India has to improve its urban areas to achieve objectives of economic development. As huge investment is required in India?s urban sector, it has to look for innovative approaches for financing urban services. However, most critical factors for introducing these innovations are a healthy municipal revenue base and good urban governance. In this context, this book has examined the costs of key urban services and identified governance issues. It is based on rich field data from six cities, namely, Chandigarh, Lucknow, Bangalore, Pune, Jaipur, and Surat and also provides detailed case studies of Ludhiana (Punjab) and Rajkot (Gujarat).
The book has estimated marginal costs of providing urban services in India. Then, it estimated total expenditure required for ensuring a certain level of services and compared it with present level of expenditure. Finally, it identified financial and institutional challenges in introducing urban reforms in the country.
Most water supply systems are not able to recover even operation and maintenance costs. Bangalore is one of the very few cities where tariff revisions have led to a marginal surplus and it is mainly due to high water charges paid by non-domestic consumers. The study has concluded that existing water pricing structures are obsolete and need to be replaced by simple, easy and transparent structures. It has recommended that water metering should be integral part of overall price reform agenda. As far as solid waste management is concerned, there is no direct charging system in India for this service. It is financed out of general tax revenues like property tax. Spending on this service in selected cities except Pune is highly inadequate. Study has also analysed costs and revenue of sewerage, roads, and street lights. It shows that while in case of sewerage finances are core of the service delivery problems but in case of street lighting and roads, governance is part of the problem.
Detailed case studies of Ludhiana and Rajkot provide very crucial information on local urban governance issues. In Ludhiana Municipal Corporation (LMC), bottlenecks to reform are: State Water Supply Board responsible for implementing major projects; LMC does not have technical expertise to manage services; LMC is not able to increase user charges for services; lack of public participation; and inadequate planning.
In Rajkot Municipal Corporation (RMC), emphasis is on private sector involvement in the city management. Private contractors are extensively used in solid waste management. Private developers are participating joint land development projects such as fire stations, community centers and others. Though it had a substantial revenue surplus in year 2002-03, it recovered less than 25% of total expenditure on water supply. The study found that the city has limited technical capacity, and there is inadequate accountability of private sector. These problems are perhaps not limited to Ludhina but are common to many Indian cities.
In response to urban problems, the government launched a reform-linked urban infrastructure investment project, Jawaharlal Nehru Urban Renewal Mission (JNNURM). The states and urban local governments accessing the JNNURM must complete a total of 22 reforms during the seven-year period. The book has described various reforms under JNNURM. It has also identified innovative management practices like municipal bonds, private sector participation, community participation in financing of services etc.
Findings of the study strongly suggest that over and above of the issue of finances, institutional and functional overlap of responsibilities are also responsible for poor delivery of the urban services. The book provides important and useful insights into costs and governance issues of delivery systems in urban India. It is unfortunate that it did not adequately cover the issue of urban services for the poor.
?The reviewer is Director, National Institute of Urban Affairs