By TIOL News Service

NEW DELHI, APRIL 21, 2018: WHILE addressing the two day Regional Conference organised by the Finance Ministry, Dr. Y.K. Alagh, Former Union Minister of Power, Science and Technology and Chancellor, Central University of Gujarat emphasized that the policy makers must follow bottom-up approach rather than top down approach in case of urban development. He said though there is need for funding the infrastructure financing gap yet smaller towns should also be included as far as planning and development of urban infrastructure is concerned. The views and suggestions of affected people, civil society and other stakeholders must be included in the process of urban planning to make it successful, he added.

The Regional Conference on "Urban Development: Technological Solutions and Governance Challenges" concluded in Ahmedabad, Gujarat yesterday. The Conference was organized by the Ministry of Finance, Government of India in collaboration with the Associated Chamber of Commerce and Industry of India (ASSOCHAM), Gujarat Council along with Asian Infrastructure Investment Bank (AIIB), Research and Information System for Developing Countries (RIS), an autonomous research organization under the Ministry of External Affairs. The Conference was the third lead-up event to the 3rd  Annual Meeting of AIIB scheduled to be held on June 25 and 26, 2018 in Mumbai. Before this Conference, two Regional Conferences have already been held at Kolkata and Vishakhapatnam on the themes of Mass Rapid Transport Systems and Port and Coastal Infrastructure respectively. In total, eight such Regional Conferences will be held on different themes at different places in the country.  

The panelists or participants in different Sessions of the said conference included officials from the Centre, State and the local bodies as well as representatives from the civil society, academia and multilateral financial institutions among others. They cited several examples on what's working and what's not, and gave their expert opinion and suggestions. Deliberations focussed on four broad categories including Institutional Issues, Resource Mobilization Strategies, Recommendations for Multilateral Financial Institutions, and Suggestions for Policy Reforms. A detailed report will be prepared and presented during the 3rd AIIB Annual Meeting in Mumbai in the last week of June, 2018. 

Most speakers referred to the infrastructure financing gap in Asia in general and India in particular. It was highlighted that among all the infrastructure sectors, the biggest financing gap is faced by urban infrastructure. On institutional issues including those relating to Urban Local Bodies (ULBs), it was pointed-out that  currently urban development is happening in a haphazard manner due to horizontal spread of urban areas, resulting in inefficiencies and affecting productivity. 

It was proposed that there is a need to shift to vertical development to improve service delivery and revenues, as well as greater efficiency and productivity. However, concerns on higher energy consumption and lack of dependable electricity need to be addressed. While the Central Government has initiated holistic urban development programs including Smart Cities, Housing for All and AMRUT, however, these are needed to be expedited. It was emphasized that the New Urban Planning Agenda should incorporate elements from the UN Sustainable Development Goals and take into account the Paris Agreement on Climate Change as well. 

It was pointed-out that while big municipal corporations are better administered and efficient, small municipal corporations are inefficient due to lack of capacity in recovering taxes and user charges. Therefore, the post of a Regional Municipality Commissioners who can oversee and monitor performance of several municipalities, have been created in Gujarat recently. Aspirational Districts or cities could catch-up with progressive cities if there are dynamic ranking mechanisms promoting competitive federalism. In this regard, there was an emphasis on pushing a Liveability Index and Sustainability Index.

Referring to the challenges in urban development, the speakers said these also relate to lack of inter-sectoral coordination due to various levels of governance with fragmented autonomy. There is a need to integrate planning and implementation agencies. There is also need to reactivate and strengthen the District Planning Committees for better coordination among urban development agencies including ULBs and other public delivery agencies at the District level. Laws relating to urban local bodies need to be amended in order to strengthen and empower them. 

Moving on to strategies for resource mobilization, it was mentioned that there is a huge untapped potential in Public Private Partnerships (PPPs), and that PPPs could be used effectively in areas including water treatment, solid waste management, multi-level parking and urban transport. Other suggestions included leveraging land-based instruments, reforms in Credit Rating Mechanism, greater clarity on municipal assets as collateral, as well as the need for improving efficiency in property tax collection mechanism.

Many speakers suggested that Foreign Direct Investment (FDI) in Real Estate Sector will increase only if there are national standards, transparency in land acquisition and land valuation among others. There is a need for a paradigm shift in how cities are financed. So, from largely grant funded cities, there needs to be a shift in approach to a combination of assured grants and more commercial sources of finance, and this means bringing in private players in urban infrastructure space. A major deterrent for entry of private firms in the urban sector is the commercial non-viability of many of the projects. It was recommended that there is a need to develop model transaction documents across the urban infrastructure sector. There was a also a suggestion to explore the feasibility of risk insurance to help increase private sector participation.

Besides, the speakers suggested  that urban local bodies should look into innovative resource mobilizing mechanism including issuance of municipal bonds, land pooling and land value capture. There is a need to standardize the use of land value capture finance tools so that they are used more extensively. It was also suggested that there should be a larger dialogue on the implications of debt based instruments on equity.

Recommendations included fiscal empowerment of urban local bodies, mechanisms to ensure efficiency and effectiveness in user fee collection, empowering the District Planning Committee, embedding authority with a professional bureaucracy, or giving the necessary powers to hire experts from market, all these following a core team approach. 

On problems relating to the lack of reliable and quality data including its adverse impact on policy planning, it was suggested that a database on urban infrastructure should be established to help in long term planning. It was also suggested that there was a need to harness technological tools like Open Data and Artificial Intelligence for continuous up-gradation. The speakers stressed on the need to create robust institutional structure and governance foundation to ensure that resources including financial resources are not wasted.

On the issue of delays in projects, it was pointed-out that the main cause is the problems relating to various permissions from all level of Governments in a hierarchical manner in States. So, for Ease of doing Business, it was suggested that there should be a tool-kit for investors on steps to be taken before, during and after investment. It was also suggested that there was need to re-engineer and restructure institutional designs and procedures, besides simplifying procedures, and changing accounting practices. It was recommended that metro cities need to be cast as the new States.

Policy makers should have greater community engagement during the land acquisition process to have smooth acquisition. The panelists suggested that the 'poor say' should weigh as much as the 'say of the financial organisations and consultants'.