The Hindu Business Line : An urban mission

ON SATURDAY THE Prime Minister, Dr Manmohan Singh, launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a gigantic scheme for urban development. The aim is to improve the basic services in over 60 cities with a population of more than one million, all State capitals and select towns of religious historical and tourist importance. The scheme will involve a combined investment of Rs 1 lakh crore by the Centre, the State governments and urban local bodies over the next seven years. Fifty per cent of that amount will be provided by the Centre; this year's Budget has made a provision for Rs 5,000 crore. Though a very tall order indeed, the project is to be welcomed considering the abysmal state of infrastructure in India's cities.

For this ambitious scheme to succeed, the State governments and the local urban bodies (LUBs) will have to reform the land market and the stamp duty structure. Many cities have archaic rent control laws and are tempted by the buoyancy of real-estate to use the stamp duty as a revenue- gathering exercise; the Prime Minister wants the level down to 5 per cent in the next seven years. JNNURM is much more than just a scheme for conferring property rights on the urban poor. Presumably, the huge corpus of funds has to be used to improve the quality of life for all present and future inhabitants. It is a mission statement whose success requires more than Budget-fixing, as in routine development schemes. It requires a radically different set-up in the governance process such that the prime responsibility and the powers for the execution of its tasks are assigned to a single and competent authority. What better way than placing that responsibility on the lowest level of administration — the municipality? Given the history of urban development failure under a top-down governance model, isn't it time to consider a more decentralised set-up for JNNURM?

Perhaps it is. One of the reasons for Mumbai's failure to cope with the monsoon havoc this year was the uneasy and ambiguous distribution of powers and accountability of action between the State government and the civic authorities. That experience has been repeated in all cities facing undue rains and floods, including Chennai and Bangalore. Municipalities have to be empowered in a manner that holds them responsible for civic governance. That can happen only when they are also vested with the powers to raise and retain resources through the taxes they levy. Unfortunately, that is not the case so far because those powers are vested in the State governments. Absence of fiscal authority undermines accountability in administration and spending so that profligacy and lack of amenities go hand in hand.

Today, States are incapable of handling the expensive project of urban infrastructure. In the best of times, they would have had to distribute their resources all over the State and among cities. Today, almost all of them are bankrupt with their combined fiscal deficit at 5 per cent of GDP. But the cities are thriving centres of economic activity, given the contribution of services sector to GDP; and municipalities are not yet in debt. Neither are the authorities accountable in the manner that those of the only city-state in India — Delhi — are.

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