

9. Structural Reforms (O9) 31

Centre for Good Governance Administrative Staff College of India1


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Foreword

With urbanization and growth of cities, there is need and urgency for better governance. Urban

governance is no more limited to provision of infrastructure and operation of civic services.

Conventional methods of governance with top-down approaches are considered inadequate,inappropriate and restrictive. Good urban governance is characterized by sustainability, equity and

efficiency, transparency and accountability, civic engagement, security development of partnerships,

etc. Livability, competitiveness and bankability are the other features of a modern city. There is a

need for prudent and efficient financial and asset management to increase their capacity to facilitate

market borrowing for investment in city development. Keeping these emerging challenges of 21st

century, the Government of India launched Jawaharlal Nehru National Urban Renewal Mission with

three interrelated and complimentary components governance, infrastructure development and

provision of basic services to poor. Implementation of governance reforms like enactment of

community participation and public disclosure laws, earmarking of funds for poverty alleviation by

local bodies, levy and collection of user charges, simplification of procedures, etc., in identified areas

is a precondition for accessing funds under JnNURM. The Mission was launched in 2005 and has a

timeframe of seven years.

The Ministry of Urban Development, GoI has initiated a Capacity Building Program to all municipal

functionaries mayors, chairpersons, councilors, commissioners and executive officers, engineers,

town planners, project officers, etc., who are responsible to implement the project to bring an

awareness on the need, significance and urgency of implementation of reforms to improve civic

management as well as the quality of life of civic communities. The objectives of the programme are:

Awareness building and understanding on the context, mission, objectives and significance of

reforms and expected impact on the city;

To develop political will and administrative commitment;

Explain their roles and responsibilities in initiation and implementation of reforms and

projects relating to infrastructure and basic services to the poor To develop ownership and positive attitude towards the programme, and

To create an enabling environment & managerial capabilities to accelerate and manage

change.

The capacity building programmes are organized jointly by the Administrative Staff College of India

and Center for Good Governance with the support of Ministry of Urban Development, Government of

India. The training material, developed and prepared by CGG and ASCI, is presented in six volumes

each of which dealing with a set of reforms. This volume deals with urbanization trends and an

overview of JnNURM covering the context, the mission and objectives, process, admissible

components, financing pattern, and list of eligible cities. It also covers four important reforms viz.

Implementation of 74th

Constitution Amendment Act, 1992 (S 1),

Integration of City Planning and Delivery Functions (S 2), Rent Control Reforms (S 3),

Rationalisation of Stamp Duty (S 4),

Administrative Reforms (O 8), and

Structural Reforms (O 9)

Under each reform current scenario, objectives and suggestions for implementation of reforms are

discussed. We hope the material presented in six volumes will help the municipal functionaries in

understanding the context of reforms and taking them forward with a view to ensure their impact on

the city and the community with in the Mission period. It is also hoped that implementation of these

reforms make the cities participative, financially vibrant, transparent and accountable, sustainable and

livable. Every effort has been made to ensure that the material and data presented is correct and

authentic. We take the responsibility for mistakes that may have crept in inadvertently.

Centre for Good Governance Administrative Staff College of India



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I. JNNURM OVERVIEW AND REFORM FRAMEWORK

1. Urbanization Trends

1.1 The twenty-first century is being characterized as the first Urban Centurywith a majority ofworld population living in cities. India, the second largest urban system in the world, is witnessingincreased pace of urbanization and growing importance of cities in national economy anddevelopment contributing over two-thirds of gross domestic product. Its urban population increasedfrom 26 million to 285 million and from 10 percent to 28 percent during 1901 and 2001.It is the secondlargest urban system in the world with an urban population of over 300 million and 35 metropolises.Cities are the engines of national economic growth and generators of wealth. The projections indicatethat by the middle of this century, the country would become more urban more than fifty percent ofits people loving in cities and towns.

1.2 Gujarat, Maharashtra and Tamil Nadu are the most urbanized states in the country andHimachal Pradesh least urbanized. With a few exceptions the regional pattern of urbanization is quitestable over the past few decades. The western and southern states are relatively more urbanized than

northern, central and eastern states. All four southern states, Maharashtra and Gujarat of west,Punjab of north and West Bengal of east have urbanization levels higher than the national average.

1.3 Urban population growth is the results of natural increase, rural to urban migration,reclassification, and boundary changes of the existing urban areas. As per the SRS data, naturalincrease during 1991-2001 was almost 55 percent and the remaining growth is due to rural to urbanmigration, reclassification or boundary changes.

Distribution by Size Class1.4 A significant feature of Indias urbanization is the growth of Class I cities, stagnation of ClassII and III cities and decline of Class IV, V and VI towns. As per 2001 census more than two-thirds ofthe urban population live in Class I cities. In each size class there are some fast growing cities andtowns and some slow growing. The emergence and dominance of metropolitan cities is a challenging

aspect of Indias urbanization. In 1901 Calcutta was the only city with more than a million population,but the number increased to 35 by 2001. The metropolitan cities together absorb about 11 percent oftotal population and 38 percent of urban population of the country. One significant aspect ofmetropolitan growth is their spatial spread contributing to balanced urban growth. To day Mumbai isthe most populous city in the country followed by Kolkata, Chennai and Delhi.

Governing Cities1.5 Urbanization is inevitable and needs to be considered as a positive aspect in nationaldevelopment. Projections indicate that by 2026 Indias population would be around 140 crores ofwhich about 34 percent or about 47 crores would be urban. Some projections also indicate that theurban population may even cross forty percent. The number of metros is expected to reach 75. Bettergovernance of cities should accompany such an urban growth.Growing urbanization makes the scaleand complexity of urban governance daunting. The 74th Constitution Amendment Act, 1992 and thelaunching of the Jawaharlal Nehru National Urban Renewal Mission in 2005 are significant initiativesto make urban local bodies as institutions of self-governance and to improve their governance.

Good Urban Governance1.6 Urban governance in the past, was equated with urban management i.e., operation of civicservices and provision of infrastructure. Discussions on urban governance tended to be state-centricand are mostly silent on local governments. Conventional methods of governing the city with top downapproaches have proved to be restrictive and inadequate. There has been an increasing demand foravenues for participation in urban governance and to increase transparency in civic management,modernize administration, improve service delivery, etc. The need and significance of to adopt newsystems and methods of governing the cities that are inclusive and facilitate active and effectiveparticipation of stakeholders is being increasingly realized. There is also a realization that the existingcapacity of the urban local bodies is limited and need to be substantially and systematically enhanced.Only this will contribute to good urban governance.



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1.7 Good urban governance is characterized by several criteria - sustainability, subsidiary equity,efficiency, transparency and accountability, civic engagement, and lastly security. Good urbangovernance contributes to sustainable urban development. It brings civil society, private lector, etc.,into a political process. Sustainable cities have four important characteristics viz., good governance,liveability, and competitiveness and bankability. Through good governance, urban local bodies can

develop competitiveness, make the city livable and through prudent and efficient financial and assetmanagement, increase their rating to facilitate market borrowings for investment on city development.

1.8 Because of the critical importance of cities in national development, efforts are being madeduring the last two decades to improve urban governance. The passage of 74th ConstitutionAmendment Act in 1992 was the first step. This was followed by several urban governance reformsin the states. Launching of Jawaharlal Nehru National Urban Renewal Mission (JnNURM) - aprestigious programme for promoting reforms and investments in select 63 cities - by the Governmentof India (GOI) in 2005, has brought a paradigm shift in urban development strategy. Similarly, the GoIlaunched two other programmes Urban Infrastructure Development Scheme for Small and MediumTowns (UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP) for non-mission cities. These Programmes also have mandatory reform component.

Excerpts of Speech by Dr. Manmohan Singh- Honble Prime Minister of India Launching the JnNURM

1.9 With urbanization comes the need to invest in infrastructure and to improve the quality of lifein our cities. Rapid urbanization has not only outpaced infrastructure development, but has alsobrought in its train a terrible downside - the downside of proliferating slums, the downside ofincreasing homelessness, the downside of growing urban poverty and crime, of relentless march ofpollution and ecological damage. This gives you an idea of the massive challenge that lies ahead.

1.10 This Mission is the single largest initiative of the Government of India for a planneddevelopment of our cities. It responds to the long-standing demand for tapping the vast potential andvitality of our cities.

1.11 To improve urban infrastructure and provide urban services for the poor, we need urgentlyurban governance reform. I am happy that this Mission has been structured with a clear focus onthese two important components urban infrastructure and basic services to the urban poor, withgovernance reform as an overarching third component.

