Om Prakash Mathur: Demystifying the JNNURM

The single largest central government initiative in urban development, it seeks to adjust the existing rules and regulations to what contemporary urban India needs.

The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is close to completing two years of its seven-year tenure. In terms of the size of investment, population coverage and the broad-spectrum reforms that it seeks to put in place, it is by far the single largest central government initiative in the sphere of urban development.

When a mission of such a scale and dimension is mounted, it evokes reactions, often even suspicion. Questions have, for instance, been asked as to why would the central government in a federal set-up whose Constitution allocates the subject of urban development to states, take such an initiative? What could be its motive? Purists might see it as an infringement of basic federalist principles. Others, less concerned with the federalist argument, dub the JNNURM as a product of "lobbies" which, as is often claimed, have a strong influence on public policy-making in the country. Thus, the JNNURM is said to be a product of "real estate lobby", which has long had a stake in the repealment of the Urban Land (Ceiling and Regulation) Act, 1976, in establishing a rental regime that would have no reference to "standard or fair rent", in raising the Floor Area Ratio or Floor Space Index from the current, absurdly low levels to levels that are currently in use in countries such as China, and in simplifying the arduous procedures for converting agricultural land into non-agricultural uses.

Others, of course, see JNNURM as a larger game of bringing in private players into the provision, production and management of local public goods and services like water supply, sewerage and sanitation, solid waste management and city roads "" a sphere that has remained historically protected from any intrusion. Does the JNNURM, many ask, not aim at creating a "market" that anyone would lap at, given that the demand for such services is not only stable but likely to grow over time? Precisely for reasons that some see JNNURM as a market response to the problems of cities, non-governmental and civil society organisations condemn it as being "anti-poor", without acknowledging that tenurial security and universalisation of services to the urban poor are the centerpiece of the JNNURM.

Not surprisingly, those who hold and advance these positions do not talk about or discuss the state of our cities and towns. As we know, cities, to use a conservative expression, with huge infrastructural and service deficits are at a breaking point. Many receive water on alternate days, others have a two-four hour water trickle of questionable quality. Few have storm water and wastewater disposal networks, and suffer from water stagnation with huge negative health impacts. City road systems can barely take on any additional load that has risen at exponential rates in the post-1991 period. According to the 2001 Census, 26 per cent of urban population live in slums in sub-human conditions.

Respect for city planning which has had strong traditions in this country has disappeared. Doing business with cities "" whether it is to take a licence for starting a business or permit for the construction of house "" is costly, to say the least. What has led to this kind of a situation? Let me underline three of the many reasons.

Continuation of obsolete laws, rules and procedures that impinge on cities and urban development: Cities continue to rely on laws, rules and procedures that have no place in contemporary urban India. Three examples would substantiate their perverse effects. (1) Cities and towns in India occupy 2.6 per cent of the country's total land mass, but hold 30 per cent of the total population. While urban population has been continuously increasing, the corresponding increase in urban land and consequently housing has been held back on account of the interplay of several laws, rules and procedures. (2) The existing municipal government system nurtures a functional and fiscal profile that was developed by the Decentralisation Commission of 1908. No change has occurred in the fiscal powers of city governments as assigned to them in 1908, notwithstanding the Constitutional Amendment of 1992, and notwithstanding the extraordinary changes that have occurred in the demographic, social-economic and physical profile of cities. (3) Cities and towns still maintain and work with a cash-based accounting system. There are strong vested interests in keeping on to the system as it allows city governments to withhold vital information on payables and receivables and what is spent on what.

Inability to upfront address the issue of assignment of functions and responsibilities: One of the features of Indian polity lies in unclear, overlapping, and often fragmented, assignment of responsibilities pertaining to municipal services like water supply, sewerage systems, solid waste management, city-wide roads and street lightning. Several bodies operate in these spheres, each justifying its mandated role but unable to explain what measure of efficiency and value it is adding to service delivery and management, or to shed light on why new assets are created by one agency, managed by another and billed by yet another. Nowhere is the issue of assignment so opaque as in the case of urban poverty alleviation and slum improvement. Who is better suited to deal with them "" municipal governments or the higher tiers?

Fear of experimenting with new ways of financing municipal infrastructure and services: Barring a few municipalities that have taken advantage of the nascent but expanding capital market and the introduction of a pool financing mechanism for relatively small municipal bodies, public financing of urban infrastructure continues to be the preferred mode. The suppliers of capital are chary of changing their conventional lending ways in order to accommodate the very special needs of urban infrastructure financing. Nor is there any discussion on exploring alternatives to escrowing or the promotion of secondary markets for municipal bonds so as to bring additional liquidity for financing urban infrastructure.

The JNNURM is a response to addressing these problems. It is a partnership between the centre, states and cities. It seeks to adjust the existing system of laws, rules and procedures to the requirements of the contemporary urban needs. It offers an opportunity for settling the assignment issue. It seeks to bring in inclusiveness to urban development. It aims at augmenting the revenue stream of municipalities so as to encourage the suppliers of capital to change their ways of financing urban infrastructure. It is meant to serve the basic needs of cities and towns, not of any lobby or interest groups.

The JNNURM, it must be recognised, carries a strong philosophy: cities can not remain unfairly bound to laws, rules and procedures that have little relevance. An absence of knowledge and understanding of this philosophy and what it stands for can turn the mission into a bureaucratic exercise. The JNNURM is a science. It requires a fuller knowledge of how a reform agenda needs to be designed, for example, what goes into fixing a user charge and what difference can a tax rate make to the revenues of municipalities. Designing reforms is a systematic and scientific business. It is equally an art. It requires capacity and acumen to be able to think what needs to be done, at what time, and with whose support and partnership. Nothing can be more damaging to the mission than implementing the reform agenda in a disjointed manner.

The JNNURM may not be an answer to the numerous problems a city faces, but it opens up a vast expanse of initiatives to make cities efficient, inclusive and liveable spaces. Only 30 per cent of Indians may live in cities today, but capacities need to be built in to deal not only with the accumulated problems of the past but equally the challenge of accommodating 9 million persons annually. The JNNURM is one such instrument that can make it happen.

The writer is Professor, National Institute of Public Finance and Policy