Financing cities: G20 infrastructure agenda

Indian cities account for about two-thirds of economic output. They are home to a growing share of the population, projected to reach 675 million by 2035 1. Housing, transportation, sanitation, water supply, health care, and education are key services to ensure the quality of living and sustained growth in urban centres. Cities that are being built, and the existing ones, need to keep in their development strategies the issues of sustainability, inclusivity, and resilience as their central focus. Climate change and energy transition add a new dimension to the cities’ capacity to build, modernise, or upgrade their infrastructure. Thus, India has made conscious efforts to include urban infrastructure as the focus area of the infrastructure agenda during the 2023 G20 presidency and chose the theme of “Financing Cities of Tomorrow: Sustainable, Inclusive and Resilient” as a flagship priority for the G20 Infrastructure Working Group (IWG).

Inclusive cities are built on equitable access to resources, spaces, and opportunities. Formulation of inclusive national policies and master plans, accessible urban spaces for all, affordable housing, education, and health care are crucial to inclusiveness. Resilient cities withstand shocks to environmental and economic systems and recover quickly. Building high-quality infrastructure that enables resilience to shocks, climate resilience, and energy efficiency is very important. Further, the elements of sustainability would embed the principles of optimal use of scarce natural resources, circularity, and LiFE.

Building inclusive, resilient, and sustainable cities is contingent on two critical requirements: Financing and institutional capacity. The G20 IWG provided a global platform where the successful implementation of innovative financing mechanisms for urban infrastructure from developed and developing countries could be exchanged. A significant part of urban infrastructure financing worldwide is done through public resources. There is a critical need to attract private financing for urban infrastructure by formulating long-term strategic planning, creating an enabling policy environment, improving the creditworthiness of cities, creating a pipeline of investible projects, launching thematic/sustainable bonds, and deepening capital markets. To achieve all these objectives, the national and sub-national governments and the multilateral development banks should play a key role.

City administrations are the frontline of delivering local urban services, and the need for augmenting their capacities to cope with the requirements of future cities is essential. The city administration requires the technical and financial capacity to formulate integrated urban plans, develop bankable projects, generate own revenues and ring-fence them, access financial markets, monitor projects through the life cycle, and deliver efficient public services. Digital infrastructure and data-driven insights would be critical in enabling this. Towards this end, through multi-stakeholder consultations, the presidency developed a customisable capacity-building framework that local governments could use in assessing and enhancing their institutional capacities. Since it is a customisable framework, it can be applied across cities of all sizes and at different developmental stages. The robust framework contains tools, checklists, and case studies that serve as a guide vis-à-vis national development plans, legal frameworks, and guidelines for urban planning, national climate adaptation plans, guidelines for public-private partnerships (PPP), fiscal responsibility and regulatory frameworks, infrastructure design codes, service delivery standards, procurement guidelines, etc.

India contributed immensely towards the outcomes of the IWG by drawing lessons from its policy and programmes in the urban development sphere. The Transit-Oriented Development in Ahmedabad, the Integrated Control and Command Centre under the Smart City Mission, the municipal bonds issuances of Vadodara, and India’s National Urban Policy Framework (NUPF), formulated in 2018, an example of how a shared vision for cities can be formulated to accommodate different capacities of cities to undertake urban planning based on an outcome-based system, became part of the agenda in IWG meetings. The learning from implementing the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission and Housing for All (PMAY), and metro rail projects were instrumental in shaping this global urban infrastructure agenda.

The IWG urban infrastructure agenda shaped by India also acted as a voice of the Global South, reflecting their ambitions and growth imperatives. By pioneering this Inclusive, Resilient, and Sustainable city agenda, India made an important contribution to shared prosperity by fostering partnerships among key stakeholders on the global stage. Domestically, India will champion the people-centric approach in building the urban infrastructure of tomorrow as it marches towards the vision of a future-ready India@2047.

Nageswaran is chief economic advisor and Arokiaraj is joint secretary in the Ministry of Finance, Government of India. The views here are personal 1. World Cities Report 2022, UN Habitat