Friday, 19 August 2011

Financing Urbanisation (Ishar Ahluwalia Committee)

India is set to urbanize at a rapid pace. A recent report by McKinsey Global Institute titled “India’s Urban Awakening” has made a few projections about the status of India’s urban spaces in 2030:.
-       India will have 62 million+ cities, in comparison to the present 42 cities.
-       India’s urban population will increase from 340million to 590 million, which is almost doubling of the urban population
-       Indian cities could generate 70% of net new employment, produce more than 70% of GDP, and quadruple the national per capita income.
-       Increase in middle class households from 22 million presently today to 91million.

To cope with the pace of urbanization as projected above a big investments are required. GOI  has recognized this and constituted a committee- the Isher Ahluwalia Committee on Urban Financing has made recommendations (March 2011:
1.    Investment requirement of Rs.39.2lakh crore for 2012-32, with Rs 17.3 lakh crore for urban roads, Rs 8 lakh crore for sectors delivering urban services such as water supply, sewerage, solid waste management and storm water deains, Rs 4 lakh crore for renewal and redevelopment including slums.
2.    New and improved JNNURM covering all cities and towns, with implementation spread over 20 years
3.    More broadbased revenue-sharing with urban bodies
a.    Inserting a local bodies finance list in the Constitution, from which local bodies can exclusively levy taxes
b.    Support to municipal bonds by tapping the growing market of pension, insurance and provident funds
4.    Proper city planning
5.    Capacity building and improving service delivery
6.    Investment in urban renewal and redevelopment esp slum development
7.    Improving governance mechanism and put in place single-point accountability- presently there are many local government bodies in urban spaces leading to confusion, dereliction of duty and lack of accountability.

Well conceived cities are important because they attract investment, unlock new growth markets, create stronger and larger middle-class, boost GDP and National Income, improve quality of life, are efficient users of energy (as opposed to dispersed habitations). To achieve this synergistic partnerships need to be developed between private and public sector as well as learn from the experiences of other countries/societies. 

1.    “Cities are India’s future”, The Times of India, 31/5/2011
2.    “India’s towns need big money”, The Economic Times, 10/5/2011

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