2013State of Governance

Have States and Cities Improved After Jnnurm

“Some States moved fast in getting the City Development Plans prepared and came forward to sign the Memorandum of Agreement”
M Ramachandran Distinguished Fellow,
SKOCH Development Foundation

The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was launched by the Central Government in 2005, as a much-needed response to the mounting problems of urban India. Though the subject of urban development is essentially a State subject, the Centre deemed it necessary to come up with a flagship programme to cope with the massive problems that emerged as a result of rapid urban growth. It recognised the fact that cities and towns of India constitute the world’s second-largest urban system, contributing over 50 per cent of the country’s GDP. Studies have shown that impact of growth of population on urban infrastructure and services has been adverse. Physical infrastructure created in urban areas has generally been languishing due to inadequate attention and lack of proper operation and maintenance.

It has been emphasised that for these cities to realise their full potential and to become true engines of growth, focused attention on improving infrastructure is urgently required. Thus a Mission Mode approach for implementation of urban infrastructure improvement programme in a time-bound manner, with focus on select cities which needed higher investment, was announced. One unique feature of this mission was that it did not mean giving Central funds as grants to States, it also required the States and Urban Local Bodies (ULBs) on agreeing to implement an agenda of reforms during the seven-year mission period (2005-2012), to bring about the much-needed improvements in governance as well. The mission statement refers to all these when it says it is a ‘reforms driven, fast track, planned development of identified cities with focus on efficiency in urban infrastructure/service delivery mechanism, community participation and accountability of ULBs/para statals towards citizens.’

The mission has two sub-missions, one for Urban Infrastructure and Governance (UIG) and the other for Basic Services for the Urban Poor (BSUP). The two Central ministries of Urban Development (MoUD) and Housing & Urban Poverty Alleviation (HUPA) manage the two sub-missions, respectively. With the main focus on the listed 63 mission cities (subsequently increased to 65 cities), a major chunk of the total Central resources of about Rs 660 billion (enhanced from the original mission allocation of Rs 500 billion ) was earmarked for the mission cities. At the same time, projects were taken up in small towns under two schemes, Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP). A list of 23 reforms, broadly categorised into governance, financial and legislative, was dawn up, and all the States and local bodies had to sign a Memorandum of Agreement (MoA) committing to a seven-year time schedule of reform implementation, before Central funds could be accessed for specific projects. The much-needed critical urban reforms was an area no State government was willing to touch and this provided then a mechanism which prompted them to take up a set of changes, which would evolve into a total regime change for urban dwellers. Reforms like repeal of urban land ceiling legislation, reform of rent control laws, rationalisation of stamp duty across the country, enactment of public disclosure law and community participation law, reform of property tax regime, introduction of system of e-governance with IT applications like GIS and MIS, were earlier only part of discussions. But now the States and ULBs were mandated to take these up for implementation. The urban poor could hope for better living conditions, through reforms like internal earmarking in municipal budgets for basic services, provision of basic services including security of tenure, improved housing/ water supply, sanitation, introduction of property title certification, etc. Levy of reasonable user charges was emphasised so that there was a proper quid pro quo with regard to improvement in basic services and that the projects taken up remained sustainable.

Some States responded enthusiastically to conform to the requirements of the mission and avail the funds, while others took time to position themselves. Some States moved fast in getting the City Development Plans prepared and came forward to sign the MoA. For progressive cities, inclined to quickly seize the opportunity, this was an exciting proposition, provided their State governments kept pace with commitment to take up reforms on a time-bound basis and provide the State share of funding.

Taking up projects, getting them approved and progressing with implementation, remained a continuous process during the entire seven-year mission period. If we look at the picture regarding approvals, according to the MoUD, as on July 2012, there were a total of 554 projects approved under UIG with a total cost of Rs 622.53 billion. Additional Central Assistance (ACA) committed by the Centre for these was Rs 287.79 billion, against which Rs 178.53 billion was released. Since each State had clearly indicated allocation, proportionate to their urban population, the total kitty was known. It was, thus, basically a question of readying the cities to come up with their project proposals as quickly as possible, so that after approval by the central sanctioning committee implementation could be taken up and completed within the mission period and thefull funds could be availed. Out of these 554 projects, Maharashtra (with 5 mission cities) had the maximum number of 80 projects, followed by Gujarat (with 5 mission cities) at 72, West Bengal(with 2 mission cities ) at 69, Andhra Pradesh (with 4 mission cities) at 52 and Tamil Nadu (with 3 mission cities ) at 48. Under the UIDSSMT, a total of 807 Projects, costing Rs 140.21 billion, were approved with the Centre committing ACA of Rs 113.58 billion. Total release against this amounted to Rs 891.5 billion leaving a gap to be filled even after the completion of the original mission duration. Against approvals of a total of 1,361 projects, completion of projects was at 139 for UIG and 213 for UIDSSMT. This figure improved to 484 projects by December 2012, but overall only 36 per cent of approved projects were completed. Tamil Nadu had a 68 per cent achievement in implementation followed by Andhra Pradesh at 57 per cent and Gujarat at 54 per cent. Kerala at 3 per cent had the lowest number of completed projects followed by Punjab at 9 per cent. Maharashtra, which has one of the largest approvals, had only completed 26 per cent of the sanctioned projects. States which could not report completion of even one project included Bihar, Uttarakhand, Jharkhand, Goa, Chhattisgarh and most of the North-East states.