1.12 The Jawaharlal Nehru National Urban Renewal Mission is a city-based programme. It willseek to build the capacity of our cities for management. Cities have the financial muscle and thetechnical resources to rebuild themselves. We see the governance reform-related proposal in theMission for a participation law and a disclosure law, as enabling the cities to locate the needed humanand financial resources for improving its services. This is a major reform for the governance of ourcities.

1.13 Cities need to develop a long-term planning framework. The Planning Commission and theMinistries, in consultation with States, have developed an agenda of reform to persuade urban localbodies to look ahead. All previous efforts in city planning have been limited by a narrow-focusedproject approach. The problems of inadequate service and infrastructure levels, of inadequateinvestment in them, and the non-availability of adequate land and housing are much deeper. Our legalsystems, our systems of work and procedures, and the inability of local bodies to effectively use theirpowers and responsibilities, make it difficult to deal with the many problems facing our cities.

1.14 The Jawaharlal Nehru National Urban Renewal Mission addresses the problems of law,systems and procedures reform and aims to align them to the contemporary needs of our cities andtowns. The Mission seeks to do away with those statutes that inhibit the functioning of land andhousing markets; it seeks to bring in those improvements that will enable the city-level institutions tobecome financially strong and viable and our development programmes relating to the removal ofpoverty becoming increasingly bankable.

1.15 This Urban Renewal Mission is designed to assist city governments in improving property taxcollection and bring user charge to the levels that cover at least operating and maintenance costs and



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change their accounting methods. The Mission is meant to bring in transparency in local budgetmaking, as also a higher degree of community participation in decision-making processes.

1.16 The success of the Mission will depend on its ability to enlist the support of a large number ofpartners and stakeholders. There is no shortage of finance in the infrastructure sector, especially if we

seek public-private partnerships. I hope our State and local Government authorities will be able todraw up programmes that can attract financial support from outside Government as well.

1.17 The Mission has to walk on two legs of improved urban infrastructure and improved urbanbasic services. The role of governance reform in the Mission should be to catalyze a process thatenables both these to move forward.

1.18 I am happy that among the list of cities being covered initially, there are some that areimportant from the point of view of our national heritage, tourism potential and religiouspilgrimage It would be a challenge before this Mission to see that these cities are restored to theirhistorical glory.

1.19 I have great pleasure in launching this Mission. Like many Indians living in our cities, I look

forward to it with great hope.

Excerpts of Speech by Shri. S. Jaipal Reddy- Hon'ble Minister of Urban Development, Government of India

1.20 This Mission is an ambitious plan conceived by the Government of India for integrated andplanned development of cities in a focused manner.

1.21 ... Quite clearly, the cities and towns of emerging India, which is in the midst offundamental economic restructuring, will play a pivotal role as centres of economic activity, competingwith each other to attract global investment, capital and business. The Government of India, the StateGovernments and the city administrations have to, therefore, work together to provide the enablingsupport systems, including infrastructure and services, which will help the cities and towns realize

their full potential.

1.22 Under this revised strategy of urban renewal, assistance to the cities is linked to theimplementation of reforms, which basically aim at improving the efficiency of services provided in thecities, removing constraints on the exploitation of land as a resource and in turn enabling the urbanlocal bodies to improve their financial condition. They are expected to become vibrant and financiallysound entities that function as efficient instruments of city governance. In this manner, the strategywill also ensure that assets created are operated and managed efficiently and become sustainableover a period of time.

1.23 I wish to emphasize before this august gathering that JnNURM is merely a platform beingprovided by the Central Government to the States and Urban Local Bodies (ULBs) for improving theurban infrastructure. Therefore, active involvement and support of the State governments and ULBsis essential in this endeavor. Only through a combined effort of all of us, will it be possible to achievethis gigantic task.

1.24 I am quite conscious of the capacity constraints of the ULBs, particularly now that they wouldbe required to play a major role in the implementation of the Urban Renewal Mission. Therefore,capacity building has to be a thrust area of our strategy. We will provide all the feasible assistance inthe form of infrastructure support, resource persons and funding for capacity building efforts of theULBs. I also wish to bring to the notice of the Honble Chief Ministers, Mayors, and MunicipalCommissioners that JnNURM permits preparation of City Development Plans and Detailed ProjectReports with the assistance of outside experts, for which purpose financial assistance up to amaximum of 5% of the project cost will be provided from the funds of the Mission. This should helpthe ULBs in the initial stages, till they are able to acquire in-house expertise for this task.

1.25 We believe that public participation is essential to improve the credibility of any organization,particularly the ULBs, which provide essential services to the residents of a city. For this purpose, Iwould like to submit for the consideration of Honble Chief Ministers to set up a Task Force or an



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Advisory Group to collectively understand the problems of the urban phenomenon and advise theState governments and city administrations to adopt appropriate strategies and programmes toresolve these in a productive and equitable manner. Needless to say, this group should have therequisite expertise and experience of the sector and also knowledge about how other developedcountries are handling the urban transition. This group could also include representatives from the

civil society, which could provide useful inputs on the problems faced and perceived needs andaspirations of the citizens. Such a structured arrangement will also provide a good interface betweenthe government and the citizens and help us address the challenges faced by the cities.

1.26 In conclusion, I will only like to assure you once again that the Government of India is fullycommitted to work with the State governments in developing city-specific strategies and interventionsnecessary to improve the urban governance and provide resources required for the same. I trust theJawaharlal Nehru National Urban Renewal Mission will result in providing the citizens a betterenvironment to live, work and invest in cities and towns. I solicit your full cooperation and support forsuccessful implementation of the Mission.



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2. nNURM - An Overview

Background

Need for Urban Sector Development 2.1 According to the 2001 census, India has a population of 1027 million with approximately28per cent or 285 million people living in urban areas. As a result of the liberalization policies adoptedby the Government of India is expected to increase the share of the urban population may increase toabout 40 per cent of total population by the year 2021. It is estimated that by the year 2011, urbanareas would contribute about 65 per cent of gross domestic product (GDP). However, this higherproductivity is contingent upon the availability and quality of infrastructure services. Urban economicactivities are dependent on infrastructure, such as power, telecom, roads, water supply and masstransportation, coupled with civic infrastructure, such as sanitation and solid waste management.

Investment Requirements in the Urban Sector2.2 It is estimated that over a seven-year period, the Urban Local Bodies (ULBs) would require a

total investment of Rs. 1,20,536 crores. This includes investment in basic infrastructure and services,that is, annual funding requirement of Rs. 17,219 crores. It is well recognised that in order to fructifythese investments, a national level initiative is required that would bring together the StateGovernments and enable ULBs catalyze investment flows in the urban infrastructure sector. Table 1shows the investment requirement in urban sector.

Table 1UrbanSector Investment Requirement

(Rs. crores)

Category Number ofCities

InvestmentRequirement(over 7 years

starting 2005-06)

Annual FundsRequirement

Cities with over 4 million population 7 57,143 8163.3

Cities with 1-4 million population 28 57,143 8613.3

Selected Cities with less than 1million population 28 6,250 892.9

Total 63 1,20,536 17219.5

Need for Reform Initiatives

Harnessing the Potential of Reforms in Urban Infrastructure2.3 While several reform initiatives have been taken up, e.g. the 74th Constitutional AmendmentAct and model municipal law, there is potential for further reform-oriented steps in order to meet thedevelopment objectives. Reform initiatives also need to be taken further and articulated by the StateGovernments in order to create an investor-friendly environment.

Need for National-Level Reform-Linked Investments2.4 There is a need to integrate the reform initiatives and scale up the effort to catalyzeinvestment in urban infrastructure across States in the country. There is a felt need to set up aninitiative that will provide reform-linked assistance to State Governments and ULBs in the country.

Need for Sustainable Infrastructure Development 2.5 Another crucial aspect requiring immediate attention is that physical infrastructure assets

created in urban areas have generally been languishing due to inadequate attention and/or improperO&M. The fiscal flows to the sector have laid emphasis only on the creation of physical assets. Notmuch effort has been made either to manage these assets efficiently or to achieve self-sustainability.It is therefore necessary that a link be established between asset creation and management, as both



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are important components for ensuring sustained service delivery. This is proposed to be securedthrough an agenda of reforms.

Need for Efficiency Enhancement2.6 Concurrent with statutory reforms, such as the enactment of a model municipal law, reduction

in stamp duty, repeal of the Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) etc, there is anurgent need to take measures to enhance efficiencies in urban service deliveries.

Rationale for the JnNURM

National Common Minimum Programme of the Government of India2.7 The National Common Minimum Programme attaches the highest priority to the developmentand expansion of physical infrastructure. Accordingly, it is proposed to take up a comprehensiveprogramme of urban renewal and expansion of social housing in towns and cities, paying attention tothe needs of slum dwellers.

