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The HPEC, mandated to estimate investment requirements for urban infrastructure for the next 12 years, was headed by Isher Judge Ahluwalia, chairperson of Indian Council for Research on International Economic Relations (Icrier), and included Nasser Munjee, deputy chairman, Infrastructure Development and Finance Company (IDFC); Hari Sankaran, managing director, IL&FS; and P.K. Srivastava, joint secretary and mission director of Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
The HPEC doesn't sound the normal doomsday warnings. Figures show that India — with 30 per cent of its population living in towns and cities — is far behind other developing markets such as China (45 per cent) and Brazil (87 per cent). Unmistakably, though, the growth of Indian cities is striding forward. The number of cities with more than one million people will go up from 50 to 87 by 2020, and India's urban populace will be 600 million by 2031. HPEC sees cities as the future engines of growth. "India's economic growth momentum cannot be sustained if urbanisation is not actively facilitated," and predicts that as much as 80 per cent of the country's GDP will come from the urban sprawls by 2031.
The report's recommendations are divided into three parts: First, investing Rs 39.2 lakh crore in urban infrastructure over 20 years with the bulk targeting development of urban roads, water and waste management and for re-housing slums. It also pleads for giving much more importance to urban planning and seeks a hike in investment from 0.7 per cent of GDP in 2011-12 to 1.1 per cent by 2031.
Next, it pitches strongly for strengthening of governance particularly of the urban local bodies. The only way urban transformation will happen is when the current bungling and financially bankrupt municipal and local bodies are souped up with efficient and autonomous administration, improved tax collection, and the ability to raise funds from the market for specific programmes and projects.
Finally, the Ahluwalia report argues for a programme-based roadmap instead of the current piecemeal project-based approach. In this context, the analysis of the JNNURM implementation is interesting. Kicked off in 2005, the JNNURM was allocated Rs 66,000 crore by the government of India. Of this, less than half — Rs 28,650 crore — has been disbursed so far, and, of the 526 infrastructure projects sanctioned, only 84 have been completed.
Asked to comment on Nath referring back the Urban Infrastructure report to the committee, HPEC's chairperson Isher Ahluwalia told BW: "The minister asking for a roadmap is a compliment. The work of the Committee is over but we will constitute a small working group and submit a ‘roadmap' in a month or so."
The committee has in fact put forward specific reforms and proposed delivery structures. These include creating an urban affairs ministry and an accountable and empowered Mayor at the level of the urban municipal bodies, pooling of taxes and resources between local bodies, and a suggestion for training 300 IAS officers annually as dedicated ‘urban specialists'.
(This story was published in Businessworld Issue Dated 16-05-2011)