2. The Analysis
Better LIFE in CITIES
Cities are important because that’s where India now lives …
1951: 80% in Rural 20% in Urban
Census Towns: 5%!
Other Cities: 10%!
Metros (1mn+): 5%!
Mega Cities (10mn+): 0%
Source: Urban India 2011 : Evidence, Indian Institute for Human Settlements
2011: 52% in Rural 48% in Urban
Census Towns: 17%!
Other Cities: 18%!
Metros (1mn+): 9%!
Mega Cities (10mn+): 4%
3. The Analysis
Better LIFE in CITIES
Cities are also important as their number is rapidly growing …
2011: 50
Metros with 1mn+ population
2031: 681951: 5
2011: 3
Mega Cities with 10mn+ population
2031: 61951: 0
Source: McKinsey Global Institute Analysis
4. The Analysis
Better LIFE in CITIES
But when India is faced with so many challenges, why worry about Cities? !
Is worrying about cities, worrying about a few urban elite?!
!
!
!
!
!
!
!
!
!
!
!
Well, NO … because Better Cities have a great impact, on everyone!
5. The Analysis
Better LIFE in CITIES
The Impact !
Better Cities mean …
Better Economic
Growth for India
Better Job Creation for
Growing Population
Better Life for All, !
Rich and Poor
Better Cities are critical to achieving !
Economic growth and Poverty reduction.
6. The Analysis
Better LIFE in CITIES
Maharastra: Urbanisation 40% | per capita GSDP Rs 30,000
Punjab: Urbanisation 35% | per capita GSDP Rs 30,000
Karnataka: Urbanisation 35% | per capita GSDP Rs 20,000
Rajasthan: Urbanisation 25% | per capita GSDP Rs 15,000
Source: 2005-06 Data, Indian Institute for Human Settlements Report
As an example …!
Cities have more productive jobs …
… so more urban the state,
the more prosperous it is.
7. The Analysis
Better LIFE in CITIES
70% 70% of jobs in cities
are in the volatile
informal sector
Source: 2005-06 Data, Indian Institute for Human Settlements Report
But all is not well …
… so could Cities decline into Social chaos?
While Rural poor !
are decreasing, !
!
Urban poor !
are increasing
1983!
25 mn
2004!
22 mn
2004!
8 mn
1983!
7 mn
40% 40% of the countries
slum dwellers live
in 1mn+ cities
8. The Analysis
Better LIFE in CITIES
So, What would make !
Life in a City better? Affordable !
Housing
Streamlined !
Transport
Efficient !
Utilities
Social!
Infrastructure
9. The Analysis
Better LIFE in CITIES
Affordable !
Housing
Why? Undersupply!!
!
!
!
!
!
Because Developers’ success depends on hoarding land and
getting clearances, not on making affordable quality housing.!
A Planning Commission study estimates that Developers need over 30
clearances from diverse agencies like tree-cutting department and civil
aviation. And to corner land banks and procure clearances, developers
resort to rampant corruption and inefficient resource usage.
Key Fact: In Berlin, one-bedroom apartments in 2012 were selling for as
little as $55,000; and four bedroom houses in Rhineland for $ 80,000.
Equivalent properties in Mumbai were 10 times that amount.
10. The Analysis
Better LIFE in CITIES
Affordable !
Housing
Why Underdeveloped?!
!
!
!
!
!
It does not make financial sense for city government to
increase supply.!
City govt bears additional expenses of providing roads, water, sewage,
etc, for additional Supply, but income of stamp duty goes to State govt
and taxes from increased economic activity go to Central govt.!
!
Result: Maximum residential FSI in major cities around the world is
above 10, while in India it does not exceed 4 and is often much lower.
Key Fact: On an average, 25% of the population of
cities, lives in slums. And in some cases like Mumbai,
slums account for 54% of population.
11. The Analysis
Better LIFE in CITIES
Streamlined !
Transport
Continued Indifference?!
!
!
!
!
!
1. JnNURM: 57% funds for roads & flyovers,
only 33% for MRTS/buses!
