Million-plus challenge fund provides an excellent opportunity for states to reimagine metropolitan governance – The Economic Times

Clipped from: https://economictimes.indiatimes.com/news/economy/infrastructure/view-million-plus-challenge-fund-provides-an-excellent-opportunity-for-states-to-reimagine-metropolitan-governance/articleshow/81176717.cms

Synopsis–An urban centre is a relatively large, dense and permanent settlement of heterogenous individuals. Such centres provide a large market for various goods and services. With the availability of many individuals with diverse skills and economies of scale, they also promote industries.

An urban centre is a relatively large, dense and permanent settlement of heterogenous individuals. Such centres provide a large market for various goods and services. With the availability of many individuals with diverse skills and economies of scale, they also promote industries. Their high population density brings down per-capita cost of providing services such as education, health, roads, water supply and sanitation, and even law and order.

No doubt urbanisation creates its own social problems — the anonymous, superficial and transitory nature of human relations. But a large heterogeneous population from different parts of the country, with diverse languages, religions and castes, living side-by-side also helps to break down rigid social structures and promotes national integration.

India has had an ambivalent attitude towards urbanisation for a long time. Mohandas Gandhi, in his 1909 book, Hind Swaraj, was all in favour of idyllic self-sufficient villages, and less than enthusiastic about technology, railways and urbanisation. By Independence, he had modified his views. Yet, nostalgia about self-sufficient villages to the exclusion of well-planned vibrant cities remained for decades.

India paid scant attention to urban areas until the late 1990s. GoI’s focus on urban India until then was in areas such as curbing unearned increment in urban land values, and laws to impose ceilings on ownership and possession of vacant urban land. The 1997 urban employment programme Swarna Jayanti Shahari Rozgar Yojana (SJSRY), the 2001 housing programme Valmiki Ambedkar Awas Yojana (VAMBAY) and the 2005 Jawaharlal Nehru National Urban Renewal Mission (JNNURM) were the first steps at the Union level towards planned urbanisation. There were no notable initiatives at scale at the state government level.

Despite such benign neglect, India has urbanised at a steady pace. The urban share of its population went up from 26% in 1991 to 28% in 2001, and to 31% in 2011. With hidden urbanisation on the peripheries of cities, these figures understate the true extent of urbanisation. The World Bank put the share of India’s population living in areas with ‘urban-like’ features at 55% in 2010.

Census 2011 identified 473 urban agglomerations, which are contiguous urban settlements comprising at least one urban local government of at least 20,000 persons, besides other local governments or even census towns (villages or parts of villages showing urban characteristics). 53 of these 471 agglomerations have one million-plus population, and comprise 40% of India’s urban population. Think of Brihanmumbai, National Capital Region (NCR) and Greater Kolkata. Such agglomerations with more than one million people have grown from only five cities in 1951 — ChennaiDelhi, Hyderabad, Kolkata and Mumbai — to 53 in 2011.

Without focused attention, India’s urbanisation has been chaotic in nature. Quality of infrastructure and services will be a crucial determinant of the cities to leverage agglomeration economies. Basic facilities such as clean air, housing, safety, power supply, water and sanitation, ease of mobility and open spaces will be crucial factors that will determine their ability to attract investments and talent, create jobs, improve economic productivity and alleviate poverty. ‘Ease of living’ is, and will remain, important not only as an end in itself but also for ‘ease of doing business’.

Integrated and coordinated governance across an urban agglomeration is critical for civic amenities. Problems like air pollution and urban flooding don’t recognise municipal boundaries. By the 74th Constitutional Amendment (Articles 243P and 243ZE), states have to designate an area with more than one million people as metropolitan areas, and constitute metropolitan planning committees in them. With insufficient progress on both these fronts, severe spatial and functional fragmentation remains in the governance of our urban agglomerations.

The 15th Finance Commission, in a departure from the past, has chosen to sharpen focus on urban agglomerations. It has proposed a million-plus challenge fund (MCF) of a substantive amount of ₹38,000 crore for 50 urban agglomerations — all 53 except the Union government-administered Chandigarh, Delhi and Srinagar — with a million-plus population. MCF is performance-linked to outcomes in water supply, sanitation and clean air. Further, the funds are allocated not for outcomes being achieved by individual local governments in cities but by all of them collectively.

Much-needed inter-agency coordination and integration over a broader metropolitan footprint is now inevitable. The entry conditions of publication of online annual accounts, notification of floor rates for property tax and consistent increase in their collections in line with GSDP apply to them, too. MCF, thus, provides an excellent opportunity for states to reimagine metropolitan governance, and realise the economic potential of their large urban centres.

(The writer is member, 15th Finance Commission, and former chief economic adviser, GoI)

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