Commitment to Achieving the Millennium Development Goals2.8 The Millennium Development Goals commit the international community, including India, to

an expanded vision of development as a key to sustaining social and economic progress. As a part ofits commitment to meet the Millennium Development Goals, the Government of India proposes to: (i)facilitate investments in the urban sector; and (ii) strengthen the existing policies in order to achievethese goals.

Need for a Mission-led Initiative2.9 Since cities and towns in India constitute the second largest urban system in the world, andcontribute over 50 per cent of the countrys GDP, they are central to economic growth. For the citiesto realise their full potential and become effective engines of growth, it is necessary that focusedattention be given to the improvement of infrastructure.

Jawaharlal Nehru National Urban Renewal Mission

Mission Statement2.10 The aim is to encourage reforms and fast track planned development of identified cities.Focus is to be on efficiency in urban infrastructure and service delivery mechanisms, communityparticipation, and accountability of ULBs/ Parastatal agencies towards citizens.

Objectives of the Mission2.11 The objectives of the JnNURM are to ensure that the following are achieved in urban sector:(i.) Focused attention to integrated development of infrastructure services in cities covered under the

Mission(ii.) Establishment of linkages between asset-creation and asset-management through a slew of

reforms for long-term project sustainability(iii.) Ensuring adequate funds to meet the deficiencies in urban infrastructural services(iv.) Planned development of identified cities including peri-urban areas, outgrowths and urban

corridors leading to dispersed urbanization(v.) Scale-up delivery of civic amenities and provision of utilities with emphasis on universal access to

the urban poor(vi.) Special focus on urban renewal programme for the old city areas to reduce congestion; and(vii.) Provision of basic services to the urban poor including security of tenure at affordable prices,

improved housing, water supply and sanitation, and ensuring delivery of other existing universalservices of the government for education, health and social security.

Scope of the Mission2.12 The Mission shall comprise two Sub- Missions, namely:

Sub-Mission for Urban Infrastructure and Governance:This will be administered by the Ministry ofUrban Development through the Sub- Mission Directorate for Urban Infrastructure and Governance.The main thrust of the Sub-Mission will be on infrastructure projects relating to water supply andsanitation, sewerage, solid waste management, road network, urban transport and redevelopment of



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old city areas with a view to upgrading infrastructure therein, shifting industrial and commercialestablishments to conforming areas, etc.

Sub-Mission for Basic Services to the Urban Poor:This will be administered by the Ministry of UrbanEmployment and Poverty Alleviation through the Sub-Mission Directorate for Basic Services to the

Urban Poor. The main thrust of the Sub-Mission will be on integrated development of slums throughprojects for providing shelter, basic services and other related civic amenities with a view to providingutilities to the urban poor.

Strategy of the Mission2.13 The objectives of the Mission shall be met through the adoption of the following strategy:

Preparing City Development Plan:Every city will be expected to formulate a City Development Plan(CDP) indicating policies, programmes and strategies, and financing plans.

Preparing Projects:The CDP would facilitate identification of projects. The Urban Local Bodies (ULBs)/ para-statal agencies will be required to prepare Detailed Project Reports (DPRs) for undertakingprojects in the identified spheres. It is essential that projects are planned in a manner that optimizes

the life-cycle cost of projects. The life-cycle cost of a project would cover the capital outlays and theattendant O&M costs to ensure that assets are in good working condition. A revolving fund would becreated to meet the O&M requirements of assets created, over the planning horizon. In order to seekJNNURM assistance, projects would need to be developed in a manner that would ensure anddemonstrate optimization of the life-cycle costs over the planning horizon of the project.

Release and Leveraging of Funds:It is expected that the JnNURM assistance would serve to catalyzethe flow of investment into the urban infrastructure sector across the country. Funds from the Centraland State Government will flow directly to the nodal agency designated by the State, as grants-in-aid.The funds for identified projects across cities would be disbursed to the ULB/Parastatal agencythrough the designated State Level Nodal Agency (SLNA) as soft loan or grant-cum-loan or grant. TheSLNA / ULBs in turn would leverage additional resources from other sources.

Incorporating Private Sector Efficiencies: In order to optimize the life-cycle costs over the planninghorizon, private sector efficiencies can be inducted in development, management, implementation andfinancing of projects, through Public Private Partnership (PPP) arrangements.

Duration of the Mission2.14 The duration of the Mission would be seven years beginning from the year 2005-06.Evaluation of the experience of implementation of the Mission would be undertaken before thecommencement of Eleventh Five Year Plan and if necessary, the program calibrated suitably.

Expected Outcomes of the JnNURM2.15 On completion of the Mission period, it is expected that ULBs and para-statal agencies willhave achieved the following:(i.) Modern and transparent budgeting, accounting, financial management systems, designed and

adopted for all urban service and governance functions(ii.) City-wide framework for planning and governance will be established and become operational(iii.) All urban residents will be able to obtain access to a basic level of urban services(iv.) Financially self-sustaining agencies for urban governance and service delivery will be established,

through reforms to major revenue instruments(v.) Local services and governance will be conducted in a manner that is transparent and accountable

to citizens(vi.) E-governance applications will be introduced in core functions of ULBs/para-statal resulting in

reduced cost and time of service delivery processes.

Assistance under JnNURM

Financial Assistance under JnNURM2.16 The Government of India has proposed substantial assistance through the JnNURM over theseven-year period. During this period, funds shall be provided for proposals that would meet theMissions requirements. Under JnNURM financial assistance will be available to the ULBs and



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parastatal agencies, which could deploy these funds for implementing the projects themselves orthrough the special purpose vehicles (SPVs) that may be expected to be set up. Assistance underJNNURM is additional central assistance, which would be provided as grant (100 per cent centralgrant) to the implementing agencies. Further, assistance from JNNURM is expected to facilitatefurther investment in the urban sector. To this end, the implementing agencies are expected to

leverage the sanctioned funds under JNNURM to attract greater private sector investments throughPPP that enables sharing of risks between the private and public sector.

Areas of Ass istance under JnNURM2.17 Assistance for Capacity Building, City Development Plan (CDP), Detailed Project Reports(DPRs), Community Participation, Information, Education and Communication (IEC). The JNNURMwill provide assistance for the above-stated components with a provision of 5 per cent of the totalcentral assistance or the actual requirement which ever is less. In Addition, not more than 5 percent ofthe Central grant or the actual requirement, whichever is less may be used for Administrative andOther Expenses (A&OE) by the States For capacity building, ULBs and para-statal agencies couldengage consultants, in consultation with the SLNA, and seek reimbursement from the Ministry ofUrban Development (MoUD) of the Ministry of Urban Employment and Poverty Alleviation (MoUEPA).

Investment Support Component2.18 Investment support will be provided to implementing agencies on a project-specific basis foreligible sectors and projects proposed to be undertaken in eligible cities subject to approval of theCentral Sanctioning and Monitoring Committee (CSMC) of MoUD/ MoUEPA. As part of the processfor seeking investment support, each ULB seeking assistance from the JNNURM would be required toprepare a CDP that shall inter alia include strategy to implement reforms, city-level improvements andan investment plan to address the infrastructure needs in a sustainable manner. Assistance underinvestment support can be deployed in the following forms:(i.) Enhancing Resource Availability: The JNNURM assistance can be used to leverage additional

resources available with the ULBs in addition to their existing resources and transfers from theState. These resources could be utilized for capital investment and O&M investments in a project.

(ii.) Enhancing Commercial Viability of Projects: In respect of projects, which are not Commerciallyviable on a stand-alone basis, assistance under the JNNURM may be sought for enhancing

project viability. This assistance could be in the nature of viability gap support to projects.(iii.) Ensuring Bankability of Projects: Cash flows of infrastructure projects having long gestation

periods are susceptible to variations in cash flows, rendering a project non-bankable. To enhancepredictability of underlying cash-flows, credit enhancement mechanisms such as establishingliquidity support mechanisms, up-front debt-service reserve facility, deep discount bonds,contingent liability support and equity support are required in order to make the projects bankable.The JNNURM assistance could therefore be used for funding such support mechanisms.

Cities, Sectors and Projects eligible for Assis tance under the JnNURM2.19 The JnNURM shall give assistance for infrastructure development in the eligible cities/ UrbanAgglomerations (UAs) (refer Annex) across States in the country. These cities/ UAs have beenselected based as per the following criteria:(i.) Cities/ UAs with 4 million plus population as per 2001 census(ii.) Cities/ UAs with 1 million plus but less than 4 million population as per 2001 census(iii.) Selected Cities/ UAs (State Capitals and other cities/ UA of religious/historic and tourist

importance)The cities should have elected bodies in position .

