Kala S Sridhar: The complexities of urban management

Correct pricing of services can help solve many urban problems

Political parties have been making loud promises on improving basic services such as electricity, roads and water this election year. Can we choose a political party that can focus on these issues in the context of reform?

Here, we must understand that any ready-made, easy solution to attain uninterrupted power or water supply will be viewed with suspicion. That's because our resources are limited, and there are no free lunches.

Ours is a large country with several urban agglomerations (UAs) and these are comparable to the UAs in many other large countries, for example, the US.

While the US has close to 265 metropolitan statistical areas (MSAs), the number of UAs in India increased from 274 in the 1981 census to 374 in 1991. And according to the 2001 census, the number increased to 384, much more than the MSAs in the US. But are the public services in our UAs in any way comparable to those in other developing countries, leave alone the US?

According to the urban development ministry, 20 per cent of the country's urban households are denied access to safe drinking water, and more than 40 per cent of the garbage generated is left uncollected for want of proper waste management. This data is for urban areas.

It is possible that analogous, if not worse, problems exist in the rural areas on which reliable data is not available.

However, if urbanisation is an inevitable occurrence, it is important to address these infrastructure problems in urban areas. If such problems cannot be addressed in urban areas, it would be much more difficult to address them in rural areas.

The question here is: have we given enough attention to urban management in the country? Government programmes have, no doubt, focused on reducing the size of cities.

Some examples are freight equalisation, industrial licensing, the promotion of small-scale industries in rural areas and the creation of industrial estates and growth centres to provide infrastructure incentives for companies to locate away from urban areas.

Although there is no substantive reason for reducing the size of various cities, the reduction is conducive from the viewpoint of employees as well as companies.

Many companies have observed that a one-way commute in a large metropolitan city like Delhi or Mumbai is about 20 to 30 km, whereas commutes in smaller cities are a maximum of 10 km. So locating in small or medium-sized cities where skilled labour force is available, and where the cost of living is much lower, represents a much better option for a number of business process outsourcing and logistic firms.

Initiating government programmes to decongest larger cities and creating small- or medium-sized towns has been one approach to urban management. Another approach to accomplish this is through curriculum and training.

Recently, at a management development workshop on the urban water sector, coordinated by the regional office of the Administrative Staff College of India (ASCI), the need for a "cadre of urban professionals" to bring about and implement urban reform in the country was discussed, highlighting the need for training in these areas.

The question we need to answer is whether or not we need to create a cadre of such professionals, just like we have for other civil services, adding to the bureaucracy, or we are interested in merely garnering support for urban reform? The issues, we recognise, are broader.

Our goal is to answer the following questions:

• Is the cause of the state of urban infrastructure (roads, water, sanitation and solid waste) in the country a result of over-urbanisation?
• Should we impose restrictions on migration into urban areas?
• How can we make our cities comparable to international standards?

Alternatively, instead of closing the doors to rural in-migration, the panacea to urban problems and services in the country could be to correct pricing of these services. That is, there should be an explicit connection between usage of a service and its price. Can we make those who are willing to pay for the various services, actually pay?

For this, a much broader perspective "" including international experience "" is required. Can consumers accept the idea of a good service quality (that requires a high fee) or appreciate the importance of low quality (low or no fees)? Until consumers who have the ability and willingness to pay, think in terms of this relationship, no real reform can take place.

Currently, in most states, user charges cover, on average, only about 45 per cent of operation and maintenance expenditure pertaining to water supply. The need, if we insist on public-private partnerships in these areas, is to increase tariffs for the various urban services, at least from consumers that can afford to pay.

This can be used to provide these services free of cost to those who are below the poverty line (BPL), subject to a sunset clause regarding their BPL status. Else, how financially viable are these projects for private partnerships?

The real leaders of the country are those who can make consumers understand the service-price relationship, whether we speak of urban services or education in the Indian Institutes of Management.

(The writer works with the National Institute of Public Finance and Policy)