2. Vehicle Tax on Public Bus is several times
higher than on a Car
Key Quote: A developed country is not where poor people travel in
cars; it is one where rich people use public transport.!
- Gustavo Petro, Mayor of Bogota
Source: Report on Indian Urban Infrastructure & Services, Mar 2011, !
by the High Powered Expert Committee chaired by Dr Isher Judge Ahluwalia
12. The Analysis
Better LIFE in CITIES
Streamlined !
Transport
Collective Culpability?!
!
!
!
!
!
1. Cars and Two wheelers make up 85% of vehicles on India’s roads,
but account for only 29% of trips. !
2. Of the 127 cities / towns monitored under the National Air Quality
Monitoring Program, only 3 have low air pollution
Key Fact: Public transport to Total urban transport, India: 22%!
Upper middle income countries, South Africa, South Korea, Brazil: 40%
Lower middle income countries, Philipines, Venezuela, Egypt: 49%
Source: Report on Indian Urban Infrastructure & Services, Mar 2011, !
by the High Powered Expert Committee chaired by Dr Isher Judge Ahluwalia
13. The Analysis
Better LIFE in CITIES
Efficient Utilities?
Social Infrastructure?
1. 41% of Firms in cities owned or shared a generator (2006) !
2. No Indian city has 24 x 7 water - supply ranges from 1 to 6 hours!
3. 55% population of Class 1 towns have access to Latrine (2001)!
4. Less than 40% compliance with Municipal Solid Waste Management Rules
on segregation, collection and sweeping (2004)
Schools, hospitals, open spaces in cities
well below acceptable quality standards,
and not close in even quantitative terms.
14. The Analysis
Better LIFE in CITIES
Increased
investment
Hence the AskHOW Questions for MPs!
How will you strengthen and improve governance of Cities?!
How will you increase financial strength of Cities?
The HPEC says: India cannot afford to get its urban strategy wrong, but it cannot get it right
without bringing about a fundamental shift in the mindset which separates rural from the urban. !
Challenge of managing urbanisation will have to be addressed through a combination of…!
Strengthening the framework
for governance and financing
A comprehensive capacity building
programme at all levels of government
HPEC: High Powered Expert Committee on Indian Urban Infrastructure & Services (Chair: Dr Isher Judge Ahluwalia)
15. The Analysis
Better LIFE in CITIES
The 74th Constitutional Amendment Act of 1992 mandated a
role for elected Urban Local municipalities and a
recommendation was made to State Governments, to
devolve a specified set of functions to the local bodies.
The ability of the ULBs to deliver urban services depends on !
a) devolution of funds and functions (including land use planning) and!
b) helping them build capacities to fulfil their responsibilities.
The Governance Challenge
Key Fact: Only 50% of the allocated funding under JnNURM sub-mission UIG has actually been
released. Cities don’t have the readiness to utilise the Funding available.
16. The Analysis
Better LIFE in CITIES
The Governance Challenge
Key Fact: 9 different Central Govt ministries have programs for Cities
Ministry of !
1. Urban Development !
2. Social Justice &
Employment !
3. Women and Child
Development !
4. Labor and Employment
The issues they address are !
1. Housing / Shelter
(4 ministries) !
2. Livelihoods /
Employment
(4 ministries) !
3. Health (4)
4. Education (4) !
5. Nutrition / Food
security (6) !
6. Social Security (2) !
7. Poverty
Alleviation (4)
5. Housing and Urban Poverty Alleviation !
6. Human Resource Development !
7. Health and Family Welfare !
8. Consumer Affairs, Food & Public
Distribution !
9. Ministry of Rural Development
17. The Analysis
Better LIFE in CITIES
Unified Command!
!
!
!
!
• One ministry at Central Govt level, for Urban Affairs
and Housing!
• One Department of Urban Affairs and Housing at state
govt level
• Unified command over a city under an empowered
and accountable Mayor
HPEC Recommendations for !
