Pace of Urbanization in India - Challenges and Strategies in the 12th Five Year Plan

Pace of Urbanisation in India

• India’s urban population is expected to go up from 377 million in 2011 to about 600

million for the year 2031. This implies an increase of over 200 million in just 20

years.

• About 60% of the growth in the urban population in the past is due to natural increase

whereas rural – urban migration has contributed to only about 20%.

• There is a concentration of urban population in large cities and existing urban

agglomeration. The census of 2011 states that there are 53 million plus cities

accounting for 43% of India’s urban population.

• The census of 2011 notes that the number of towns in India increased from 5161 in

2001 to as many as 7935 in 2011. Most of this increase was in the growth of census

towns (2532) rather than on statutory towns (242).

• A large number of towns are born in the vicinity of existing cities with million plus

population.

• India’s urbanization, however, is in smaller proportion as compared to other large

developing countries such as China (45%), Indonesia (44%), Mexico (78%) and

Brazil (87%).

Main Challenges in Indian Urbanisation

• The main challenges as far as urbanization is concerned in India are:

� There is a urban housing shortage of 18.78 million

� According to the 2011 census, only 70.6% of urban population is covered by individual

water connections compared with China (91%), South Africa (86%) and Brazil (80%)

� Duration of water supply in India cities is only between one to six hours

� According to 2011 census, about 13% of urban population defecate in the open, about

37% are connected by open drains and 18% are not connected at all.

� the number of urban poor has increased by about 34.4% between 1993-2004.

� In so far as the urban transport is concerned, a Ministry of Urban Development study in

2010 based on sample of 87 cities has estimated that in about 20 years time, the

expected journey speed of major corridors in many cities would fall from 26-17 kmph to

8-6 kmph.

� The air quality has also deteriorated sharply carrying with it concomitant health costs.

The per capita emission levels in India’s seven largest cities have been estimated to be

at least three times than WHO standards.

Strategy to be followed for Urbanisation

• Given the problem of urbanization, a multi-pronged strategy is required to meet the following

objectives:

i. Accelerate the rate of job creation

ii. To impart relevant skills to urban poor

iii. Facilitate self employment opportunities for urban poor

iv. Provide basic services to the urban poor especially through re-habilitation of

slums

v. Ensure financial inclusion of urban poor

• The strategy for urban Five Year Plan will focus on strengthening the five enablers for

organization i.e. Governance, Planning, Financing, Capacity Building and Innovation.

Governance Issues

• For strengthening urban governance, the following steps need to be taken:

i. Transfer of all the 18 functions identified in the 74th Constitutional Amendment to the

ULBs.

ii. Set up an independent utility regulator at the state level to monitor service levels and

adjudicate disputes related to state and pricing of services.

iii. With the objective of establishing single point accountability, the Mayor should be the

Executive Head of the city and he should be vested with appropriate authority.

iv. All million plus metropolitan areas should set up a Unified Metropolitan Transport

Authority (UMTA).

v. Every municipality should publish a Citizens’ Charter which should contain

comprehensive information on services levels for all urban services.

Governance Issues (contd.)

vi. In all metropolitan areas and cities, dedicated government agencies with additional

autonomy should be carved out to provide services like water supply, solid waste

management, sewerage, sanitation etc. The allocated municipal bodies may procure services

from these agencies by entering into suitable MoUs.

vii. Committees and Area Sabhas should be set up for institutionalizing participatory

development process for effectively carrying out the functions devolved to Urban Local

Bodies.

viii. Adopt an outcome based project and put up a robust monitoring system

ix. Set up Lokayuktas / Ombudsman at state and city level

Issues Related to Planning

• India’s urbanization effort is being implemented through disjointed projects / activities with

inadequate or no planning for the urban area as a whole.

• The Master Plan approach focuses on only the core area of the city and has little linkages to

any financial and operational strategy.

• Every city/town should have a Development Plan by taking at least a 10 year perspective

• Along with the City Development Plan, there is need for a functional plan that indicates the

sources of funds required for holistic urban development of the city.

• There is a need to provide incentives for strategic densification of cities / new towns on

growth corridors.