2.20 The Sectors and Projects eligible for Assistance under the Sub-Mission Directorate for UrbanInfrastructure and Governance are:(i.) Urban renewal, that is, redevelopment of inner (old) city areas [including widening of narrow

streets, shifting of industrial and commercial establishments from non-conforming (inner city)areas to conforming (outer city) areas to reduce congestion, replacement of old and worn outpipes by new and higher capacity ones, renewal of the sewerage, drainage, and solid wastedisposal system etc.];

(ii.) Water supply (including desalination plants) and sanitation.(iii.) Sewerage and solid waste management.(iv.) Construction and improvement of drains and storm water drains.(v.) Urban transportation including roads, highways, expressways, MRTS, and metro projects.



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(vi.) Parking lots and spaces on PPP basis.(vii.) Development of heritage areas(viii.) Prevention and rehabilitation of soil erosion and landslides only in cases of special category

States where such problems are common; and(ix.) Preservation of water bodies.

NOTE: Land cost will not be financed except for acquisition of private land for schemes and projectsin the North Eastern States and hilly States, namely Himachal Pradesh, Uttaranchal and Jammu andKashmir

2.21 The Sectors and Projects eligible for Assistance under the Sub-Mission Directorate for BasicServices to the Urban Poor.(i.) Integrated development of slums, housing and development of infrastructure projects in slums in

the identified cities.(ii.) Projects involving development, improvement, and maintenance of basic services to the urban

poor.(iii.) Slum improvement and rehabilitation of projects.(iv.) Projects on water supply, sewerage, drainage, community toilets, and baths etc.(v.) Projects for providing houses at affordable cost for slum dwellers, urban poor, economically

weaker sections (EWS) and lower income group (LIG) categories.(vi.) Construction and improvement of drains and storm water drains.(vii.) Environmental improvement of slums and solid waste management.(viii.) Street lighting.(ix.) Civic amenities like community halls, child care centres etc.(x.) Operation and Maintenance of assets created under this component.(xi.)Convergence of health, education and social security schemes for the urban poor

NOTE: Land cost will not be financed except for acquisition of private land for schemes and projectsin the North Eastern States and hilly States, namely Himachal Pradesh, Uttaranchal and Jammu andKashmir.

Inadmissible Components for JnNURM Assis tance

2.22 The Projects pertaining to the following are not eligible for JnNURM assistance:(1) Power, (2) Telecom, (3) Health, (4) Education, (5) Wage employment programme and staffcomponents, and (6) Creation of fresh employment opportunities

Agenda of Reforms2.23 The thrust of the JnNURM is to ensure improvement in urban governance and servicedelivery so that ULBs become financially sound and sustainable for undertaking new programmes. Itis also envisaged that, with the charter of reforms that are followed by the State governments andULBs, a stage will be set for PPPs. The agenda of reforms is given in the section below. The NationalSteering Group (NSG) may add additional reforms to identified reforms. A Memorandum ofAgreement (MoA) between States/ULBs/Para-statal agencies and the Government of India, aprerequisite for accessing the Central assistance, would spell out specific milestones to be achievedfor each item of reform. All mandatory and optional reforms shall be completed within the Missionperiod.

Mandatory Reforms at Local Government level2.24 The following are Mandatory Reforms at the Level of ULBs and Para-statal Agencies:(i.) Adoption of modern accrual-based double entry system of accounting in ULBs and para-statal

agencies.(ii.) Introduction of a system of e-governance using IT applications, such GIS and MIS for various

services provided by ULBs and parastatal agencies.(iii.) Reform of property tax with GIS. It becomes a major source of revenue for ULBs and

arrangements for its effective implementation so that collection efficiency reaches at least 85 percent within next seven years.

(iv.) Levy of reasonable user charges by ULBs and Para-statals with the objective that the full cost ofO&M or recurring cost is collected within the next seven years. However, cities and towns in theNorth East and other special category States may recover only 50 per cent of O&M chargesinitially. These cities and towns should graduate to full O&M cost recovery in a phased manner.

(v.) Internal earmarking, within local bodies, budgets for basic services to the urban poor.



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(vi.) Provision of basic services to the urban poor including security of tenure at affordable prices,improved housing, water supply and sanitation. Delivery of other existing universal services of thegovernment for education, health and social security is ensured.

2.25 The following are Mandatory Reforms at the Level of States:

(i.) Implementation of decentralisation measures as envisaged in 74th Constitutional AmendmentAct. The State should ensure meaningful association and engagement of ULBs in planning thefunction of para-statal agencies as well as the delivery of services to the citizens.

(ii.) *Repeal of ULCRA.(iii.) *Reform of Rent Control Laws balancing the interests of landlords and tenants.(iv.) Rationalisation of Stamp Duty to bring it down to no more than 5 per cent within next seven years.(v.) Enactment of the Public Disclosure Law to ensure preparation of medium-term fiscal plan of ULBs

and para-statal agencies and release of quarterly performance information to all stakeholders.(vi.) Enactment of the Community Participation Law to institutionalize citizens participation and

introduce the concept of the Area Sabha in urban areas.(vii.) Assigning or associating elected ULBs with city planning function. Over a period of even

years, transferring all special agencies that deliver civic services in urban areas to ULBs andcreating accountability platforms for all urban civic service providers in transition.

* Note: In respect of people oriented schemes relating to water supply and sanitation, the under-mentioned State level mandatory reforms may be taken as optional reforms:b) Repeal of Urban Land Ceiling and Regulation Act, c) Reform of Rent Control Act

Optional Reforms2.26 The following are Optional Reforms common to States, ULBs and Para-statal Agencies:(a) Revision of byelaws to streamline the approval process for construction of buildings, developmentof site etc.(b) Simplification of legal and procedural frameworks for conversion of land from agricultural to non-agricultural purposes.(c) Introduction of Property Title Certification System in ULBs.(d) Earmarking at least 20-25 per cent of developed land in all housing projects (both public and

private agencies) for EWS and LIG category with a system of cross subsidisation.(e) Introduction of computerised process of registration of land and property.(f) Revision of byelaws to make rainwater harvesting mandatory in all buildings and adoption of waterconservation measures.(g) Byelaws for reuse of recycled water.(h) Administrative reforms i.e. reduction in establishment costs by adopting the Voluntary RetirementScheme (VRS), not filling posts falling vacant due to retirement etc., and achieving specifiedmilestones in this regard.(i) Structural reforms.(j) Encouraging PPP.Note: Cities under the JnNURM will have the freedom to opt for any two reforms from the optionalcategory in each year of implementation.

Table 2 gives the list of identified cities under JnNURM.

Table 2List of Identified Cities Eligible for JnNURM

Category A Category B Category C*

Mega Cities/ UAs Million plus Cities/ UAs Cities/ UAs with less than onemillion population

(1) Delhi (1) Patna (1) Guwahati(2) Greater Mumbai (2) Faridabad (2) Itanagar(3) Ahmedabad (3) Bhopal (3) Jammu(4) Bangalore (4) Ludhiana (4) Raipur

(5) Chennai (5) Jaipur (5) Panaji(6) Kolkata (6) Lucknow (6) Shimla(7) Hyderabad (7) Madurai (7) Ranchi



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(8) Nashik (8) Thiruvananthapuram(9) Pune (9) Imphal(10) Cochin (10) Shillong(11) Varanasi (11) Aizawl(12) Agra (12) Kohima

(13) Amritsar (13) Bhubaneshwar(14) Vishakhapatnam (14) Gangtok(15) Vadodara (15) Agartala(16) Surat (16) Dehradun(17) Kanpur (17) Bodhgaya(18) Nagpur (18) Ujjain(19) Coimbatore (19) Puri(20) Meerut (20) Ajmer-Pushkar(21) Jabalpur (21) Nainital(22) Jamshedpur (22) Mysore(23) Asansol (23) Pondicherry(24) Allahabad (24) Chandigarh(25) Vijayawada (25) Srinagar

(26) Rajkot (26) Mathura(27) Dhanbad (27) Haridwar

(28) Indore (28) Nanded

* The National Steering Group (NSG) may consider addition or deletion of cities/ UAs/towns underCategory C (other than State capitals) based on the suggestions received from State Governments.The total number of cities under the Mission shall, however, remain around 60.

