Urban India is changing. Though the figures do not make the country predominantly urban, increasing urbanisation, problems relating to slum expansion, shortage of housing and traffic confusion, all make living in India's 5,161 cities and towns difficult. Our urban population grew from 290 million in 2001 to 340 million in 2008 and is expected to reach 590 million by 2030. From 35 cities with million-plus population in 2001, the figure is to reach 68 in 2030. Six of them will be mega cities with a population of 10 million or more.

During the ten-year period from 1991 to 2001, the total number of cities and towns in the country grew from 3,768 to 5,161. A substantial part — as many as 4,720 of these — are towns with population of a lakh or less, which means they are bound to grow and expand beyond the present limits, and fast. If 58 per cent of India's GDP came from urban areas in 2008, it will be 70 per cent by the year 2030. Cities will contribute about 85 per cent of the country's tax revenue.

Waste disposal

If cities have such huge importance in our economic growth scenario, what conditions prevail in our cities? As far as water supply is concerned, only 70 per cent of urban households are served by tap water and only 66 per cent of such households have their basic source of water within their premises. Some 26 per cent of urban households have no latrines and only 22 per cent are connected to the sewerage system.

As many as 4,861 of the 5,161 cities and towns do not have even a partial sewerage network .While around 15,800 million litres of waste-water gets generated everyday in 300 Class-I cities, treatment facilities exist only for about 3,750 million litres per day. There is no segregation of bio-degradable waste from the rest, collection of garbage from dump sites is infrequent and disposal rules are mostly not followed. About 30 per cent of the urban population live in slums and the shortage of housing units of nearly 2.45 crore as of 2007 is set to reach 2.65 crore units by the end of this Plan.

Road space

Indian cities are increasingly faced with the challenge of providing adequate road space for future use, improving the poor condition of existing roads and decreasing share of public transport, mainly because more and more private vehicles are coming out on the roads.

Public transport accounts for only 22 per cent of urban transport in India and figures show that the share of public transport fleet decreased from 11 per cent in 1951 to 1.1 per cent in 2001. Only 20 of the 85 cities with population of 0.5 million or more have an organised city bus service.

One of the recent comprehensive reports on India's urban scenario, the McKinsey study, says infrastructure in the cities is looking decidedly tattered and access to basic services in urban areas is still poor. The report confirms the inadequacies in urban services. Urban citizens have access to only 105 litres per capita per day of potable piped water supply, against a requirement of 150 lpcd.

Lack of investment in public transportation has resulted in a significant decline in share of public transportation from nearly 40 per cent in 1994 to 30 per cent currently.

In per capita terms, India's annual capital spending of $17 for urban infrastructure is just 4 per cent of UK's $391 and 14 per cent of China's $116. The report projects that India needs to invest $1.2 trillion (53.1 trillion rupees) in capital expenditure alone in our cities over the next 20 years.

It is probably this awareness of such a large requirement that prompted the government of India to launch the Rs 66,000 crore centrally driven JNNURM in December, 2005. States have not yet claimed this Central grant in full and the seven-year mission period will end in March, 2012.

Resource estimates

Since there was no proper estimation of what is the size of investment required in our cities, the Ministry of Urban Development set up an experts committee under the chairpersonship of Isher Judge Ahluwalia that has just submitted its report.

The report concludes that India's economic growth momentum cannot be sustained if urbanisation is not actively facilitated and it argues that the challenge of managing urbanisation will have to be addressed through a combination of increased investment, strengthening the framework for governance and financing a comprehensive capacity building programme at all levels of urban governance.

The estimate for investment to cover eight basic areas, including water supply and sanitation, over a 20-year period from 2012 to 2032 is Rs 39.2 lakh crore. This means increasing urban infrastructure investment from 0.7 per cent of GDP in 2011-12 to 1.1 per cent by 2031-32. Arguing for better governance structure, the report calls for strengthening local governments with own sources of revenue, predictable formula-based transfer from State governments and other transfers from the Centre and States.

The Government will have to take a leadership role in financing a major part of the programme. Tax reforms are needed, unlocking land value could fetch more revenue and reforms to strengthen non-tax revenue also have been suggested.

Introduction of a new improved JNNURM to cover all cities and towns with a 20-year period has been recommended and with this it is expected that the Government will provide 0.25 per cent of the GDP to the local bodies.

The other two major sources through which the required quantum of finances can be found are (1) through exclusive taxes at the local body level and a guaranteed share of local bodies in tax revenue of state governments and (2) reforms in governance and financing at local body level to begin a move away from a weak financial base towards a framework which enhances the creditworthiness of local bodies.

Since about a year's time is available before the next Five-Year Plan is launched, all the preliminary work could be completed during this period so that a massive urban investment programme comes into action by April 2012.

(The author is a former Secretary, Ministry of Urban Development. blfeedback@thehindu.co.in

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