Taking up projects, getting them approved and progressing with implementation, remained a continuous process during the entire seven-year mission period

Since implementation of projects is a dynamic process, and taking into account the fact that the mission period is not yet over (it has been extended by two years), the status keeps changing. As of July 31, 2013, Gujarat had completed 49 out of the total of 71 UIG projects, Karnataka 23 out of 47, Andhra Pradesh 22 out of 52 and Tamil Nadu had completed 18 out of 48 projects. Maharashtra had completed 37 out of 80, Chandigarh had completed its two projects and Chhattisgarh had completed its one project. The corresponding figures for UIDSSMT are: 101 out of 122 for Tamil Nadu, 69 out of 84 for Andhra Pradesh, 35 out of 52 for Gujarat, 17 out of 38 for Karnataka and 26 out of 95 for Maharashtra. Arunachal Pradesh, which had 9 projects approved, had completed all its projects.

When it comes to the second sub-mission of BSUP, at the end of the 11th plan, West Bengal had the highest approval for building 98,530 dwelling units (DUs) for the urban poor in mission cities followed by Maharashtra 75,404, Delhi 67,784, Uttar Pradesh 63,537, Andhra Pradesh 60,534, Gujarat 42,396, Karnataka 13,777 and Tamil Nadu 47,797. Completion at this stage was: West Bengal 30,598, Maharashtra 17,248, Delhi 14,844, Uttar Pradesh 26,303, Andhra Pradesh 22,024, Gujarat 15,596, Karnataka 7,370 and Tamil Nadu 9,598. As regards IHSDP, during the same period West Bengal had completed 27,399 units against an approval of 39,842, Maharashtra 15,300 against 97,943, Uttar Pradesh 13,968 against 45,367, Andhra Pradesh 5,000 against 14,775, Gujarat 2,168 against 22,223, Karnataka 11,872 against 13,167 and Tamil Nadu had completed 20,664 against an approval of 28,638 units. A total of 1,610 projects had been approved under the two components of BSUP plus IHSDP, with a total project cost of Rs 417.23 billion as of December 2012, for construction/upgradation of 1.57 million units in various cities and towns. Out of this, a total of 0.62 million houses were reported to have been completed.

Since the entire process of completion of projects and reforms could not be completed within the originally scheduled period of seven years up to March 2012, the Government of India extended the mission duration by another two years up to 2014 with additional allocation. Different reviews have tried to pinpoint why the mission objectives could not be achieved in the given time frame. The Mid-Term Appraisal (MTA) of the 11th plan noted that States like Maharashtra, Tamil Nadu and Gujarat, that had ‘shovel ready’ urban projects, have been better at utilising their programme allocations. At that time, some States claimed less than 30 per cent of the funds allocated to date. These includedm Goa, Delhi, Mizoram, Chandigarh, Nagaland, Sikkim and Manipur. The MTA also observed that while unwillingness to adopt the reform conditionality was a factor explaining low absorption in some of the States, in many, the primary driver was the lack of sufficient capacity in the States and ULBs to develop plans, identify project priorities, raise matching funds and execute projects. And how did the Chief Ministers approach this issue? The Group of Chief Ministers on Urban Issues, constituted by the National Development Council, listed quite a number of action points, more repeating the urban agenda than specifically coming out with an agenda which all the States needed to follow. Of course, the report talked about a National Urban Capacity Development Scheme to be introduced to support capacity building needs at the State and city level with enhanced budgetary allocation. An appraisal made of the JNNURM in March 2011, came out with the findings that were based on interactions during the visit to sample cities. It emerged from this study that the 23 reforms to be implemented within a span of five to seven years, seemed to pose a considerable challenge for the States/ ULBs.

