By Shweta Aggarwal, IFMR Rural Finance & Deepti George, IFMR Finance Foundation
The High Powered Expert Committee, chaired by Dr. Isher Ahluwalia submitted its Report on Indian Urban Infrastructure and Service Delivery. The report lays out the infrastructure investment needs for urban India in the next twenty years and makes recommendations for mechanisms to finance such a magnitude of investments.
Having contributed to the drafting of the report, IFMR Finance Foundation and the Centre for Development Finance (CDF) invited Dr. Ahluwalia to speak about the report in a workshop on Urban Infrastructure and Service Delivery. Held on 8th September 2011, this workshop had participation from a small but diverse mix of people actively engaged in shaping the urban agenda, from practitioners, representatives from Government bodies, to academicians. The workshop commenced with a session by Dr. Ahluwalia, followed by a session by Mr. Vikram Kapur, IAS (who previously held the position of CEO of TN Urban Development Fund) and concluded with panel discussions by the participants.
Dr. Isher Ahluwalia presented the report’s findings and shared experiences from the process of writing the report. While she spoke about the need for planning, financing, creating and maintaining urban infrastructure, she also specified that standards of service delivery must be available to all including the poor. All efforts must be made towards consciously building rural-urban synergies in policy and planning. To this end, reforming governance at all levels of government, from the Urban Local Bodies (ULBs) to the Centre, as well as investing in capacity building of the ULBs should be the need of the hour. She stated that municipal entities need to be strengthened with ‘own’ sources of revenue and predictable transfers from state governments, to help them discharge the larger responsibilities assigned to them by the 74th Constitutional Amendment.
Dr. Ahluwalia also noted that having a ‘local bodies’ list in the Constitution and making devolution mandatory would empower ULBs by giving them opportunities to collect specific local body taxes and charges (such as motor vehicle tax, entertainment tax, advertisement fee). Policies will need to be altered to incentivise states that devolve more powers to the ULBs. Dr. Ahluwalia conveyed best practices that she had opportunity to see during the course of her work, which she regularly writes about in her monthly columns in the Indian Express.
Mr. Vikram Kapur shared experiences from Tamil Nadu while addressing Long Term Infrastructure Financing needs of Urban Local Bodies (ULBs), especially small and medium cities in India. He stressed that investment needs for small and medium cities over the next 20 years was 65 times the current level of investments. Mr. Kapur stressed that given India’s phenomenal growth rate of 8% and a record of healthy savings rates, the government should tap domestic capital markets to finance these needs. He stated that the key today is to shift the way government funds are used, to leverage government funds rather than looking at them purely as grants.
Excerpts from the two sessions:
The group discussions that ensued were based on critical themes such as decentralisation and governance, political economy and institutional fragmentation, revenue generation and infrastructure financing, water and sanitation, capacity building, and land and city growth. Many interesting ideas and themes were generated in this workshop. We will be carrying these in a subsequent post.