JnNURM Institutional Overview

2.27. The JnNURM, as discussed in the previous section, has two submissions viz., Submissionon Infrastructure and Governance and Submission on Basic Services to the Urban Poor. The formeris administered by the Ministry of Urban Development and the latter by the Ministry of Housing andUrban Poverty Alleviation, Government of India.

2.28. To operationalise the Mission activities a National Steering Group under the leadership ofMinister for Urban Development (Chair) and Minister of State for Housing and Urban PovertyAlleviation (Co-chair) and Central Sanction and Monitoring Committee under the Secretary of theMinistry of Urban Development have been constituted. A separate Mission Directorate has beenestablished for ensuring effective coordination with the state and city governments and otheragencies for expeditious implementation of programs under the Mission in the Ministry of UrbanDevelopment. The Joint Secretary, who is also designated as the Mission Director, heads the MissionDirectorate.

2.29. At state level for implementing the projects under JnNURM a State Level Steering Committeeand State Level Nodal Agency have been established. The former prioritises the projects, monitorstheir implementation and reviews the implementation of reforms. The latter appraises the projectssubmitted by the ULBs and parastatals, obtains the sanction of the Steering Committee, managesfunds under the Mission, operates the revolving fund and monitors progress of implementation ofsanctioned projects as well as implementation of reforms as per the MoAs. To enhance theownership of the Mission Technical Advisory Groups are being set up at state and city levels.

2.30. The Mission strategy is to ensure planned urban development over a period of 20 25 yearsfocusing on policies, programs and strategies, private sector participation, integrated development ofinfrastructural services, securing effective linkages between asset creation and asset management tofacilitate sustainability and redevelopment of inner city areas.

2.31. The number of cities identified under the Mission, admissible components for funding and thereforms to be implemented, etc., have already been discussed in the previous section. One importantfeature for the Mission is that the state governments and the ULBs/parastatals should execute a



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Memorandum of Agreement with the Ministry of Urban Development, Government of India indicatingtheir commitment to implement reforms along with milestones and timelines for implementation.Signing the MoA is a pre-condition to access funds under the Mission.

Capacity Support to State Nodal Agency

2.32. State Level Nodal Agency (SLNA) is responsible for the implementation of the projectssanctioned under JNNURM. But the relative role and capacity of the SLNA vary considerably acrossthe states. With a view to strengthen the capacity of the SLNAs to manage and implement the variedtasks under JNNURM, the Ministry of Urban Development evolved a scheme to support ProgramManagement Unit (PMU) at the SLNA. Similarly, to enhance the capacity of the ULBs to implementthe projects and reforms under JNNURM it is proposed to assist them in establishing ProjectImplementation Units (PIU).

Program Management Uni t2.33. The PMU will be established as a unit of SLNA under and is designed to extend strategic,technical and managerial support to SLNA to ensure effective implementation of JNNURM. The PMUis expected to ensure that the CDPs prepared through consultative process remain as livingdocuments, investment proposals are in tune with CDP, formulate strategies to design and implement

infrastructure projects, coordinate with state and city level technical advisory groups and coordinateand liaise with central and state governments and implementing agencies. They are responsible tosupport and monitor implementation of projects and reforms, facilitate selection of quality consultants,appraise utilization of funds and ensure timely reporting of implementation of reforms and projects toMoUD. They also support capacity building initiatives including lateral entry of professionals into theULBs.

2.34. The professionals/specialists suggested to function in the PMU apart from the TeamLeader/Program Manager who will also be responsible for HRD, are from the fields of ProjectManagement and Procurement, Public Works and Public Health, MIS, Municipal Finance and SocialDevelopment. The MoUD reimburses the professional fee and travel expenses of the team subject toa ceiling of Rs.1 crore per annum for period of three years without any increase in remuneration. TheSLNAs have to submit proposals to seek support for the establishment of PMUs.

Project Implementation Units2.35. The PIUs ware proposed at the ULB level on the lines of PMU at the state level. The PIU willsupplement the existing skill sets and works in tandem with the municipal staff. The PIU will extendtechnical support to manage, coordinate and implement reforms and projects under JNNURM, ensuequality in planning, designing, implementation and service delivery, monitor project progress andcoordinate with convergent departments and agencies, engage experts and prepare reports to SLNAand MoUD. They liaise with SLNA, state government and Mission Directorate of the MoUD regularly.

2.36. The PIU may consist professionals drawn from the areas of IT, municipal finance, publichealth, social and community development, urban planning, procurement, HRD, and environment.The recruitment of these processionals should be undertaken by the ULB as per the existingpractices. For each professional the GoI extends financial support at the rate of Rs. 15,000 to Rs. 25,000 per month. The continuation of support will be based on performance and financial support toPIU will be limited to 75% and 50% in the second and third years. The ULBs intending to establishPIUs with GoI support have to submit proposals to the MoUD, GoI.

Community Participation Fund2.37. One of the objectives of JNNURM is to facilitate and ensure participatory urban developmentto contribute to sustainability. The CDPs prepared by the cities are the result of stakeholderconsultations. One of the mandatory reforms under JNNURM is the enactment of CommunityParticipation Law to provide platforms for the participation of the community of stakeholders indecision making and governance at ward and sub-ward levels. But it is recognized that thecommunities have little capacity to participate and fully utilize the space provided meaningfully. With aview to create capacity in the communities to effectively engage and contribute in improving the livingenvironment a Community Participation Fund has been established under the Sub-mission onGovernance and Infrastructure with an initial corpus of Rs. 90 crores.. It is meant to be participatoryincubator to enable the communities to experience the process of collective decision making and totake full accountability for the decisions.



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2.38. The projects under CPF are eligible to a maximum funding of Rs. 10 lakhs and there shouldbe a community contribution of 10% which may be relaxed to 5% in case projects involving the poor.The projects should be completed within a year. The projects should meet the following principles tobe eligible to access funds:

Does it enhance community capacity to effectively engage and take responsibility? Is there a clear plan for operation, maintenance and sustenance?

Is it the result of consultations; is it comprehensive and the benefits reach the widercommunity?

2.39. The examples of the projects include water distribution in slums managed by the user group,establishing a crche, centers for the elderly, educating hawkers, setting up mechanisms for interfacewith ULB, community based information system, etc. the applications for funding should be madethrough the Area Sabha to be constituted under the Community Participation Law. But until the AreaSabhas are constituted they can be submitted by CBOs, RWAs, neighbourhood groups, etc. Theproposals should be endorsed by 51% of the voters in the project area. There is a four stage processin undertaking the projects viz., community consultation and project and implementing agencyidentification; project appraisal and sanction; implementation and fund flow and monitoring and impact

evaluation. .

Progress2.40. The JnNURM is under implementation for over two years and the Mission has madesubstantial progress over the period. All the Mission cities have formulated city development planswhich were appraised and approved by the Ministry, 58 cities signed MoAs with the Ministry forimplementation of reforms, several projects have been approved and their implementation is indifferent stages of progress in the Mission cities. The progress of projects approved state-wise underthe Mission (as on 30

thSeptember 2007) is given below.

Number of Projects sanctioned : 248.

1, 403 crores Value of Projects : Rs.2

Number of states for which projects have been sanctioned : 22

Number of cities for which projects have been sanctioned : 46

2.41. The following Figure 1 gives state-wis the projects sanctioned.e details ofFigure 1

State/UT Scenario (as percentage of project value)

West Bengal

11%

Gujarat

7%

Chhattisgarh

7%

Bihar

3%

AP

14%

Karnataka

6% Haryana

9%J&K

2%

Kerala

4%

Assam1%

UP

1%

Maharashtra

9%

MP

8%

Punjab

1%

Rajasthan

7%

TN

8%

Nagaland

3%



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The details of projects sanctioned state wise along with value of projects is given in the Table 3 below:

Table 3Details of Projects Sanctioned

State Projects Value (Rs. Crs) State Projects Value (Rs. Crs)

Andhra Pradesh 33 2, 253.91 Kerala 06 680.05Arunachal Pradesh 02 89.19 Madhya Pradesh 13 987.99Assam 01 35.16 Maharashtra 47 6, 396.19Bihar 01 36.95 Manipur 01 25.80Chandigarh (UT) 02 56.98 Orissa 02 504.93Chattisgarh 01 303.64 Pudichery 01 203.40Gujarat 44 2, 497.69 Punjab 02 328.83Haryana 03 210.97 Rajasthan 06 474.53Himachal Pradesh 02 26.13 Tamil Nadu 22 2, 123.00Jammu & Kashmir 02 262.15 Uttar Pradesh 09 988.06Karnataka 30 1, 654.62 West Bengal 18 1, 263.58

2.42. The Projects sanctioned sectorwise is indicated below. Number of DPRs (Detailed Project Reports) received from ULBs : 54

