City focus welcome but broader vision needed

FM invokes the migrant worker; Rs 7,060 crore allotted for developing 100 smart cities; credit for affordable housing

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In his first Budget, Finance Minister Arun Jaitley invoked the migrant worker rather than the rural agriculturalist. “As the fruits of development reach an increasingly large number of people, the pace of migration from the rural areas to the cities is increasing,” he said, “A neo middle class is emerging which has the aspiration of better living standards.”

The Budget allots Rs 7,060 crore for developing 100 smart cities, Rs 4,000 crore to help the National Housing Bank provide cheap credit to provide affordable housing to the urban poor, and Rs 100 crore for metro projects in Lucknow and Ahmedabad. The government also hopes to upgrade 500 existing cities over the next 10 years by improving water supplies, waste management and digital connectivity through public-private-partnerships.

That apart, Jaitley suggested including slum development in the list of Corporate Social Responsibility (CSR) activities of the private sector, and launched the Shyama Prasad Mukherji ‘Rurban’ Mission for the urbanisation of rural areas. He also extended the Pooled Municipal Debt Obligation Facility, first announced in 2006, by five years and called for an enlargement of the facility’s corpus from Rs 5,000 crore to Rs 50,000 crore in partnership with private banks.

Urban planners said that the announcements appeared to be a reworking of existing schemes like the Jawaharlal Nehru National Urban Renewal Mission, rather than a bold urban vision statement.

“The Rs 7,060 crore for smart cities could a recasting of the JNNURM allocations,” said Ramesh Ramanathan of Janaagraha, a Bangalore non-profit focused on urban issues, “The focus on affordable housing, and the acknowledgment of the “rurban” — which represents the continuum between the rural and the urban — is very welcome. But we need a systemic framework for urban India rather than a smattering of discrete initiatives.”

As an example, Ramanathan said, the JNNURM was not an incremental source of resources for urbanisation, but “cannibalised” funds from other possible uses and also stymied the growth of the municipal debt market as cities preferred government grants to raising debt. Enhancing the Pooled Municipal Debt Facility could create a new source of resources by creating an avenue for private banks to lend to city municipalities.

“But bankers will not lend to cities without comprehensive governance reforms,” he said, explaining why the facility had floundered thus far, “We see this Budget as a beginning, but look forward to a comprehensive urban agenda by next year’s Budget.”