Reforming Urban Governance in India

Context

India’s economy has grown from being stagnant to being the third largest in the world throughout the last three decades. Significant urbanization is occurring in tandem with this expansion; by 2036, 600 million people (or 40% of the population) will reside in urban areas, up from 31% in 2011. According to projections, urban regions will also contribute about 70% of GDP.

Though there are encouraging signs of improvement, cities still struggle with issues including bad governance, inadequate infrastructure, and a lack of services.

Challenges in Urban Governance of India

• Lack of Autonomy – According to the Indian Constitution, urban government is a state. As a result, each state has its own administrative structure and regulations for ULBs.    
• Draining Finances – India has the lowest property tax collection rate (property tax to GDP ratio) in the world, according to the OECD. According to a 2020–21 RBI survey of 221 municipal corporations, revenues decreased for over 70% of these companies while expenses increased by over 71.2%.  
• Multiplicity of Agencies – Complicating governance is the establishment of special-purpose agencies under direct state supervision, which are not answerable to urban municipal governments. The State Transport Corporation and the Water Supply Department are two examples of institutions that municipal authorities must support but do not have authority over.   
• Unplanned Urbanization – Inadequate planning makes it difficult for municipal services to satisfy the increasing demands of the populace in terms of both quantity and quality. Poor land use, inadequate home construction, the emergence of slums, unapproved colonies, and inadequate utilities including power, sewage, water supply, and traffic congestion are all results of local bodies’ weak administrative capacity.   
• Environmental Concerns – One of the main annoyances for inhabitants in metropolitan areas is the high levels of pollution and inadequate garbage management. Urban India generates around 42.0 million tons of municipal solid trash yearly, or 1.15 lakh metric tons per day (TPD). Of this total, 423 tier-I cities, including Bengaluru, Delhi, Chennai, Hyderabad, and others, create 72% of the waste.    
• Low Public Participation – Even with comparatively high levels of education and literacy, city dwellers frequently have little interest in the operations of urban government agencies. Additionally, there is a deficiency in public involvement in pollution and waste management.  

Steps taken to Improve Urban Governance

• Smart Cities Mission – Launched in 2015, it is a Centrally Sponsored Scheme that uses “Smart Solutions” to convert 100 cities into places where people can live decent lives by using clean, sustainable environments and basic infrastructure. Its goal was to raise inhabitants’ standards of living by promoting inclusive and sustainable development. 
• Allocation of Funds for Pollution Control – In December 2023, 131 million plus/non-attainment cities (cities exceeding National Ambient Air Quality Standards (NAAQS), consecutively for five years) have been identified and accordingly City Specific Clean Air Action Plans have been prepared along with fund allocation for these cities to improve the air quality.  
• Pradhan Mantri Awas Yojana – Urban housing initiatives under the Ministry of Housing and Urban Affairs (MoHUA) fall within the government’s aim of “Housing for All by 2022.” Through an interest rate subsidy during the principal repayment period through EMIs, it lowers the cost of housing loans for urban impoverished individuals.   
• Swachh Bharat Mission – It was launched in 2014, by the Ministry of Housing and Urban Affairs as a national campaign to promote cleanliness, sanitation, and proper waste management in urban areas.  
• AMRUT Scheme – Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Mission was launched in 2014 to ensure that every household has access to a tap with the assured supply of water and a sewerage connection. 

Measures to be taken to improve Urban Governance

• 3 F’s for Urban Governance – The transfer of “functions, finances, and functionaries” to municipal governments is a necessary step toward granting them functional autonomy.  
• Investing in Infrastructure – India must invest $55 billion (1.2% of GDP) in infrastructure per year on average, according to the World Bank. Currently, 72% of urban projects are financed by the federal and state governments, with the remaining 5% coming from commercial sources. Urban infrastructure financing needs to come from private finance in large quantities.    
• Strengthening Municipal Revenue – By providing municipal governments with a portion of their income tax revenue, the Scandinavian nations effectively manage a wide range of public services, from waste management to transportation and urban planning. Finance commissions have acknowledged that in order to strengthen municipal finances, more money from property taxes is required.    
• Strategic Property Management – Local governments frequently own underutilized real estate. Public-private partnerships (PPP) are one way to monetize these for the development of parking lots, marketplaces, and commercial areas. The 14th Finance Commission suggested giving local governments the authority to impose an empty land tax. 
• Capacity-building for ULBs – One approach that involves value-added teaching is capacity building. It encompasses the development of human and institutional capacities. ULBs must hone their skills and concentrate on carrying out projects that will generate revenue.
• Municipal Bond and Social Stock Exchange – A state, municipality, or county may issue municipal bonds as a means of raising money for capital projects like building schools, bridges, or highways. The Social Stock Exchange (SSE) facilitates capital raising for social firms that prioritize social impact in addition to financial maximization.
  

Download as PDF