Number of DPRs received from States : 29

% of projects sanctioned for augmenting and improving basic infrastructure : 77

Percent of the sanction towards public transport systemFigure 2 gives sector-wise details of the projects sanctioned.

s :11

Figure 2Sectorwise sanction of Projects

Water Supply

34%

Sewerage

26%

Drainage

12%

Solid Waste

Management

6%

Public Transport

11%

Roads/Flyover/ot

hers

9%

Heritage

Development0%

Urban Renewal

1%

Other Urban

Transport1%

The details of projects sanctioned Sector wise along with value of projects is given in the Table 4below:

Table 4etails of Projects Sancti ecD oned S

jects

tor wise

. Cr)Sector Pro Value (Rs

Water Supply 74 7, 067.98Sewerage 45 5, 660.82Drainage / Storm Water Drains 33 2, 627.71Solid Waste Management 23 1, 187.07Mass Rapid Transport System 11 2, 427.41Roads /Flyovers / RoB 47 1, 995.18

Other Urban Transport 08 270.47Urban Renewal 06 124.03Heritage Development 01 43.13



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3. Reform Framework

Introduction3.1 Reforms in the urban sector are not new in India. Both central and state governments andULBs have been making efforts to improve theorganization and working of the local bodies. During

the last two decades, the reform process in the urban sector has been intensive and focused. The74

thCAA is itself a major reform effort to strengthen urban administration and to decentralize powers

and functions to make them self-governing institutions. The Ministry of Urban Development, GoI,initiated several reforms and they included Urban Reforms Incentive Fund (URIF), City ChallengeFund, etc. The URIF itself consisted of several reforms like repeal of ULCRA, rationalization of stampduty and rent control laws, implementation of commercial accounting, simplification of procedures,etc., implementation of which will only enable the local bodies to access funds under the scheme.Introduction of double entry accounting system across all local bodies in Tamil Nadu and introductionof e-governance across all the local bodies in Andhra Pradesh are examples of state level initiatives.Similarly, issue of municipal bonds in Ahmedabad and Bangalore, streamlining and simplification ofissue of building permissions in Mysore and Hyderabad and introduction of self-assessment system ofproperty taxation in Hyderabad and Lucknow are examples of city level reform initiatives. Most ofthese reforms were ad hoc and often project based. Because of weak implementation, they did not

have the intended impact and, therefore, were unsustainable.

3.2 The JnNURM synthesized these reform initiatives of the past and designed an urban sectorreform package to be implemented at state and local levels. JnNURM is a reform linked urbandevelopment project. Grants from Government of India for infrastructure provision will only be madeavailable on implementation of reforms as indicated in the memorandum of agreement signedbetween the state and city governments and the Ministry of Urban Development, Government ofIndia. The reforms are of both mandatory and optional and have to be implemented both at state andlocal levels. Even the optional reforms are also mandatory, as both state and local governments needto implement them during the Mission period i.e., before 2011-12. The only option to them is that theymay choose any two reforms per year and implement them. They are optional only in this sense. A listof mandatory and optional reforms to be implemented at state and local body levels has already beengiven in the previous section.

Objectives of Reforms3.3 The Reforms under JnNURM aim at strengthening urban governments and to decentralizeand devolve functions, finances and functionaries to them so as to enable them to function as self-governing institutions providing services efficiently and effectively. Broadly, the reforms aim to:

Provide for an integrated governance framework with transparency and clear lines of authorityand accountability to achieve the objectives of good urban governance;

Facilitate and promote inclusiveness, civic engagement and effective participation of the civilsociety in city management;

Contribute towards financial sustainability of cities - strengthen the financial base of the citiesand make them bankable;

Enable the cities to work towards planned and integrated provision and operation andmaintenance of infrastructure;

Develop partnerships with public, private and other sectors for better provision and delivery ofservices;

Extend the canvas of IT and eGovernance to all aspects of city management for efficient,effective and timely service delivery; and

Promote pro-poor urban governance and work towards slum free cities with universal,adequate and affordable housing and basic services;

Ensure renewal and revival of inner cities;

Contribute to municipal capacity enhancement.

Implementation o f Reforms

3.4 Implementation of governance reforms is central to JnNURM. These reforms address issuesof urban governance and urban poverty in a sustainable manner. In what follows, an overview of fourmandatory and two optional reforms is presented.



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4. Implementation of the 74th

Constitutional Amendment Act (S1)

4.1 The Constitution (Seventy fourth Amendment) Act, 1992 (CAA) is an important initiative of theGovernment of India to strengthen municipal governance and to provide them constitutional status.The important provisions of the Act include constitution of three types of municipalities, devolution of

greater functional responsibilities and financial powers, adequate representation of weaker sectionsand women, regular and fair conduct of elections, constitution of Wards Committees, District PlanningCommittees, Metropolitan Planning Committees and State Finance and Election Commissions. TheCAA provided a basis to the state governments to strengthen municipal governance. The CAA hasnot been applied to certain Scheduled Areas and the Tribal Areas of India like parts of Meghalaya,Mizoram and Nagaland. In these states, however, traditional municipal institutions such as municipalboard, notified area committee, etc., continue to function. Table 5 shows the status of implementationof decentralization measures as per 74

thCAA in States of the country.

Table 5Implementation of decentralization measures as per 74

thCAA

S.No. State/UT WCs DPCs MPCs

1 Andhra Pradesh Y Y N2 Assam N Y N

3 Chhattisgarh Y Y N4 Gujarat Y N N

5 Haryana N N N

6 Himachal Pradesh N Y NA

7 Karnataka Y Y N

8 Kerala Y Y N9 Madhya Pradesh Y Y N

10 Maharashtra Y Y N

11 Manipur N N N12 Nagaland N Y N

13 Orissa Y Y N

14 Punjab Y N N

15 Rajasthan Y Y N16 Tamil Nadu Y Y N

20 Uttaranchal Y N NA

21 Uttar Pradesh Y N N

Source: The MoAs of cities of the respective states.

4.2 All states amended their municipal Acts and Laws in conformity with the constitutionalprovisions. As per the provisions of the CAA, ULBs have been constituted in all states ascorporations, municipalities and nagar panchayats. The conformity legislation also makes provisionfor reservation of seats in the councils to women, SCs and STs and in some states like Andhra

Prades and Kerala for BCs as well. Similarly, State Finance Commissions have been constituted in allthe states and in some states like Andhra Pradesh and Kerala third generation Commissions havealso been constituted. There are variations between states in the constitution and working of wardscommittees and District and Metropolitan Planning Committees as can be seen from the Table below.

Elections to Local Bodies4.3 Elections to urban local bodies are being held regularly in all states except in Chhatisgarh andJharkhand. In states like Andhra Pradesh and Kerala elections were held thrice, the last being in2005. One of the outcomes of the CAA is the election of large number of representatives from weakersections of society like women, SCs, STs and BCs both as councilors and chairpersons.

Functional Domain of Urban Local Bodies A Status Report4.4 As per Article 243W of the 74

thCAA, eighteen functions were listed in the 12th Schedule to be

transferred to the urban local bodies. They are:(i.) Urban planning including town planning.(ii.) Regulation of land-use and construction of buildings.



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(iii.) Planning for economic and social development.(iv.) Roads and bridges.(v.) Water supply for domestic, industrial and commercial purposes.(vi.) Public health, sanitation conservancy and solid waste management.(vii.) Fire services.

(viii.) Urban forestry, protection of the environment and promotion of ecological aspects.(ix.) Safeguarding the interests of weaker sections of society, including the handicapped and

mentally retarded.(x.) Slum improvement and upgradation.(xi.) Urban poverty alleviation.(xii.) Provision of urban amenities and facilities such as parks, gardens, playgrounds.(xiii.) Promotion of cultural, educational and aesthetic aspects.(xiv.) Burials and burial grounds; cremations, cremation grounds and electric crematoriums.(xv.) Cattle pounds, prevention of cruelty to animals.(xvi.) Vital statistics including registration of births and deaths.(xvii.) Public amenities including street lighting, parking lots, bus stops and public conveniences.(xviii.) Regulation of slaughterhouses and tanneries.

4.5 It was hoped that the states would undertake a comprehensive review of the municipallegislation and bring changes in conformity with the 74

th CAA. But only a few states took the

opportunity to review the functional domain of the local bodies in conformity with the constitutionalprovisions as indicated in the 12

thSchedule. The Kerala, West Bengal, Tamil Nadu, Maharashtra,

Gujarat Haryana, Madhya Pradesh and Punjab are some of the states who amended the municipallaws comprehensively. However, changes in the municipal laws by itself do not ensure the transfer offunctions. Despite transfer of functions there may be several restrictions in the exercise of thetransferred functions. There is the question of transfer of funds and functionaries to undertake thetransferred functions. The situation, therefore, reflects considerable variation in reality. The Table 4gives a picture of the functional domain of the urban local bodies in the context of the 12

thSchedule of

the 74thCAA.

