Subir Roy: Sense at last on urban crisis

VALUE FOR MONEY

The launch of the national urban renewal mission by the Prime Minister has created some hope that at last a total view is being taken of the urban disaster facing the country and a rational framework has been worked out to tackle the problem.

The least important point is the large price tag attached to the project""around one lakh crore rupees, or over 3 per cent of GDP, to be spent over seven years on 60 cities with a population of over a million. The expenditure will be shared equally by the central government, on the one hand, and the states and municipalities, on the other. Going by past experience, the Centre will end up doing most of the spending, and the projects will be remotely and inadequately monitored, having at best a marginal impact.

The good news is that the government recognises this. It has drawn attention to the practice so far of state governments mostly treating municipalities as "wards" and city planning thinking salvation lies in getting the Centre to fund mega projects. The mission seeks to link the release of central funding to state governments and municipalities with progress on reforms. The latter will have to sign a memorandum of understanding with the Centre, incorporating a road map and milestones for reform. A quarter of the funds will be disbursed once the agreement is signed and thereafter according to the milestones.

The Centre has in mind a long list of reforms. Not all are mandatory but even if a reasonable part of the agenda is addressed""some states have already made piecemeal progress""it will change the face of urban government. Urban land ceiling laws should be repealed, rent control laws rebalanced between the interests of landlords and tenants (presumably tilting them back a little towards the landlord), stamp duty rationalised to below 5 per cent in five years, the property tax system reformed, reasonable user charges levied to recover costs, by-laws for approval of construction reformed, and a modern, double entry-based accrual system of accounting adopted.

The proposed reforms also seek to encourage transparency and public participation. For this, a public disclosure law has to be enacted, making municipalities prepare medium-term fiscal plans and disclose quarterly performance details. Plus, machinery has to be set up for mandatory consultation at the ground level through bodies like ward committees. There is also a call to set up something like Voluntary Technical Corps to tap the enormous store of skills available in major cities and make it easy to roll out citizens' initiatives.

Use of IT to enable the introduction of e-governance will play an important part in making all this happen. Computerised registrations of land and property, and use of geographic information systems in levying property tax are envisaged. Plus, since municipalities should be run along modern lines, IT-enabled MIS should become apart of a municipal administration's functioning.

But perhaps the most important reform which has to be made mandatory""there can be no option on this""is what has been listed as implementing the decentralisation measures envisaged in the 74th amendment to the Constitution. Once this happens, municipalities' power to tax and spend and obligation to bear responsibility for what they are supposed to do should be firmly in place. This should end today's situation in many municipalities where the municipal commissioner is all-powerful and corporators only deliberate and regulate spending""they actually are responsible for nothing ""and the state government both controls senior administrative postings and funding without being directly responsible. And of course, municipalities should not be superseded for long periods.

The mission stands on two legs""one, focus on an integrated development of urban infrastructure and services enabled through appropriate governance (without this, cities will die) and, two, take particular care of the needs of the urban poor. The latter means providing water supply, sanitation, community toilets and baths, slum improvement, and housing. The Prime Minister has spoken of giving land rights to the urban poor at affordable rates so as to make the poor increasingly bankable and raise the scope for private investment in these areas.

There is need to rejoice that at least some politicians have realised that if the governance structure is set right, city-level institutions will become financially strong and viable and some of the development programmes for the urban poor more bankable. The government's funding role will be limited to filling the "viability gap".

But all this raises one disquieting thought. In outlining the urban renewal mission, that is the gap that needs filling, the Prime Minister says agencies already exist in rural areas to take care of things like education, healthcare, social security, and pensions. But they must be barely working, as otherwise the trek to cities for a perceived better life, even in a horrible slum, would not continue. If urban slums begin to look better, then the rush to them will only increase. That will again create pressure on the newly improved urban facilities.

The fact is that cities provide an escape route for rural people from acute income poverty but do not allow the poorest migrants into them to eke out anything other than a miserable existence. Until basic minimum wages go far higher than what they are now in both urban and rural areas, improving the quality of life for all in cities will remain a receding goal.

sub@business-standard.com