• Considering land re-adjustment which is gaining acceptance as an alternative to land

acquisition.

Issues about Financing of Urban Infrastructure

• The total capital investments required in urban infrastructure over the next 20 years has been

estimated to be about Rs. 39 lakh crore.

• The share of Urban Local Bodies own revenues has declined significantly from 63% in 2002-

03 to about 53% in 2007-08.

• A major strategy under the 12th Plan would be to strengthen the municipal finance and make

them predictable.

• Profits accruing to Urban Local Bodies from innovative sources like land monetization should

be pooled into a “ring fenced” City Development Fund which should be used only for urban

infrastructure projects.

• The State Finance Commissions need to be further strengthened for functional devolution and

imparting predictability to the municipal finances.

How to improve municipal finances

• Some measures on how to improve municipal functions would include:

i. Making a Constitutional Amendment that clearly outlines the various tax and non-tax

revenue streams for Urban Local Bodies through the incorporation of a Local Bodies

Finance List in the Constitution.

ii. States should share 25% of the GST equivalent with Urban and Local Bodies.

iii. Additional Floor Space Index (FSI) i.e. giving beyond what is normally prescribed

should be charged for adequately.

iv Increase user charges collection for all measurable services where beneficiaries are

easily identifiable. The user charges should not only cover O&M cost, debt servicing cost

and depreciation, but also provide minimal profit to the Urban Local Bodies.

v. Added investments from the private sector can be obtained through People – Private –

Public Partnerships (PPPP) and about 13-23% of investments in urban infrastructure can be

raised through this mode.

Issues on Capacity Building

• Lack of efficient capacity across all levels of Government is the root cause of India’s urban

development challenges.

• Substantial skill gaps exist across all areas of urban management.

• The Central Government should create a comprehensive frame-work that addresses issues

such as staffing, training, skill development and finances.

• Every State should institutionalize a dedicated municipal cadre with necessary technical

skills.

• To meet the skill deficit in the short to medium term, policies should enable reforms from the

private sector and hiring of external Consultants through a fast track process.

Issues on Capacity Building (contd.)

• A dedicated unit to address issues such as implementation of reforms, dissemination of best practices

across urban issues should be set up under the capacity building mission structure of JNNURM.

• The Government of India in partnership with the State Governments and the private sector should set

up 5 Indian Institutes of Urban Management (IIUMs).

• The Ministry of Urban Development and the Ministry of Housing & Urban Poverty Alleviation

should bolster existing institutions and set up new ones to assist with policy research, design etc.

• The Government’s net-work of about 1,800 Industrial Training Institutes (ITIs) and 3,300 Industrial

Training Centers (ITCs) run by the private sector can be roped in for skilling personnel from Urban

Local bodies.

• The Indian Institute of Public Administration along with the Administrative Training Institutes

should be tasked with the preparation of standardized training modules.

• The focus of the National Institute of Urban Affairs should be renewed so that it is capable of

assisting the Ministry of Urban Development with policy formulation, providing advisory services to

States etc.

Matters related to Housing

• The Technical Group on the Estimation of Urban Housing shortage has estimated the current

shortage to be about 18.8 million dwelling units. The Group has further estimated that 73%

of the shortage in self occupied units is in bottom 40% of the urban households.

• Under the scheme of JNNURM, only about 1.6 million dwelling units have been sanctioned.

• All costs for housing cannot be met by the Government and, therefore, there is need to attract

private investment.

• It is not just the availability of finance which is problematic as far as housing is concerned

since availability of land itself is the most crucial issue.

• Scarcity of land is the result of sub-optimal land use patterns largely induced by the regulatory

regime in place, lack of long term urban planning and lack of participatory planning process.

Urban Transport

� The National Urban Transport Policy 2006 calls for increasing the share of public

transport in our cities from 22% to 60%.

� The Study (2008) conducted by the Ministry of Urban Development estimated that

public transport had accounted for only 27% of the urban transport in India.

� In the 12th Plan, the aim must be to raise the share of public transport to at least 50%

of all motorized trips.

