Indian Cities On the Radar of Global Investors but Rules Must be Conducive

If we want to spur economic growth and create many more jobs, then it is necessary that we make the conditions favourable for investors,
insists Shankar Aggarwal

01 January, 2015 Opinion, Infrastructure
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In 1947, when we gained Independence, the biggest challenge in front of us was the security of the nation. It was a huge and a difficult task. And many believed that India would not be able to keep its political integrity intact. And we had faced problems in 1948 and thereafter in 1962. But then we gained strength and today we are a very empowered and powerful nation and no country in the world can ignore us. The credit goes to our soldiers who laid down their lives to make our present happy and bright.

The second challenge in front of us was the form of governance. In 1947, we took the bold decision to adopt democracy. Today, we are not only the largest democracy in the world, but also the most thriving and vibrant one. We conduct all our elections absolutely free and fair, and we change our governments smoothly without any resistance. It’s a huge credit to every citizen of the country. And especially in the circumstances, because, India is hugely pluralistic, multi-ethnic, multi-lingual, multi-religious and multi-tier democracy. We have 22 recognised languages and more than 1,500 dialects. But inspite of all these differences and barriers, we were able to take the country forward and move ahead many a miles.

And then there was a problem of food scarcity. As you know in 1948, and then thereafter even in late 1960s and 1970s, we used to have an acute shortage of food. And today, we are not only self-sufficient in food production, we are also exporting food grains to a large part of the world. We are one of the largest producers of wheat and rice in the world. And for this, the credit goes to our farmers and our scientists who made it possible and we all are very proud of the fact that today we are not going around with our begging bowl for food grain.

Cities which have been built like London, Paris, NY, Tokyo, are not very efficient. If we follow their examples, we will become non-competitive globally very soon.
We have to think out-of-the-box.

The next challenge was economic development. Everyone thought that India would keep growing at the rate of 3-3.5 per cent. But then this elephant (India) started galloping. We started growing at the rate of 6 per cent, 7 per cent, 8 per cent and then 9 per cent plus. It was an impressive growth. We all are very proud of that. We are the second fastest growing economy in the world today. Though the growth rate in absolute numbers has come down a little bit, but it is bound to go up as we have the capability and the capacity to do it. But there is one problem. We must make sure when we talk about growth, we should make it inclusive. Even today 25 per cent of people are below the poverty line and that’s a huge number. Moreover, many people who are from the disadvantageous sections of the society, such as SC, ST, OBC, minority, women, they are still not a part of the success story. If we really want to have a meaningful growth, then it’s necessary that they have to become active participants in creation of wealth. We have to go out of our way and hold their hand and bring them in the mainstream and that’s a challenge. And in that journey, we are now focusing on urbanisation process. So far, our entire focus was on the masses that lived in the rural areas. But today we have come to a stage where there are no starvation deaths, we are self-sufficient in food production, only 25 per cent are below the poverty line and they are also moving upward.

Focus on Cities

A time has come, where we have to look at our cities. If we want to create more jobs, create economic growth and achieve big numbers, then it is necessary that we make the conditions conducive to this kind of development and that can happen only in urban areas.

Our young boys and girls have done well in areas of technology. We are considered leaders in the field of ICT. So let’s take advantage of that. And let’s enable them to create wealth for the entire nation. And that will happen only when we are able to improve our cities accordingly. Today almost 90 per cent of India needs to be rebuilt. Nowhere in the world there will be this kind of an opportunity.

You go to New York, London or Paris, if they have to build a city, they flatten it out. And if they have to build a new city they will do it in an entirely different manner. Cities like these are not very efficient. If we follow their examples, we will become non-competitive globally very soon. Experts say a new paradigm has to be created and that will be created by India, in the area of urbanisation because we are getting huge opportunities of creating new cities and we have to put our best foot forward. And we have got to think innovatively. We have to think out-of-the-box and think of means how we can improve the quality of life with the most efficient utilisation of resources especially the natural resources. We have to create infrastructure for every citizen and not only for those who are the owners of automobiles, or those who are in a position to spend a lot of money. If we are able to create infrastructure which is meant primarily for the masses, we can get many more economic opportunities in our towns. And in view of this, the government has taken four big-ticket initiatives.