Resolving the Governance Challenge
HPEC: High Powered Expert Committee on Indian Urban Infrastructure & Services (Chair: Dr Isher Judge Ahluwalia)
18. The Analysis
Better LIFE in CITIES
HR Capacity Creation!
!
!
!
!
• Set up five Indian Institutes of Urban Management
(anchored in existing IIMs or as standalone excellence
institutions) !
• Infuse funds and new talent into existing Schools of
Urban Planning
HPEC Recommendations for !
Resolving the Governance Challenge
19. The Analysis
Better LIFE in CITIES
HR Capacity Building!
!
!
!
!
• 300 officers from IAS and other central services trained
annually as urban specialists!
• Transparent search-cum-selection process in the
appointment of the Municipal Commissioner, with
minimum of three years tenure of Management team!
• Develop dedicated IT cadre with a Chief Information
Officer for the larger cities
HPEC Recommendations for !
Resolving the Governance Challenge
20. The Analysis
Better LIFE in CITIES
Key Fact: Spending on Urban infrastructure is 6% of GDP in South Africa and 7.4% of GDP in Brazil,
but in India it is a paltry 0.9% of the GDP.
The 74th Amendment recommended devolution of functions,
but did not insist of devolution of revenues. State Finance
Commissions have been set up to propose devolution of
funds, but rarely done adequately, and hence ULBs have
little ability to predict availability of funds.
• Investment required ~Rs 40 lakh crores over 20 years (or Rs 2 lakh crores /year),
compared to expenditure of 1.6 lakh crore in 2012 - a 25% increase is to be sustained!
• But Cities will need to meet 2/3rd of their expenditure through their own revenues by
2031. So Cities have to increase their own spending from Rs 0.50 lakh crores in 2012,
to Rs 1.2 lakh crores (up 140%) by 2022 and Rs 1.5 lakh crores (up 300%) by 2032.
The Financing Challenge
21. The Analysis
Better LIFE in CITIES
Taxes!
!
!
!
!
• Strengthen legal ability of Cities to levy taxes !
• Reform Property Tax system for wider net, and better
recovery: From 56% coverage and 37% recovery, if we move
to 85% coverage+recovery: Revenues grow 340% (from 0.2%
to 0.68% of GDP)!
• 13th Central Finance Commission boldly recommends
automatic fund transfer to local governments through a
percentage of the divisible pool of taxes
HPEC: High Powered Expert Committee on Indian Urban Infrastructure & Services (Chair: Dr Isher Judge Ahluwalia)
HPEC Recommendations for !
Resolving the Financing Challenge
22. The Analysis
Better LIFE in CITIES
Land Value based charging!
!
!
!
!
• Conversion /betterment /impact / development
charges, as well as FSI should be priced on the basis
of land value!
• And land value appreciation must be captured by
Govt (not by Developers and speculators) and funds
must be used to build and renew City infrastructure
HPEC Recommendations for !
Resolving the Financing Challenge
23. The Analysis
Better LIFE in CITIES
User Charges!
!
!
!
• User-charges (for water, waste management, etc) to be recovered
separately, and not through Property Tax
• User-charges should cover operating, and capital servicing costs !
• Automatic indexation for charges to cover cost increases - Water
charges cover only 30-35% of O&M expenses. For poor, water
supply is very costly: they cannot go to work on days that water
is to be collected)!
• Parking fee to raise revenue and encourage public transport.
Average daily parking rate in India cities is around US$ 2 (Rs 90),
while cities in other developing countries charge US$ 10-15 (Rs
450-675) per day.
HPEC Recommendations for !
Resolving the Financing Challenge
24. IN CONCLUSION!
Please Ask your Lok Sabha candidate
w
w
w
.A
skH
ow
India.org
Creative Partner!
MeriMaaCineMAA
More?Follow
AskHowIndia
on
How will land use planning
and transport planning be
integrated to encourage use of
public transport?
How will single point
responsibility for City
planning and management
be established ?
How will more !
land / space be released !
to make housing
affordable?How will !
Cities' have
enough Funds?
How will Cities'
management capability
be strengthened?