� A key challenge to generate non-budgetary resources to fund transport projects

especially through land based instruments needs to be devised.

� The Ministry of Urban Development should initiate a proposal for setting up an

apex institution viz. the National Urban Rail Transit Authority.

� The Ministry of Urban Development should also initiate a proposal for setting up a

Center of Excellence for Rail based Mass Transit system which should promote

research in civil net-work, rolling stock, tracks and signaling etc.

� All metro projects which are in high density corridors and are viable on their own

may be encouraged under People – Private – Public Partnership mode.

Water Supply

� As regards water supply, the target for the 12th Plan period should be:

i. Universalization of water and sanitation of urban areas

ii. Reduction in unaccounted water ie. Non revenue water (NRW)

iii. 100% metering of water supply

iv. Ensuring 24x7 water supply

v. Take an integrated view of water supply and sanitation

Solid Waste Management

• For solid waste management, some of the important issues are:

i. Absence of segregation of waste at source

ii. Lack of funds for waste management at Urban Local Bodies.

iii. Lack of technical expertise and appropriate institutional arrangement

iv. Unwillingness of Urban Local Bodies to introduce appropriate collection,

segregation, transportation etc.

v. Indifference of citizens towards waste management due to lack of

awareness

Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

• The Jawaharlal Nehru National Urban Reforms Mission (JNNURM) was launched in December, 2005 for

a period of seven years with an outlay of Rs. 66,085 crore. The objective of the Scheme included

empowerment of Urban Local Bodies (ULBs), planned and holistic development of cities and making them

inclusive.

• About 70% of the funds were used for projects in 65 identified Mission cities and only the balance was

used for projects in smaller cities/towns

• The Scheme mandated preparation of City Development Plans and setting up urban reforms at state and

municipal levels.

• Release of funds under JNNURM was linked to reforms undertaken by the State and also at the municipal

level.

• The majority of the projects which were taken up were for water supply, sewerage, drainage, housing with

upgradation of slums, roads and flyovers etc.

• Some key inadequacies noted during its implementation included failure to mainstream urban planning,

incomplete reforms and slow progress of project implementation, delay in securing land for projects and

obtaining approvals in a time bound manner from various regulatory authorities. Till March 2012, only

about 30% of the projects were completed.

• The scheme of JNNURM has been instrumental in ushering in an era of reforms in the urban sector and the

areas where a lot of progress has been made includes Shift to double entry accounting system, Revision of

building bye-laws to make rain water harvesting mandatory, Rationalisation of stamp duty to 5%, Increase

in coverage of property tax, E-Governance

Swarn Jayanti Shahari Rozghar Ypjana (SJSRY)

• The Swarna Jayanti Shahari Rozgar Yojna (SJSRY) is designed to enable

poor to get gainful employment. Under the Scheme, about 4,000 towns

have been covered with an assistance of Rs. 3,360 crore. Since inception,

about 12.3 lakh persons have been imparted training under the scheme.

• The funds have been utilised for upgradation of skills and also for

providing financial assistance to Self-Help Groups (SHGs) apart from

assisting setting up of micro enterprises.

• One of the major drawbacks of this scheme is that while information is

available on the number of beneficiaries, no information is available on

how many beneficiaries actually got employment after being given training.

These deficiencies are being corrected during the 12th Plan period.

Focus during the 12th Plan Period

• The outlay for JNNURM has been stepped up substantially from Rs. 66,085 crore for the years 2005 to 2012 to about Rs. 1.02 lakh crore.

• The distinction between Mission and Non-mission cities is being removed so that smaller cities and towns are also able to avail the benefits of this scheme.

• Greater emphasis is being laid to capacity building which was one of the major weaknesses of the program.

• The link between release of money under the program to that of reforms actually achieved would continue during the 12th Plan period.

• As far as employment opportunities is concerned for the urban poor, the scheme of SJSRY would continue but would now be implemented on a mission mode and would be rechristened as National Urban Livelihood Mission (NULM). The outlay of NULM during the 12th Plan has been stepped up to Rs. 6,400 crore from Rs. 1750 crore during the 11th Plan period.