Five years of NDA's urbanisation drive: Slow progress muffles good intent

While most schemes fallen woefully short of targets, they have nevertheless helped bring convergence and coordination at various levels of governance

Over the past five years, the Narendra Modi-led NDA government has launched several programmes such as the Smart Cities Mission, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the Pradhan Mantri Awas Yojana (urban) to tackle various aspects of India's urbansiation challenge. As the term of this government comes to an end, Business Standard examines how some of these flagship schemes have fared. 

Smart Cities 

Launched in mid-2015, the Smart Cities Mission was meant to promote cities that provide core infrastructure and give a decent quality of life to citizens. Over four rounds, a total of 100 cities were selected for development as smart cities. These cities had to fulfill two criteria. First, they would have to either redevelop at least 50 acres, or retrofit 500 acres, or build a new project over 250 acres. Second, they would have to provide at least one smart service such as smart metering across the length and breadth of the city. 

The smart city proposals of these cities listed 5,151 projects with investments adding up to Rs 2,05,018 crore. But almost four years after the mission's launch, 2,748 projects worth Rs 1,04,964 crore have been tendered as on January 25, 2019. Of these, 2,032 projects worth Rs 62,295 crores are currently under implementation or have been completed. 

A closer look at the list of projects throws up two salient points. First, most projects are localised in nature, geared towards area-based development. On the other hand, pan-city projects have been accorded less priority. Second, market variation exists in implementation levels across states. 

On the former, experts that Business Standard spoke to say it’s a question of scalability – whether the area-based projects can be scaled up to the city level. “Every city had to do at least one pan-city project and the rest could be area-based development. Now the question is whether the area-based development projects can be scaled. I think they can. we are seeing some cities such as Vishakapatnam beginning to think about this,” says Jagan Shah, Director at National Institute of Urban Affairs. 

State-wise data also shows that some cities are way ahead of others when it comes to implementation. “With states having differing implementation capacities, the pace of implementation of various urban development schemes has been varied,” notes Arindam Guha, Partner at Deloitte. “For implementation to be further streamlined, we need more clarity on the role of the SPV (the delegation of powers etc) as well as strengthening of the capacities that exist at the SPV as well as the municipality level,” he adds. 

Experts that Business Standard spoke to say that a positive outcome of the Smart Cities Mission has been the operationalisation of city-level command and control centres in 10-12 mission cities. Given the relatively lower time taken for implementing technology interventions than physical infrastructure like water distribution and sanitation networks, it was always expected that these projects would be the first ones to be up and running. But many states like Tamil Nadu and Maharashtra have also gone in for state-level command & control centres as against city-specific ones, thereby enabling wider reach.

AMRUT

Along with the ambitious smart city programme, the NDA government also launched the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) in 500 cities, to focus on water supply, sewerage and septage management, storm water drainage, non-motorised urban transport and development of green space and parts. 

The state action plans drawn up envisaged investments worth Rs 77,640 crore, of which Rs 35,990 crore was committed by the centre. But progress has been slow so far, with work completed only on 1,283 projects worth Rs 3,139 crore according to the ministry’s reply in parliament. Contracts have been awarded for 3,198 projects with investments adding up to Rs 56,946 crore. Another 590 projects worth Rs 11,202 crore are currently under tendering and detailed project reports (DPRs) of 371 projects worth Rs 7,307 crore have been approved.

While the pace of execution may be less than desired, experts Business Standard spoke to, say these schemes have helped bring convergence and coordination at various levels of governance. “One of the positive fall-outs of the Smart Cities Mission has been higher convergence and alignment between Central and state governments as well as across schemes like Smart Cities Mission, AMRUT, Swachh Bharat etc. at the city level,” says Guha. 

Other experts concur. “In my view, the achievements of the Smart cities/AMRUT programmes have been three-fold. First, it has led to convergence and integration at the state and municipal level on issues such as transportation and housing, which has led to integrated planning. Second, there has been a convergence of fund at the centre, state and municipal levels. Third, it has led to thinking about technology in a more holistic manner rather than just about purchasing solutions,” noted Shah. 

However, Shah cautioned that the programmes exposed the lack of capacity at the state and municipal levels. “There wasn’t enough supply of trained professionals. In fact, some cities faced troubles getting professionals to work in the SPV,” he added.  

Housing and sanitation 

The NDA government also launched an ambitious programme to ensure housing for all. The Pradhan Mantri Awas Yojana–Urban aimed to construct 10 million houses in urban areas by 2022. 

But while central assistance released under PMAY (U) has been ramped up sharply the past years, from Rs 3,222 crore in FY16 to Rs 11,801 crore in FY19, progress on the ground has been slow. Data shows that as on February 25, 2019, total houses completed (including incomplete houses of the earlier National Urban Renewal Mission) stood at 16,04,342 against a total of 79,03,674 houses sanctioned. 

The scheme has faced challenges due to unavailability of land in prime areas, low participation of private developers, rising construction costs and lack of new technology, noted ratings agency Crisil.  

“While many state governments have offered higher floor area ratio and other concessions to private players, a number of other issues also need to be addressed for replicable models to emerge in affordable housing. Some key issues include ensuring adequate beneficiary financing through micro-mortgages and related instruments; diversifying the focus from high rise constructions alone to alternate models around in-situ development of slums / habitations through a mix of low cost building technology backed by required municipal amenities with community-based operation & maintenance; addressing linkage of affordable housing with livelihood options for the intended beneficiaries,” says Guha. 

Then there’s also the budgetary constraint. Crisil had estimated that the government needed around Rs one trillion crore over the next three years to achieve the target of 10 million houses. But with revenue from the goods and services tax (GST) continuing to be subdued and the government struggling to meet its fiscal deficit, the government doesn’t seem to have the elbow room to fund this scheme. 

“Our calculations show the government will have to garner around Rs 1 lakh crore (Rs one trillion) over the next three years if it has to achieve the target of building 1 crore (10 million) houses. This is going to be a tall ask given the current fiscal arithmetic,” noted Prasad Koparkar, Senior Director, CRISIL Research, in the research note. 

On the December 2018, some 54,64,727 individual household latrines were constructed as against a target of 66,42,222, shows data. Another 4,64,250 community and public toilets have been constructed as against a target of 5,07,589 toilets. 

On the flip side, as against an allocation of Rs 1,462 crore meant for IEC and public awareness so as to change behaviour regarding open defecation, only Rs 653 crore has been released so far.