Government may double size of JNNURM

Negotiating $5 billion loan with World Bank.

The government could double the size of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) as it is close to exhausting the funds allocated to the mission.

The government’s flagship programme for urban development was launched in December 2005 with a commitment of Rs 50,000 crore to part-fund urban projects.

These funds are given as a central government grant to states and urban local bodies, subject to progress on certain urban governance reforms.

The government has already extended its commitment to Rs 61,000 crore by increasing the allocation for each of the 65 cities covered under the programme (up from 63 originally), and also through the stimulus packages announced recently.

More such top-ups for the seven-year mission are planned, officials stated.

Part of this top-up could be through a $5 billion (Rs 25,000 crore) loan from the World Bank which is currently being negotiated. “We are moving forward and are hopeful of getting the loan, for which we have support from the finance ministry,” said Dr M Ramachandran, Secretary, Ministry of Urban Development.

JNNURM funds are allocated almost equally to its two main components — urban infrastructure and governance, and housing and basic services for the urban poor.

Fund release is tied to a governance reform agenda which includes repeal of the Urban Land Ceiling and Regulation Act, reform of rent control laws, rationalisation of stamp duty, levy of user charges and transfer of powers to urban local bodies (according to the 74th constitutional amendment).

Areas for which funds have been granted under the mission include urban transportation, waste management, water supply and sanitation, slum development, housing for the poor and development of heritage areas.

“There is definitely good progress made under the mission. Many of the projects (like drainage and sewerage) would not have been taken up otherwise,” said Ramachandran.

Under the urban infrastructure part of the mission, the largest number of projects approved are in the area of water supply (141 projects worth Rs 18,540 crore), sewerage (Rs 12,339 crore), drainage (Rs 7,139 crore) and for roads and flyovers (Rs 3,416 crore).

In Ahmedabad, the bus rapid transit system is being part-funded by the mission, though the largest recipient of funds for urban infrastructure are cities including Pune, Hyderabad, Chennai and the Greater Mumbai area.

In all, over 460 urban infrastructure projects worth about Rs 50,000 crore have been approved. The central government’s commitment to these projects is Rs 23,500 crore while the rest is to be mobilised by state governments and urban local bodies.

This leaves room for just a few more project approvals, and that too from some states which have not yet reached their sanctioned limit. “The funds will run out this year,” says Ramachandran.

Under the head of housing and basic services to the urban poor, almost 1,300 projects worth Rs 34,000 crore have been approved. The central government’s commitment to these projects is about Rs 19,000 crore.

Funds here are also expected to run out this year, despite the recent top-up.

That is what explains the rush to pump more funds into the mission.

There have been some complaints about tardiness in completion of projects but most industry experts are gung-ho about the programme. “It is a very well crafted intelligent innovative programme. The pity is that the states and city administrators have not been proactive in pulling more funds out of the mission,” said Vinayak Chatterjee, chairman of the national infrastructure council of the Confederation of Indian Industry and chairman of consultancy firm Feedback Ventures.

Increase in the size of the mission is likely to be accompanied by an increase in the number of cities funded as well as the set of activities that are eligible for funding under the mission, officials added.

Almost a third of the country’s population now resides in cities. By 2011, cities are expected to contribute 65 per cent of the gross domestic product (GDP).