By Anand Sahasranaman, IFMR Finance Foundation
The High Powered Expert Committee (HPEC) for estimating the investment requirements for urban infrastructure services released its final report recently. The committee was set up by the Ministry of Urban Development in 2008 under the chairmanship of Dr. Isher Judge Ahluwalia.
The objective of the group was to assess the challenges of urbanisation and project the quantum of investment required for the provision of public infrastructure and services in urban India. The report also outlines the reforms in governance and financing that will be essential for cities to discharge their responsibilities in provision of these public services.
The group comprised of eight experts – Nasser Munjee, Chairman, DCB; Nachiket Mor, Chairman, IFMR Trust; M. Vijayanunni, Former Chief Secretary, Kerala; Sudhir Mankad, Former Chief Secretary, Gujarat; Rajiv Lall, Managing Director, IDFC; Hari Sankaran, Vice Chairman and Managing Director, IL&FS; Ramesh Ramanathan, Co-Founder, Janaagraha; and Om Prakash Mathur, NIPFP.
The committee estimates the investment for urban infrastructure over the next 20 years at Rs 39.2 lakh crore (at 2009-10 prices), which is an indication of both the large current backlogs in public service provision as well as the scale of expected urbanisation till 2031.
In order to achieve this scale of investment, the committee states that fundamental reforms in governance will be essential. These reforms include increased focus on metropolitan and regional planning; service delivery reforms such as corporatisation of service delivery institutions; regulatory reforms such as the setting up of urban utility regulator; enhanced community participation through empowered area sabhas and preparation of citizen report cards and a strong focus on institutional capacity building.
The committee also recognises the critical need for financing reforms such as the adoption of an area based system of property tax appraisal by cities; the revision of user fees periodically to ensure recovery of overall O&M charges; the need for state level financial intermediaries to work with smaller cities; and the creation of regulatory guidelines for municipal borrowings.
IFMR Trust has been advocating some of the reforms that the HPEC has recommended in its report and this paper outlines these ideas in greater detail.