Wards Committees

4.6 As per the 74th Constitutional Amendment Act, wards committees have to be formed in allurban local bodies with more than three lakhs population to bring greater decentralisation of functions,proximity of the elected representative and civic administration to citizens and to enhance peoplesparticipation in local governance.

Varied Arrangements in States4.7 The constitution of Wards Committees (WC) varies considerably in states. In states likeKerala and West Bengal WCs are constituted for each ward and in others for a group of wards. InChennai, the 155 municipal wards are grouped into ten Wards Committees, each representing apopulation of close to four lakhs. Bangalore's Wards Committees cover an average population ofabout two lakhs. In effect, these are Zonal Committees and not Wards Committees. There are 16WCs for 221 wards in Greater Mumbai Corporation. In Calcutta Corporation, in addition to the WardsCommittees, the Borough Committees, which are for groups of contiguous wards, have been inexistence for a long time. These are in effect a substitute for the Zonal Committees. Calcutta has athree tier decentralized system. In Delhi Zonal Committees for groups of 10 to 12 municipal wardshave been formed comprising exclusively with ward councilors.

4.8 In Kerala there is a Wards Committee for every Ward with the Councilor as Chairman. TheCommittee consists of about 50 persons nominated by the Chairperson of the Municipality inconsultation with the Councilor and drawn from residents associations, doctors, teachers, NGOs,CBOs, etc. They meet at least once in three months and they ate attended by Secretary and theHeads of Departments in the Municipality. The Committee will prepare and supervise thedevelopment schemes for the Ward, encourage harmony and unity among various groups, mobilisevoluntary labour for social welfare programmes, give assistance for identifying beneficiaries for theimplementation of welfare and development schemes related to the Ward. This is besides assistingtimely collection of taxes, fees and rents for the Council. The duration of the Wards Committee shallbe for five years. Functional Domain of ULBs as per the 12 thSchedule is given in Table 6.



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Table 6Functional Domain of ULBs as per 12

thSchedule

S.No

State 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1 AndhraPradesh

Y Y Y** Y Y Y Y** Y** Y Y Y Y Y Y Y Y Y

2 Chattisgarh Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y3 Gujarat* Y Y Y

4 Karnataka Y Y Y Y Y Y Y Y(P) Y Y Y Y Y Y Y Y Y Y5 Kerala Y Y Y Y Y(P) Y N Y Y Y Y Y Y Y Y Y Y Y6 Maharashtra

*Y Y Y

7 Orissa Y(P) N Y Y(P) N Y N N N Y Y Y Y Y Y Y Y Y8 Tamil Nadu N Y Y Y Y Y N Y * Y* Y Y Y Y Y Y* Y Y Y9 Uttar

PradeshY(P) Y(P) N Y(P) Y(P) Y N Y(P) Y(P)Y(P) Y(P) Y Y Y Y Y Y Y

10 Uttaranchal Y Y Y Y Y Y Y Y 11 Madhya

PradeshY Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

12 Haryana Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y13 Assam Y Y Y Y Y Y N N N Y Y Y Y Y Y Y Y Y14 Manipur Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y15 Rajasthan N Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y16 Jammu

&KashmirY Y Y Y Y Y Y Y N Y Y Y Y Y Y Y Y Y

17 Nagaland N Y Y N N Y N Y Y Y N Y Y Y Y Y Y Y18 Punjab Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y19 Himachal

PradeshY Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Y Y, assigned to Municipalities; N N, Not assigned to Municipalities, P-Partly*Data varies within different cities in the state; ** Services transferred only by executive orderSource: MoAs of cities of the respective states.

Functions o f Wards Committees4.9 WCs have been assigned several responsibilities, such as maintenance of civic services,revenue collection/assistance in tax collection, drafting of annual budget, slum improvement, publicgrievances, formulation and execution of development schemes, monitoring the implementation ofdevelopment programmes, recommendations on proposals regarding estimates of expenditure,granting approval and financial sanction to plans and municipal works, scrutiny of monthly progressreport, etc. In Kerala and West Bengal the tasks to be performed by these committees have beenelaborated in the Rules. Orders have also been issued for the Corporation/Municipal staff to beinvolved in their work in addition to some financial allocations within the city budget.

District Planning Committees4.10 The constitution of District Planning Committees (DPCs) is mandatory under article 243ZD ofthe Constitutions. They are responsible for integrated planning for urban and rural areas in the district.Both urban and rural areas need to share the physical and economic resources of the district such ascommunications, water resources and market places. Allocation of water for irrigation, drinking orindustry has always been a contentious issue. Dealing with each other's wastes is another seriousproblem.

Composition4.11 The composition of the DPC and the manner in which the seats are to be filled have been leftto the States, article 243ZD stipulates that four-fifths of the total number of members of DPC will beelected by, and from amongst, the elected members of the Panchayat at the district level and of themunicipalities in the district in proportion to the ratio between the population of the rural areas and ofthe urban areas in the district. The rest are to be nominated.



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4.12 While most States have made enabling acts to constitute District Planning Committees, theyhave not been actually constituted in all states and where constituted not functional. This is becauseof both political apprehensions and bureaucratic problems. First is the fact that the provisions onDistrict Planning are to be found in the 74th rather than in the 73rd Constitutional Amendment. RuralDevelopment departments in the various State Governments have traditionally regarded district level

planning as falling in their domain but since they find that the provisions for the DPC are now a part ofthe 74th Constitutional Amendment, under the Part IXA relating to Municipalities, their reactionsometimes has been that these Committees are the concern of the Urban Development or MunicipalAffairs department in the State. These departments, on the other hand do not have a clue about theobjectives and purposes of the District Planning Committee and expect that some other departmentlike Planning, will take care of it. The result is that the item often became orphaned betweendisinterested departments. The political apprehension is about the DPC emerging as a dominant bodydeciding on public investments and thus reducing the influence and patronage of State level politicalleaders.

4.13 The State Governments have, therefore, been left to draw their own interpretations. In Assam,Karnataka, Kerala, Rajasthan and West Bengal the State laws envisage the DPC as a part of the ZillaParishad. The Chairperson of the Parishad is also designated as Chairperson of the DPC. In Madhya

Pradesh, a Minister of the State Government is the Chairperson of the DPC and is expected to leadand guide district planning with the help of the district administration. The Chairperson of the ZillaParishad is a Vice-Chairman. Gujarat and Maharashtra have long had District Planning andDevelopment Committees with a minister of the State Government as the Chairperson. The view ofthese two Governments has been that these district committees are an adequate substitute for theDPCs. The Table 5 indicates the varied arrangements in different States.

4.14 The designation of a Minister as the President of the DPC virtually makes it an extension ofthe State Government and goes against the intent of the Constitution and defeats the principle ofdecentralisation. In West Bengal, the organizational arrangements are similar to those in Kerala.West Bengal has revived a previous practice of District Planning and Development Co-ordinationCommittee (DPDCC) presided over by a Minister of the State Government. Though the President ofthe Zilla Parishad continues to be the Chairman of the DPC, the DPC is expected to consult the

DPDCC thereby diluting the position of the Zilla Parishad.

4.15 In Rajasthan, DPCs have been formed in all districts with the President of the Zilla Parishadas the Chairperson and the Chief Planning Officer of the Zilla Parishad as the Secretary. In UP andKarnataka the DPCs have been set up but they are not functional. In Tamil Nadu until recently theDPC was perceived and operated as a non-PRI body with the Collector as the Chairman and the ZillaParishad President as the Vice Chairman. Recently, the position has been changed with the Presidentof the District Panchayat designated as the Chairman of the DPC.

4.16 The highly varied organizational and operational arrangements for the DPC confirm the factthat the provisions of the Constitution have remained very poorly understood and very badlyimplemented. Where the DPC has not been located within a Zilla Parishad the ownership of theprocess itself has been left to doubt. The induction of a State Government Minister appears to be adeliberate attempt to dilute the position of the district level panchayat and forestall possible attemptsof that panchayat to assert its preeminence as a distinct body of elected representatives. Theoperational arrangements for the preparation of a district development plan and merely forwarding itto the State Government also reduces it to a paper exercise. If, on the other hand, district levelplanning becomes multi sectoral and inter-departmental and also covers project allocation, monitoringand supervision and if that district level planning becomes a part of the Zilla Parishads responsibilitiesit would undoubtedly enhance the Parishads power and influence. Composition of District PlanningCommittees is given in Table 7.



