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A Rs 66,000-cr infrastructure intervention that needs more fuel

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Half of India’s 1.2 billion populace will live in urban areas in 25 years, as compared to 27.82 per cent presently. How prepared are we for this? The Rs 66,000-crore Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was launched as an infrastructure intervention to address precisely this issue.

The was launched on December 3, 2005. The mission is expected to last seven years and mainly focused on improvement in four key areas. These included: Efficiency of urban infrastructure, efficiency of service delivery, community participation in the decision-making process and accountability & transparency.

The Mission comprises 2 sub-missions:
* Urban Infrastructure and Governance (UIG)

* Basic Services to the Urban Poor (BSUP)

In addition to these there are two other components which were added later to accommodate more cities and towns.

* Urban Infrastructure Development for Small and Medium Towns Scheme (UIDSSMT)

* Integrated Housing and Slum Development Programme (IHSDP). Now, let’s look at the sub-missions individually and also see what they have achieved in terms of targets set. (Click here for chart)

Urban Infrastructure & Governance
The focuses on 65 mission cities in 31 states and Union Territories and has 532 sanctioned projects. The estimated costs for these projects are Rs 60,529 crore till completion (of the project).

The Government of India will provide ‘substantial assistance’ while the rest will have to be financed either by the state government or the urban local bodies (ULBs). The following table shows the break-up of contribution between centre and states under the UIG mission. It’s also interesting to note the kind of projects that get a higher Central Government share and those which do not.

Sector-wise, the UIG has approved nearly 152 water supply projects, followed by sewage projects. A further 4 projects pertaining to preservation of water bodies have been approved followed by five on development of heritage areas, parking lots and spaces on public-private partnerships (PPP) basis.

State-wise, Maharashtra has the highest number of projects with 79 followed by West Bengal with 58 projects worth Rs 11,504 crore and Rs 5,604 crore, respectively, under UIG. Whereas, the states of Chattisgarh and Mizoram have only 1 project approved worth Rs 303.64 crore and Rs 16.81crore, respectively.

Focus on
The UIDSSMT focuses on 644 small and medium towns in the country. It has sanctioned 767 projects till March 11, 2011. The estimated costs for these projects is Rs 12, 947.51crore and the Additional Central Assistance (ACA) — or extra funds from the Centre — committed Rs 10, 450.33 crore.

The funding for this project is shared between the centre and state governments on ratio of 80:10 while the balance 10 per cent is raised by nodal or implementing agencies through financial institutions.

The agencies may also exchange internal resources in order to raise funds from financial institutions. However, the central government will change its ratio of contribution 90:10 basis in some cases like the north eastern states and the state of Jammu and Kashmir.

The UIDSSMT has approved 418 projects pertaining to water supply, followed by 110 projects involving roads and flyovers. Soil preservation and parking projects are low on the list, with only one project each being approved.

The highest number of projects approved by a state is 94 by the state of Maharashtra followed by the state of Andhra Pradesh with 84 worth Rs 2,699 crore and Rs 2,459 crore, respectively.

BSUP and
Some 66 per cent of the BSUP funds are used in projects on slum development and other slum support infrastructure. The total money approved for BSUP and IHSDP is Rs 16,356 crore and Rs 6,828 crore of which Rs 14,804 crore and Rs 7,311 crore have been approved, respectively. Maharashtra and West Bengal have been approved Rs 3,320 crore and Rs 1,962 crore under the BSUP. Under the IHSDP, Uttar Pradesh and Maharashtra have been approved funds worth Rs 846 crore and Rs 1,433 crore, respectively.

The mission suggest two types of reforms namely mandatory and optional reforms in order to improve service delivery , access to services, participation of citizens and accountability.

The annual update on JNNURM report proposes mandatory reforms so as to ensure ‘internal earmarking of funds for services to the urban poor’. The report also stresses on a shift to a double-entry accounting system. As it stands, nearly 44 cities of the 65 Mission cities have put aside funds for urban poor, while 55 under UIG have moved to double entry accounting system.

IndiaSpend has earlier reported on the delays in double entry accounting system implementation in states like Maharashtra.

Under the UIDSSMT, of the 644 small and medium towns in the country, 558 towns have agreed to internal earmarking of funds for services to the urban poor. While 471 towns have agreed to initiate property tax reform which in turn will ensure 85 per cent coverage.

The JNNURM has broadly pushed several optional reforms in return for funds invested. For instance, ‘revision of building bye-laws such as to make rainwater harvesting mandatory’ and ‘encouraging public participation’ has been adopted by nearly 60 and 55 of the 65 mission cities. Also, the ‘revision of building bye-laws by making rainwater harvesting mandatory and ‘revision of building bye-laws by streamlining the Approval process’ has been implemented by nearly 579 and 574 small and medium towns under the UIDSSMT.

The Planning Commission’s mid-term review on JNNURM suggests this program needs to be extended keeping in mind the rapid growth of urbanisation. It adds the government could raise funds for future extensions through four untapped avenues namely; private money, sale or lease of urban land, fair recovery user charges and through better management of property taxes.

Sector-wise, most projects are focused on water supply and waste management. Another reason for the focus on basic services is that it’s far easier to design and implement as compared to programmes related to urban transport (roads, parking lots) as they involve issues pertaining to land acquisition.

Whereas state-wise, the reasons for the failure of some to participate actively in mission is being attributed to their inability to adapt to the conditions of reform and also a lack of capacity on the part of either the state or the ULB or both. The lack of capacity refers to insufficient skilled professionals to implement the reforms and the projects; also to develop plans, identify priority projects, raise funds and execute the projects themselves.

While there are severe national deficits in areas like education and healthcare, urban development as an issue will increasingly consume the minds of planners as the rate of urbanisation accelerates. The JNNURM way of combining funds with outcomes at the local level is a good start but it’s equally important to address the other end of the stick; sustained economic growth in rural India.


 

Reprinted with special permission from IndiaSpend.com 

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