Policy quagmires bog down flagship urban revamp plans

The panel found that the budgets of almost all flagship missions were shrunk due to lower “demand” from states. However, experts noted that this trend contrasted with the urban population growth, which is projected to reach 800 million by 2050 with half of India’s people living in urban areas; and the need for investment in supporting infrastructure, which the World Bank estimated to be ₹4.6 lakh crore annual investment by 2036. Further, according to experts, India’s goal of becoming a developed economy by 2047 can only be fuelled by the efficiencies of sustainable urbanisation.

So while our urban infrastructure is in desperate need of renewal, why are funds for the purpose sitting unused?

HT spoke with sectoral practitioners including officials in MoHUA as well as those serving in state governments to understand how to efficiently use the existing central government, which is under-leveraged due to design of existing mission and schemes.

These experts advocated a more decentralised approach to project design and finance, less stringent funding rules, a more nuanced approach for cities of different population sizes and urban capacities and a stronger stress on building capacity and pushing reforms in line with the 74th Constitutional Amendment.

Graded approach vs one scheme for all

Srikanth Viswanathan, CEO at Janaagraha, a non-profit working on urban local governance, said significant higher budget allocations of the past decade has not translated into a commensurate transformation in quality of life in India’s cities.

He suggested that rather than nationwide flagship schemes, MoHUA should start being organised around regions. Large urbanised states, mainly southern and western states, large less urbanised states--Rajasthan, Madhya Pradesh, Bihar and Uttar Pradesh, small urbanised states such as Goa, Kerala, and small less urbanised states such as Odisha, Jharkhand, Chattisgarh and hill states, all have different needs and context, and possess varying levels of state capacities, he cited. “We need bureaucrats in the MoHUA to specialise in regional economies and ecology organised around such clusters of states and metropolitan regions.”

Decentralisation lessons from rural governance

Unlike its rural counterpart, Viswanathan said the local self-government department of MoHUA is not fit for purpose in its current avatar.

“Our smaller cities and towns don’t need more and more tied funds. Tied funds are ineffective compared to untied funds as our own field visits in several cities across states have indicated.”

Similarly, Hitesh Vaidya, former director at the National Institute of Urban Affairs (NIUA) and ex-country representative of UN-Habitat India, said, “A bottom-up approach can unlock significant creative potential in addressing the broad-based challenges defined by the centre, by allocating funds based on regional strengths and needs.” He stated that this model has worked relatively better for rural development than urban development. States such as Kerala have taken a lot of bottom-up planning approaches and reforms, which can be showcased as models for the rest of the country.

Vaidya emphasised that with the 16th Finance Commission set to make its recommendations in October, this is the opportune window to adopt hard reforms.

Tathagata Chatterji, professor of urban management and governance at XIM, Bhubaneswar, said funds for urban infra should ideally be demand-driven rather than supply-driven. “Funds to support new infrastructure must be dovetailed with city master plans. To draw central funds, cities must identify infrastructure needs based on local demand and growth projections. Unfortunately, now, in many cases projects are pouring in because funds are there, instead of cities needing it.”

The best illustration of the same being swanky metro rails built in smaller cities such as Lucknow, Kanpur, and Jaipur which not only incur losses but also fail to get a fraction of their projected ridership.

Lesser flexibility, diluting reforms agenda

The concept of tied funds (conditional and restricted to specifics of the scheme) from the centre in the urban sector was introduced in the erstwhile Jawaharlal Nehru National Urban Renewal Mission (JNNURM) keeping in mind the poor outcomes of the Integrated Development of Small and Medium Towns (IDSMT) scheme launched under the Sixth Five-Year plan (1980-85). Chatterji explained under JNNURM, the concept of tied funds was used as a carrot and stick approach to carry forward the objectives of the 74th Constitution Amendment Act and to drive a few essential urban reforms. He noted that under AMRUT while the incentives remain, the reform agenda is diluted with lesser emphasis on mandatory reforms.

Rigid funding timelines, micromanagement

The funding under JNNURM, for mega cities with a population of over 4 million, was in ratio of 15:35:50 between centre, state and ULBs; for those with a population between 1 to 4 million population, the ratio was 35:50:15, and for smaller cities it was 80:10:10. “In retrospect, it appears that the JNNURM formula of fund sharing was more nuanced compared to the uniform approach under the later schemes,” he said.

Majorly, work under AMRUT and Smart Cities has a 50:50 funding from the centre and the state (including ULB share).

A senior Karnataka-based IAS officer with experience in urban governance and currently in the state secretariat, said an inflexible funding timeline dictated by the centre often is a hindrance to optimal outcomes. “Be it PMAY or SBM, money is released in tranches requiring the beneficiary to upload photos. Sometimes if beneficiaries are not able to construct at that particular time, they have to wait for a longer time as funds are released only in specific intervals, that may not only delay completion but also increase the cost on the beneficiary.” Compared to this, the officer said working with a consolidated fund helps local authorities to execute projects more efficiently. He added while for richer states like Karnataka, matching the centre’s share is not an issue, it might be for financially weaker states.

Politics vs policy

Officials at MoHUA could not be reached for a comment. A senior central government official with experience in working in MoHUA in the recent past said that even in the current scenario, notable successes of the often-criticised Smart Cities Mission came from cities that had “a fairly bottom-up approach” in selection and design of projects.

“Be it Chappan Dukan of Indore or a fresh stormwater drain network for Davangere was a product of thorough citizen engagement, decentralised planning,” said the person, who asked not to be named.

SBM was initially designed to be much more decentralised than JNNURM, but again in recent years, there is a feeling of over-centralisation, the person added.

“This is largely because the leadership feels they are not able to reap the political mileage out of the decentralised implementation. So lately there has been high incidences of surrendering of SBM funds by the states, and that has been spent by MoHUA on branding, advocacy.”

Aravind Unni, an expert on urban poverty alleviation policies, said this top-down design of schemes with mandatory and significant state funding components does not augur well politically too, especially when states governed by opposition parties, even more so, if they have similar schemes already in place as seen in Kerala for PMAY(U). The centre had withheld funding of over branding issues. While the state said that the state’s LIFE mission (state government and ULBs) gives ₹4 lakh to beneficiaries, the centre gives only ₹72,000.

“Cities are places and can’t be transformed unless they are governed as such, rather than as an aggregation of schemes and sectors which is the case right now,” said Vishwanath.