Swachh Bharat: Need Change in Mindset

Shankar Aggarwal
Secretary, Ministry of Urban Development

The first is Swachh Bharat Mission. As you know that in spite of all of our efforts, we are one of the dirtiest countries in the world. We take pride that in 2500 BC, we were the first to create planned cities with sewerage system—underground and covered, all roads met at 90 degree angle, every household had a source of water. And suddenly we became one of the dirtiest and most unplanned society. So let’s pull up our socks and take the initiative of making our cities clean and that’s why the mission was launched on 2nd October 2014, with an objective to keep the entire country clean, whether rural or urban areas. This requires a huge change in the mind-set, our conduct and in our behavior, more than the creation of infrastructure. Otherwise, this exercise is not sustainable. We are determined that with the co-operation of everyone and if we work with passion and commitment, surely, we will make this country neat and clean. For that we need collaboration from public sector, private sector, formal sector, informal sector, academia, industry, everyone.

Protecting our Heritage

The second big ticket initiative taken by the government is rejuvenation of our heritage towns like Varanasi, Mathura and Ayodhya. We are unable to keep such important places in our culture and heritage, clean. We do not have signages, nor do we have information kiosks. And we call Varanasi the oldest surviving city in the world. So the idea is to make these towns liveable.

Urban Renewal of 500 Cities

In 2004, JNNURM was started. For the first time, the government of India took the initiative to help urban local bodies (ULBs) to create good quality infrastructure. In that programme we had taken up only 65 towns. Now under the new term, we are going to take care of 500 towns. Each town having a population of more than 100,000. Idea is to look at these towns holistically and lets chalk out a programme, to take care of urban infrastructure of 500 towns. It’s a humungous task. The Expenditure Finance Committee memorandum (EFC) is ready. It’s a document, which has to be put up to finance ministry. We will be spending a lot of money on that. Our focus is on sanitation, drainage, drinking water, connectivity and mobility.

Smart Cities

This smartness will come from young boys and girls who have done well in the field of ICT. Idea is to take the knowledge and expertise available within the country in ICT. But that is a very thin layer. Ultimately there is a thick layer down below. And that is a very good basic quality urban infrastructure. 24×7 water supply, electric supply, sewerage, good quality roads, pedestrian pavements, cycling tracks. Towns are meant for citizens and not for motor vehicles. We should be able to identify the potential of each of these 100 towns for generating economic activity and then work backward.

If we have to create these economic activities, we have to create job opportunities. For that, a large amount of investment has to come from the private sector. Government will only be playing a role of a catalyst. We are still trying to figure out, how to attract investment from the private sector. Otherwise it is going to become like JNNURM and that is not going to serve the purpose.

If we are able to give them assurance on change of land use, on floor area ratio (FAR) and on ground coverage, this is all that they would require. I think, this way, we would be able to attract large amount of investments.

The people should get excited and feel safe while they are investing in these towns, so that we can create new townships. We are talking about existing towns and not about green cities or greenfield projects. What we want is that we should be able to take the advantage of the existing town, i.e. in the periphery of the town. For example, we can develop one good township in Dwarka, may be another township through redevelopment in Paharganj – it is nothing but an urban sprawl, highly inefficient. Why can’t we develop it into a very beautiful township? We need 50, 60 or 100-storey buildings, in 10 towers each, which will take care of office space requirements, for commercial and residential purposes. And next to it, the Connaught Place, is supposed to be the most expensive real estate in the world. Why? Because we have not been able to create office, institutional and commercial spaces. This way, we will be able to free a large track of land for entertainment, green fields, water bodies etc. We are working on that but that requires huge investment and that kind of investment can come only from the private sector.

Private Role in Urban Development

We have to create a mechanism so that they don’t feel that they are taking the risk of policy. They can take the business risk, but they should not take the risk of policy. They should feel confident that this is the policy framework, this is the role of the state government and urban local bodies. So, we are toying with an idea whether it is better to create some kind of an special purpose vehicle (SPV).

We (the government) may not create the SPV. The SPV can be created by the private sector and we put in our equity. Now, the moment we put in our equity, they will get the confidence that when they will go to any ULB, they will get the clearances easily. Otherwise, they will never get clearances in a time bound manner. It takes years and years. If we are able to give them assurance on change of land use, on floor area ratio (FAR) and on ground coverage, this is all that they would require. I think, this way, we would be able to attract large amount of investments.

Today, everybody is very keen to invest in this country because they feel that India being a democratic country, it is a place to invest. There is a huge market. Europe is already saturated. Even in terms of urban mobility, metro rail or light rail transit systems (LRTS) or trams, there are huge opportunities in this country. For this we would be needing collaborations.

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