The High Powered Expert Committee on Indian Urban Infrastructure and Services (March, 2011) observed that the Mission’s demand-driven approach, which was changed after two years into a State-wise allocation mode, was successful in the more progressive States like Andhra Pradesh, Karnataka, Gujarat, Maharashtra and Tamil Nadu, where some governance reforms had been implemented, and supplementary funds provided by the State government and local government. The report also made a key observation that the State governments and ULBs committed to many ambitious reform measures to get commitments and sanctions under the JNNURM from the Government of India for financing specific projects. However, as physical implementation of the asset creation starts and the time comes for real reforms in the programme implementation, the State government and the ULBs begin to draw their feet.

Moving on to the status regarding implementation of reforms, the MoUD states that as at the end of January 2013, implementation of State level reforms (7 of them, including rationalisation of stamp duty, rent control reform, enacting public disclosure law/community participation law, etc.) has been ahead as compared to the other two categories, with an overall 75 per cent achievement. In the case of optional reforms (9 of them, including revision of the approval process for construction of buildings, administrative/structural reforms, encouraging PPP, etc.), the achievement was 73 per cent, and for ULB-level reforms (six of them, such as reform of property tax, levy of reasonable user charges, earmarking budgets for basic services to the poor, provision of basic services to the poor), the achievement was 52 per cent. There are nine States – Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Tamil Nadu, Uttar Pradesh and West Bengal – which have achieved above 75 per cent level of reform implementation. There are 16 States/UTs – Arunachal Pradesh, Chandigarh, Haryana, Jharkhand, Mizoram, Punjab, Sikkim, Uttarakhand, Assam, Delhi, Himachal Pradesh, Kerala, Meghalaya, Odisha, Rajasthan and Tripura – which fall in the 50-70 per cent level. Six states/UTs – Bihar, Goa, Jammu and Kashmir, Manipur, Nagaland and Puducherry – figure in the less than 50 per cent category. States which are performing well in terms of both projects and reforms include, Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Tamil Nadu and West Bengal. Chhattisgarh and West Bengal make it to this list because of their better reform implementation and the former’s completion record of the only project under UIG. As at the end of the 11th plan, against a total of 7,112 DUs sanctioned under BSUP for the only mission city, Chhattisgarh did not have a single completion. Similarly, under IHSDP, achievement was nil against total sanctioned units of 3,076. Arunachal Pradesh, Manipur and Nagaland are the States where project implementation has been good but reform implementation poor. The north-eastern States have their own issues with regard to urban bodies and though urban populations in cities and towns are small compared to other States, they are also slowly and steadily getting on to a scheme of things, whereby the reform agenda uniformly formulated for the entire country is brought to the forefront. Himachal Pradesh, Jharkhand, Kerala, Orissa, Tripura, Chandigarh and Mizoram are States/UTs where reform implementation has been good but project implementation average.

The Expert Committee on Indian Urban Infrastructure and Services observed that the Mission’s demand-driven approach, which was changed after two years into a State-wise allocation mode, was successful in progressive States

Kerala seems to be a surprise candidate in this category with its typical urban trends and high awareness levels. States/ UTs which need to improve substantially in terms of both parameters include Bihar, Jammu and Kashmir, Goa, Puducherry, Punjab and Uttarakhand.

From the overall scenario it can be seen that when it comes to implementation of reforms, initiation of early action to get projects approved, commitment to speedily implement projects and the inclination to take up parallel urban initiatives, Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu are ahead, followed by Madhya Pradesh and West Bengal. These States have a good number of urban best practices to list.

Select examples are:

  • In the case of Andhra Pradesh, off-site real-time monitoring system to provide real-time information on solid waste management, urban planning, public works and street lighting to municipal managers and citizens in the Greater Hyderabad Municipal Corporation and taking up innovative IT solutions for improving urban water supply management through Supervisory Control and Data Acquisition (SCADA) in Vijayawada.
  • In Gujarat, the introduction of Bus Rapid Transit System in Ahmedabad and a citywide e-governance system to improve service delivery in Surat.
  • In Karnataka, using GIS for a better property tax regime, thereby also ensuring a four-fold increase in the tax revenue of the Brihan Bangalore Mahanagar Palike, and reforms in service delivery and accounting, along with computerisation in all 213 urban local bodies in the State to ensure transparency and accountability in administration.
  • In Maharashtra, Nagpur’s city-wide 24×7 water supply initiative and Pune’s solid waste management project integrating the informal sector, moving towards 100 per cent scientific processing of waste.
  • Tamil Nadu focused on timely implementation and completion of a large number of their small town projects, thereby reaching the benefits to the urban residents faster. There are specific instances of definite change for the better, like the project taken up in Sellur area of Madurai to ensure better living conditions for slum dwellers through preventing stagnation of garbage in Sellur Odai, and providing safe and quality drinking water to slum dwellers.

