In country-sized states

State governments cannot make cities livable. They must give urban areas freedom to manage themselves.

Written by Neelkanth Mishra | Updated: May 16, 2015 12:08:55 am
India, Indian states, Indian states population, Urban development, Urbanisation, Bihar government, JNNURM, IE column The concept of new cities that can be planned and built afresh is tempting, but new habitations take decades to settle. They cannot drive mass urbanisation.

Exasperated with explaining the size of India to people, I now carry a map in which the country that comes closest to a state’s population is marked in its place. So Brazil replaces UP, Japan replaces Maharashtra, Mexico replaces Bihar, and so on. This map provides fascinating insights.

Looking at it, I remembered studying federalism in Mexico and asking how much autonomy its 31 provinces have.

Yet, look at Bihar, which has 38 districts. How often do we discuss the Bihar government devolving funds and powers to districts and towns?

With the release of the Central government’s plan to spend Rs 1 lakh crore over the next five years on urban development, the issue of the management of our cities has come to the fore again. Will the 100 “Smart Cities” and 500 Amrut (“Atal Mission for Rejuvenation and Urban Transformation”) cities be successful? As urban administration is a state subject, the Centre cannot build or rejuvenate cities. It can only fund and motivate state governments to do so.

So, can the state governments execute the programmes effectively? Every project needs a team that has “skin in the game”, that is, stands to benefit from its success. In China, for example, urbanisation on a massive scale is being delivered by ambitious mayors, likely motivated by aspirations for “promotion” to positions of greater power and responsibility.

In India, where politics and parties run differently, democratic forces must play a role. The Centre must not only provide funds, it must also motivate the states to devolve more powers to directly elected representatives in urban areas. There is no better way of managing country-sized states.

But this is easier said than done. That  our cities are so unlivable cannot just be  because of lack of funds. If that were the  case, Mumbai, whose municipal corporation generates a significant budgetary surplus every year, wouldn’t be the mess that it  is. The problem, most likely, is that state  governments do not give cities the freedom to manage themselves. Instead, they create state-level agencies that have overlapping mandates with municipal corporations, particularly for the capitals. In Mumbai, for instance, different stretches of the same road could be managed by different agencies.

Worse, in many cities, executive functions reside with the municipal commissioner, a bureaucrat appointed by the state government. The mayor, elected by city residents, is a mere figurehead. Even the geographical area of a ward, the political unit, is rarely aligned to the area under civic agencies.

This is changing, but too slowly. Governance in India is being built top down — effective state governments have become the norm more than five decades after Independence, even though their powers are enshrined in the Constitution. Given that urban administration was an afterthought, it is not surprising that urban governments are weak. The first time the word “municipality” was introduced in the Constitution was in 1956, through the seventh constitutional amendment.

It took another 36 years for urban administration to become part of the Constitution, when the 74th amendment in 1992 added a third layer to the federal polity. More than two decades later, however, urban governance remains weak, mostly because of the reluctance of state governments to change, particularly as the devolution of powers has been left to them.

Like its predecessor, the Jawaharlal Nehru Urban Renewal Mission (JNNURM), Amrut also has mechanisms to motivate state governments to reform urban administration. It mandates important changes, such as the development of a cadre of professional municipal administrators and the devolution of funds and functions to city governments, and provides monetary incentives for states that achieve these.

Amrut gives state governments the flexibility to design schemes and eases Central monitoring, both improvements on the JNNURM. Among other things, this would make the states feel less like supplicants. It keeps the Centre’s share of funding for a project at 33-50 per cent, which would ensure that state governments “own” the projects, use their own funds, and, therefore, work towards their success. The “city challenge competition” to select the smart cities will also encourage the desire for change among local politicians.

However, you can lead a horse to water, but you cannot make it drink. Despite following similar tactics, such as making funds conditional on state-level legislative changes, the JNNURM was only partially successful on this front. Some states repealed the urban land ceiling acts, certain cities adopted double-entry accounting, and state finance commissions directed governments to devolve more funds to city governments. But these changes were far from universal and often effected in a diluted form.

For states to efficiently deliver on urban transformation, they need to change. The prime minister seems to be in no doubt that to deliver on his promises on housing, electricity, roads and water, he will need to work with chief ministers, irrespective of their political affiliations. Now chief ministers need to appreciate that delegation, and empowerment, while disorienting in the short term, can drive rapid on-the-ground change and materially improve their electoral prospects. Urban revival may also mean working on low-cost housing, pressuring real estate markets and speeding up projects so that builders focus on higher volumes rather than higher prices.

The concept of new cities that can be planned and built afresh is tempting, but new habitations take decades to settle. They cannot drive the mass urbanisation expected in India. Instead, villages are likely to grow into towns, and deeper federalism seems the only way forward.

At a recent Express Adda, the chief minister of Rajasthan had an important take on the problem: voters rarely appreciate the nuances of decentralisation. They may still blame their MP or the prime minister for a broken water pipe. The subtext was that politicians will not change till voters do. So maybe the proponents of urban transformation should stop reiterating how India has to urbanise. Their intellectual horsepower would probably be better used helping build a consensus on the right governance structures and educating voters.

The writer is the India equity strategist for Credit Suisse

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