PPP is Essential for Urban Development

Sudhir Krishna
Secretary, Ministry of Urban Development

India’s growth is dependent on the urban sprawl and there are projections that 70 per cent of GDP will come from urban India. Urbanisation holds the key to development. The policies that have been pursued till 2005 had majorly focused only on the rural areas that unwittingly neglected urban areas. This was pursued right from 1947 till about 2005. Almost six decades of continued neglect of the urban sector was not so much by design but by default. That has taken its toll on the country’s growth. Cities have grown in migrant population but they could neither provide full economic activity nor offer proper living conditions for them. There are cities like Bangalore and Hyderabad, which have done well due to the proliferating IT sector.

However, by and large, migration and neglect added to the unbearable strain urban infrastructure was already under in most Indian cities. Slums expanded simply because there were inadequate housing facilities. Drinking water supply was erratic. Lack of urban waste disposal turned even best part of our cities into eyesores. Rivers and water bodies got polluted at an alarming pace. There was no scheme whatsoever worthwhile and cities were left to fend for themselves. Even as rural landholdings declined from about three hectares couple of decades ago to less than one hectare today.

This fundamental development issue had to be resolved and happily, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) brought that change. Although, it was introduced in 2005, it picked up momentum only a couple of years later. In vast majority of cases, the Mission has helped the cities. Take, for example, the traditional old cities like Agra, Kanpur, Lucknow, Allahabad and Varanasi in Uttar Pradesh, these are the cities, which were written off as lost hopes, because they were bursting at the seams. We had assumed that these cities are old enough to remain whatever they are and probably become worse. There is a lot of floating population in these cities which come and go. Agra hosts lots of visitors and therefore, it was assumed that Agra will remain dirty forever. Economic activities were not improving. We had good excuses. The implementation of the JNNURM has changed the picture and people’s mindset.

Participatory planning is intertwined with participatory governance. We have put a condition that before attempting empowerment, all local bodies should be elected in the first place. Good governance will come only through strengthened municipalities. However, capacity-building of local governments to handle urban infrastructure is a big challenge

Water supply in our cities was in shambles. The investment required to fix it is estimated to be in billions of dollars. In a seven-year period, the JNNURM programmes poured about Rs 1 trillion, which is only a fraction of what is required. However, for the money spent, it has made so much of difference.

Participatory planning is intertwined with participatory governance. We have put a condition that before attempting empowerment, all local bodies should be elected in the first place. Good governance will come only through strengthened municipalities. However, capacity-building of local governments to handle urban infrastructure is a big challenge. But we don’t want to wait till such time municipalities are strengthened to provide, say, clean drinking water. That is why we are tapping agencies like the Jal Board to work in tandem with municipalities. This is the strategy we are adopting.

The government says that it requires upwards of Rs 30 trillion over the next 20 years for urban infrastructure. Public-private partnership (PPP) is essential because the urban infrastructure development is a dynamic process. It is so very dynamic that it has to be viewed from a commercial angle and not as a procedural issue. PPP is essential in urban infrastructure projects more notably in case of water supply, sanitation including solid waste management, street lighting and so on. Let us take solid waste management. A private partner treats the waste as resource and as input for generating something to value add. The value added part comes by way of manure out of the solid waste or electricity from solid waste or bricks to be made out of the construction waste and so on. Street lighting is important because modern methods in street lighting using the LED and also the technological management of lighting fixtures will save a lot of money. But in government system the process will be overwhelmed and we may not be able to achieve the end whereas through a PPP, you get the best of both the worlds.

A lot of urban development can pay for itself. Take the case of water bodies’ rejuvenation. Once cleaned up, they could generate much more revenue than the money spent on rejuvenating them. This is a case of whether it is Ahmedabad Sabarmati riverfront development, Kankadia Lake in Ahmedabad, Chinhat Lake in Lucknow, or Bhopal Lake in Madhya Pradesh. There are number of other examples where the land value has appreciated with the improvement of the water bodies in the city. You garner so much revenue by way of FAR charges and better land use, land use can be changed from mere residential and then you add to the water body, add connectivity, mass rapid systems such as metro rail or BRTS: all these change the whole paradigm of infrastructure. The economic activity improves and people are able to invest and from that investment you collect a small part to develop other infrastructure. Even solid waste can pay for itself.

A lot of urban development can pay for itself. Take the case of water bodies’ rejuvenation. Once cleaned up, they could generate much more revenue than the money spent on rejuvenating them

In JNNURM, solid waste management, water supply and urban water bodies’ rejuvenation have done reasonably well. Waste water recycling has not got enough attention. That is what we should be doing now. We are giving greater attention to waste water recycling. In urban transport, we have succeeded significantly in metro rail projects but the success has been rather modest in bus rapid transit system (BRTS), though it has shown a lot of promise. Buses make a lot of difference in urban connectivity.

Now we are attempting to work out a paradigm and had an interaction with technology providers whether they can supply technology, which at least will meet the revenue cost, if not the capital. Capital can come by way of value appreciation of land that can pay for the capital and revenue should pay for revenue expenditure. This is a model we are working on. The urban development should pay for itself. That is the motto. Small towns may have difficulty, but larger cities should be able to garner resources for their own infrastructure development.