A clearly visible pattern in all this seems to be that the more urbanised the State, better are the governance practices. In terms of total percentage of urban population, Goa and Mizoram may rank higher, but are not among the leading States as per the above review. Tamil Nadu with 48.45 per cent as urban population (723 ULBs and 376 census towns), Maharashtra with 45.23 per cent (257 ULBs and 279 census towns), Gujarat with 42.58 per cent (197 ULBs and 153 census towns), Karnataka with 38.57 per cent (220 ULBs and 127 census towns) and Andhra Pradesh with 33.49 per cent (125 ULBs and 228 census towns) have made it to the list of better performing states.

JNNURM, no doubt, has been a solid motivator for the States and cities to take up new initiatives to bring about improvements in governance and the way cities function. However, all this is subjective and the larger question is, what differences are emerging as far as governance changes in India’s 7,935 cities and towns as a whole, including ‘census towns’. With the introduction and availability of a series of policy measures and specific actions, like the National Urban Transportation Policy, National Urban Sanitation Policy, credit rating of cities, recommendations of the 13th Finance Commission, capacity building scheme for the urban local bodies, service-level benchmarking concept and the like, it is up to the States to restructure urban governance and bring in the much-desired changes as are expected of the third-level of governance.

One can see some significant beginnings as far as change at the level of cities is concerned. Examples of this include: the bold initiative of providing 24 x 7 water supply in a select area in the Hubli-Dharwar area of Karnataka; the introduction of 15,000 new buses in the 65 mission cities heralding a much-needed change in opting for public transport as a preferred mode of travel; Maharashtra taking up a drinking water supply regime change through a three-level Maharashtra Sujal Nirmal Abhiyan; Surat taking steps for a new outer ring road, financed totally by disposal of land on both sides of the proposed road; riverfront development project taken up in Ahmedabad; Bus Rapid Transit System taken up in close to 15 cities in the country; a good number of waste to wealth projects and PPP arrangements in solid waste management; Andhra Pradesh being the first State to provide through legislation for Area Sabhas, a level closer and more practical to urban residents; one city in each of the four southern States having the Metro rail initiative; and, Hyderabad having a legislated Unified Metropolitan Transport Authority to oversee and address city transportation issues, are some of the key new initiatives in recent years.

With the introduction and availability of a series of policy measures and specific actions, it is up to the States to bring in the much-desired changes as are expected of the third-level of governance

After years of limited interest in the urban agenda, the JNNURM reflects a significant shift in public policy towards delivery of urban services. It is now increasingly being emphasised that just funding asset creation is not enough, it has to go hand-in-hand with improved management of assets by accountable service provider agencies. For this to happen, States have to take a call as to how effectively they are going to implement the provisions of the 74th Constitution amendment. The agenda is anything but small, the cadre structure of the urban bodies has to undergo a sea change if these bodies are to perform in line with the expectations and challenges of today.

Are the States giving serious attention to the regular constitution of the State finance commissions and implementation of their recommendations? Is the devolution process undergoing a continuous change, so that the local bodies have more resources to take up activities within the subjects allotted to them? Are the local bodies themselves striving to rise up to the levels, whereby they improve their own revenue base and find more resources for the city level activities? Are we slowly but steadily moving towards putting in place a sound municipal bond system? How serious are the States in supporting and encouraging local bodies to increasingly take up more e-governance measures? Are State budgets for urban development showing signs of steady increase, or are they limited to providing the State share for the mission projects? Have States recognised the need for having a well-defined urban strategy so that urbanisation proceeds in a sound and steady manner?

These and such other various prominent parameters will have to be put together, to properly evaluate the performance of States in facilitating good service delivery and promoting sound urban living.

M Ramachandran

Dr M. Ramachandran, an IAS officer of the 1972 batch, served State and Central Government in India for thirty-eight years before retiring in 2010. Born and brought up in Kerala, he served in various positions including that of the District Magistrate and Collector, Rae Bareli. He rose to be the Chief Secretary of Uttarakhand and was Secretary in the Ministry of Urban Development, Government of India, for close to four years. Post retirement, he continues to be active in the urban sector and governance areas. He is associated with various national level endeavors in the capacity of Chairperson of the Indian Heritage Cities Network Foundation, Chairman of the National Urban Transport Awards Committee, Chancellor of a University and Senior Advisor to the Green Buildings Council. Dr Ramachandran has a Master’s degree in Economics, MPhil in Economic Planning and PhD on Project Planning. His published works are Uttarchal: ideas that worked, Urban Renewal, Building from the Bottom: Infrastructure and Poverty Alleviation, Delhi Metro Stations and Surroundings, Metro Rail Projects in India, India’s Urban Confusion, Reforming Urban Transport in India: Issues and Best Practices and Mavericks of Mussoorie.
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