With cities being the engines of economic growth, it is only correct that the new urban development minister, Venkaiah Naidu, took charge amid big policy announcements. His inaugural announcement was to start building 100 new smart cities in India, and in turn scrapping the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Cities are a state subject, with a limited role for the Union government to play. With the 74th amendment, cities became a matter of local self-governance, though most states have not devolved much power to them so far. Any new push from Naidu or ministries in New Delhi will have to keep this in cognisance. Our experiments with Delhi-driven urban development have not yielded good results so far, with the best example being JNNURM. As JNNURM is wound down, it is good to see what we can learn from it. JNNURM is a "centrally-sponsored scheme", which means it is a Union government scheme in areas pertaining to the state list, whereby the Union ministry lays down guidelines and budgets for state and local governments to implement on a variety of themes from rural health to food security to urban development. As the Narendra Modi government is keen on the ideas of minimum government and federalism, the rationale for centrally-sponsored schemes must be thoroughly interrogated. If wielded well, such schemes can provide the right incentives, showcase models for states to pursue, fill the gap of unfunded mandates and leverage unique abilities of the Union government. JNNURM had a tantalising premise when it was first launched: the Union government will give cities money for infrastructure as an incentive for states to devolve power to cities, and for these cities to reform. The Union government was a third party in the state-city equation, hoping to tip the scales in favour of cities and true decentralisation. The promise of JNNURM was lost for two broad reasons. One, the ministry of urban development had to perform two conflicting functions: it had to spend money by disbursing it to states, but it also had to audit and verify the reforms process. The outlays were conditional on meeting reform targets. Though the ministry did a lot in checking whether cities had completed enough reforms, the spending mandate usually won through, and poor reformers were rarely punished. This made it a weak incentive for genuine urban reform. Some cities like New Delhi also received large infrastructure funds from sources such as the Commonwealth Games, making JNNURM irrelevant as an impetus for reform. Two, the Union ministries demanded an extraordinary amount of scrutiny and control for the projects approved. For example, if a town in Karnataka wanted to finance a water supply project under JNNURM that improved the lives of its residents, often the project had to meet extremely trying norms such as 24/7 water supply or complete metering of connections, which were enforced by Union ministries and attached bodies. While these are desirable, the lack of state-level decision-making led to the projects losing local relevance, apart from being subjected to an excruciatingly long and difficult process of approval.
If the intent of the Union government was to incentivise reform, then perhaps it should not have controlled the type of infrastructure projects beyond setting broad norms. All future urban policies should be made with the full understanding of the limitations of the Union government. There is also a niggling point of policy continuity with JNNURM, where a new set of projects had been sanctioned in many cities by the ministry in February this year. If these are cancelled now, they will contribute to greater policy uncertainty, which is certainly not desirable. Coming to the bold plan of building 100 new cities in India, it is still early days. The shape, size and context of the 100 new cities will play a large role in determining their success. From unofficial census towns to town panchayats to city municipal councils and corporations, India is seeing urban growth at all levels. Which of these will be chosen as the nuclei for the new cities, where will they be located and how many will be greenfield cities will determine their success. City building by the Union government should be seen a lighthouse project - to provide models in urban development and growth that the states and empowered cities can emulate. Even if half a million people move into each of these 100 new cities, India will need more urban capacity in the next decade. New Delhi can lead the way, but the success of urban India depends on whether the states choose to follow. While public policy has a large role to play in the shaping of cities, their fates are determined by the simple metric of people voting with their feet. The ultimate success of a city depends on whether large numbers of people want to go live there, and whether it can be the necessary economic and social engine that meets their aspirations. This will need a deft hand at policymaking, an engagement of all parties involved, and an understanding of both people's needs and aspirations. Most countries that have successfully embarked on city building have had failures along the way, with ghost towns, dead business districts and ugly freeways littering the graveyard of failed ideas as people figured out what worked and what did not. An experimental approach to city building with the 100 cities plan is perhaps the one most likely to work. Whether JNNURM failed or succeeded, it did bring cities to the front and centre of national policymaking in India, perhaps for the first time since independence. The 2014 elections showed that urban residents do not remain second fiddle to rural residents when it comes to politics. Now, it is time to help Indian cities become the masters of their own destinies.
The writer is the head of policy research at the Takshashila Institution, an independent public policy think tank