Ownership issues dog city governance

On a descending scale this is the problem staring most major Indian cities too. At the other end from Mumbai are the towns where financing is just not available to make investment in the infrastructure required for them. For instance the total revenue of municipal entities in India is already more than 1 per cent of the GDP but the ability to invest the sum usefully is lacking in most urban areas.

Speaking on the problem at a recent seminar organised on the subject of cities by the Indian School of Business at Mohali,former Union urban development secretary,M Ramachandran said some of the problems of the local regions might need to be bumped upwards i.e. to the state governments to handle.

While this could militate against the decentralisation model envisaged by the 74th Amendment to the Indian Constitution there is currently a shortage of trained manpower among cities. This makes it difficult for them to address the sort of complicated challenges the urban areas are throwing up.

An example of this,he said was that of waste disposal. The landfills in most cities have choked but the municipal authorities do not have the mandate to explore regions beyond their cities to scour fresh sites. Similarly several south Indian cities face water shortage that can only be solved by transporting it for up to a hundred kilometres from another region. City fathers have little ability or authority to take on such challenges he pointed out,in a panel discussion.

A background paper on the subject prepared by ISB shows that Indian cities at best will supply about 95 billion litres of water per day to their citizens by 2030,less than half of the 189 billion litres that is required as a basic service standard. The shortage includes both financial gridlock and management weakness.

These are the structural problems speakers agreed which make working out the future of the Indian cities a challenge. There is however some solutions that have begun to be worked out,as Debashree Mukherjee,CEO of Delhi Jal Board pointed out in another session at the same place. She said her Board has begun three pilot projects on public private partnership to improve the supply of water and cut back on wastage in three locations,in the National Capital Territory. She said the initial results do show that people even in the poorest areas are willing to accept that a public utility will need to price services which cover the cost. The trade-off is that they will need to be given a transparent view of the changes planned,ex-ante.

The same issue was also discussed by Suresh Kumar,principal secretary water supply and sanitation,in the Punjab government. According to him the process as Mukherjee outlined took time to take off unless the political leaders were brought in the dialogue. His intervention again made clear that the best results of city transformation were likely to happen in those places where the political class took ownership of the changes.

In fact this is the theme that has populated all recent ideations on cities. A similar effort by the Centre for Policy Research at Mumbai too has overwhelmingly supported the need to make the cities develop a governance structure which resonates with its need.

At the Mohali meet,Sheela Patel,founder and director of Society for Promotion of Area Resources Centre which works among the under-privileged in the cities,made it clear that lack of governance accountability hurts the poor the most. She pointed to the example of water supply pipelines cutting through areas like Dharavi in Mumbai while the local population foraged for supply from the water tankers. She said it was an asymmetry that didnt seem to gather any opprobrium,instead.

Looking at the possible solutions KP Krishnan,principal secretary in the Karnataka government and former secretary,Prime Ministers Economic Advisory Council said some of the problems the cities are unable to provide for are,however,rudimentary and can be tackled with basic administrative will. While fund raising is a complicated exercise,he said ensuring water is not pilfered requires just men on the job to do their work well. He however acknowledged that the development of the municipal bond market was going to take time. The problems of the government bond market are just getting solved and the corporate bond market is the next goal,he said. The municipal bonds are further down the road,he explained.

According to Rajesh Chakrabarti,professor ISB making the Markets meet the Cities is a tall order right now. But it is worth examining with the state governments to what extent a city like Mumbai can be given an operational and the financial autonomy to shape its future. And that,he said will require bringing the right governance and financial structure together soon enough.

Chinese investment boost  vs  Indian impediments

2011,broke 17-year old ban on municipal bonds to fund public projects

Shanghai and Shenzen municipalities raised 3.57 billion

Shanghai funded its 29 billion investments,half through the local taxes and user charges and other half through monetisation of land assets and commercial loans

2011-12,total revenue of municipal entities was 1.05 of GDP,of which own sources were about 50

In 2008,3 of nearly 3.61 billion capital expenditure of urban local bodies plus JNNURM funded through borrowings

Since 2002,urban local bodies own sources of revenue increased by 150,while revenues from government transfers increased by 300