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Table 7Composition of Dist rict Planning Committees

StateTotalMembers

ElectedMembers

NominatedMembers

Chairperson Secretary

Kerala 15 12 03 President of the ZillaParishad

DistrictCollector

MadhyaPradesh

15-25 Four-fifths One-fifth Minister nominated bythe State Govt.

DistrictCollector

Maharashtra

30-50 Four-fifths One-fifth Minister nominated bythe State Govt.

DistrictCollector

WestBengal

10-100dependingon districtsize

Four-fifths One-fifth President of the ZillaParishad

DistrictMagistrate

Rajasthan 25 20 5 President of the ZillaParishad

ChiefPlanningOfficer of ZP

UttarPradesh

20-40 Four-fifths One-fifths Minister nominated bythe State government

ChiefDevelopment Officer ofthe District

Karnataka Four-fifths One-fifth President of the ZillaParishadMayor/MunicipalPresident of DistrictHq. Vice Chairman

CEO of Z.P.

TamilNadu

Fourth-fifth One-fifth Collector; ZP PresidentVice Chairman

CEO ofDistrictPanchayat

Working of DPCs Kerala Experience4.17 The Kerala Municipalities Act, 1994 provides for creation of DPCs and they have been inexistence since 1995. As per the law the total strength of the DPC is 15. The President of the DistrictPanchayat is the Chairperson. The District Collector is the ex-officio Secretary of the DPC. Twelvemembers are elected from the members of District Panchayat and from councilors of Municipalitiesand Corporations in the ratio of rural and urban population in the district as fixed by the Government.The election to the DPC is conducted under the guidance, supervision and control of the StateElection Commission by a Returning Officer appointed by it. The election is made on the basis ofproportionate representation by single transferable vote. Casual vacancy of elected members is filledup by elections.

4.18 The members of Lok Sabha and Members of Legislative Assembly representing the areacomprising fully or partly are permanent invitees to the DPC. The members of the Rajya Sabharepresenting the State are permanent invitees to the DPC in the district in which he is a registeredvoter. If any of such member is a Minister, Speaker or Deputy Speaker, or Government Chief Whip orLeader of Opposition, such member may nominate a person to represent him in the DPC.

4.19 As the Grama Panchayats and Block Panchayats have no representation in the DPC, thegovernment has decided that two representatives of the Presidents of Grama Panchayats and arepresentative of the Presidents of Block Panchayats are designated as permanent invitees of theDPC. The Association of the Presidents of Block Panchayat and Grama Panchayat suggests thenames of the invitees respectively.

4.20 The government nominates one member who has considerable experience in administration

and planning. The district level officers of Government departments are designated as JointSecretaries of the DPC but do not have any voting rights.The powers of the District Planning Committee are:



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(i) Vetting the plan projects prepared by local governments for their technical soundness andadherence to mandatory guidelines prepared by Technical Advisory Committees, constituted by theDPC with official and non-official experts.(ii) While the general guidelines for Plan preparation are issued by Government, the DPC has beengiven some powers to decide on avoidance of unproductive schemes and for giving priority to certain

developmental areas.(iii) Review of the annual plan performance of local government and conveys its views to that localgovernment.(iv) Prepare the District Plan.(v) Develop a District vision on future development and translate it into a broad perspective plan(vi) Appraises all Plans prepared by local governments with the help of TACs. The DPCs cannotchange local government priorities or choices but they can ensure adherence to mandatory guidelinesand technical standards.

4.21 The District Planning Offices function as the secretariats of the DPCs and provide support forthe socio-economic planning. District Town Planners have help them do spatial planning and theDistrict Statistical Office also extends support.

Functioning of Dist rict Planning Committees4.22 The DPCs have been constituted in 10 states viz., Bihar, Chhatisgarh, Haryana, Karnataka,Kerala, Madhya Pradesh, Orissa, Rajasthan, Tamil Nadu and West Bengal. The number of membersof DPCs varies between states. They generally comprise the minister-in-charge of district, mayor ofcorporation, chairperson of council, chairperson of zilla parishad/ panchayat, elected members of localbodies (both rural and urban), special invitee members (i.e., MPs, MLAs, MLCs), nominatedmembers, divisional commissioner, deputy commissioner, additional deputy commissioner, districtcollector, district planning officer, district statistical officer, etc. It is understood that in Karnataka,Kerala and Tamil Nadu, DPCs have been constituted and technically they are functioning. However,in Karnataka they have not been functioning as expected. In fact, Kerala is the only state in the southwhere DPCs are active and functional. In Madhya Pradesh, the DPC has no executive powers and inChhatisgarh, they are not functioning and no meetings of DPCs are held.

Metropolitan Planning Commit tees4.23 Metropolitan areas are engines of growth and economy in the country. Urban transport, watersupply, waste management, police, public health, etc., require metropolitan level planning,implementation and coordination. Besides the scale of services needed in the metros is huge and it isnot possible for the urban local bodies to address. Since the 74th Constitution Amendment, mayorsand chairpersons are moving increasingly to assume executive leadership for managing theirrespective areas. Constitution of a MPC is a constitutional requirement. In most states conformitylegislation or enabling laws have been passed more or less reproducing the language of theConstitutional Amendment but no state, except West Bengal has set up MPCs.

4.24 In the composition for MPC it is envisaged that one-third of its members are to be elected byand from amongst the elected representatives of urban and rural local bodies in the metropolitanareas. The others are to be nominated representing central and state government agencies and otherinstitutions including private sector responsible for various services in the metropolitan areas. Themanner of choosing the Chairperson of the MPC, and the planning and coordination functions to beentrusted to it, is left to the State Legislature. In preparing the draft development plan the MPC shouldhave due regard to the plan prepared by the Municipalities and the Panchayat, matters of commoninterest to them, objectives and priorities of the Government of India and the State Government,available financial and other resources for integrated development of infrastructure, environmentalconservation, etc. The MPC is expected to hold wider consultations with different institutions andorganisations. The MPC is envisaged as an inter- governmental and inter-organizational forum forproviding a vision, a strategy and a metropolitan wide development perspective.

4.25 MPC has been constituted only in West Bengal. The Kolkata Metropolitan PlanningCommittee (KMPC) comprises 60 members, including chief minister of state, minister-in-charge ofmunicipal affairs and urban development, elected members of local bodies and nominated members.Of the 60 members, 2/3rd members are elected and 1/3rd are nominated. Chief Minister of the state isthe Chairman of KMC and the Minister-in-charge of Municipal Affairs and Urban Development



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Department of the state is the Vice-Chairman. Kolkata Metropolitan Development Authority (KMDA) isthe technical secretariat of KMPC and Secretary; KMDA is the Secretary of KMPC.

Why MPCs are not being setup?4.26 The reasons for not setting up MPCs appear to be a mixture of lack of political interest,

bureaucratic confusion about the purpose and role of the MPC, and fear of the urban developmentauthorities that their domain will be undermined. The state governments are apprehensive about thelarge staff, which these development authorities have acquired over time, which would becomesurplus in the event separate MPCs are established. This is a totally mistaken perception. The MPC isexpected to be a high level democratic set up providing a constitutional basis to metropolitandevelopment planning. The development authorities could serve these MPCs as technical secretariat.

State Finance Commissions4.27 The State Finance Commissions(SFCs) attempted a detailed review of the financial positionof ULBs and local-level issues of governance and made recommendations to overcome the prevailingconstraints confronting ULBs. Bihar is an exception, where the report could not be submitted due tovarious reasons. The state governments process the recommendations and have accepted most ofthe recommendations fully, partly or in a modified form. There are, however, a few recommendations

which have either not been accepted or are under consideration. The decision to accept or reject arecommendation lies with the state government and is based on a number of factors, such as thefinancial condition of the state/local government, priority areas of concern, etc. The number ofaccepted recommendations is high in the states of Haryana, Himachal Pradesh, Tamil Nadu and UttarPradesh, and moderate in Andhra Pradesh, Goa, Gujarat, Kerala, Rajasthan, Delhi and Pondicherry.In some states the SFCs have given importance to devolution of functions, functionaries and powersalong with a transfer of funds. The SFCs have also emphasized participation of the community andthe private sector in the delivery of urban services and training for municipal official and non-officialsto improve their efficiency and attitude.

5. Integration of City Planning and Delivery Functions (S2)

Objectives and Expected Outcomes of the Reform5.1 The proposed reform measure was expected to bring about the

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