As the economy advances towards incentivising wealth creation, environmental sustainability and technologically proficiency, urbanisation acceleration is inevitable.
By Himani Sachdeva & Satwik Mishra
Never before in history has such a high volume of population shifted from rural to urban locales as is currently happening in India today. The government has been carefully curating policy provisions and orchestrating future plans to prepare for this urban acceleration. Government estimates suggest that over 60 crore people would be residing in urban India by 2030. This trend is encouraging for several reasons.
Firstly, urban areas are hubs of economic growth. In 2016, a Brookings Institute study stated that 123 largest metro cities in the world, with only 13% of the world’s population, contribute 33% of the world GDP. This trend resonates in India as well, with urban locales contributing about 63% to the country’s GDP as of today, and this is expected to rise to 75% by 2030, according to a CBRE and CREDAI report.
Secondly, population density is also shown to be correlated to innovation. Leading scientist Geoffrey West, working on scientific models of cities, has shown that as the population of a city doubles, innovation measured by the number of patents marks a rise by 15%.
Finally, smart urbanisation also brings the potential of environmental sustainability. A 2018 McKinsey study noted that smart cities have the potential to save 25-80 litres of water per person each day, and reduce non-recycled solid waste by 30-130 kg per person annually.
Taking cognisance of such network benefits, recently the Budget acknowledged and the Fifteenth Finance Commission (FFC) anticipated the growing importance of urban India.
The Budget FY22 acknowledges
The Budget FY22 has given an unprecedented cross-sectoral focus on urban India. The Ministry of Housing and Urban Affairs (MoHUA) has been allocated Rs 54,581 crore. Almost half of this has been provisioned for the Pradhan Mantri Awas Yojana (at Rs 27,500 crore). The scheme has been augmented given its success story so far, where the Economic Survey 2020-21 points out that so far 109.2 lakh houses have been sanctioned, 70.4 lakh houses have been grounded for construction, and 41.3 lakh have been provided to the beneficiaries.
The Ministry of Jal Shakti has received Rs 2,87,000 crore for five years to provide 2.86 crore tap-water connections in 4,378 urban local bodies and liquid waste management facilities in 500 AMRUT towns (the Atal Mission for Rejuvenation and Urban Transformation). Given the mindboggling acceleration with which the rural counterpart of this scheme is being scaled up with tap-water connections reaching more than 7 crore families already, similar mission mode zeal will surely be seen in its urban endeavour.
There has also an emphasis on “faecal sludge management and waste water treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution by effectively managing waste from construction-and-demolition activities, and bio-remediation of all legacy dump sites.” For this, the Swachh Bharat Mission (Urban) 2.0 has been given an allocation of Rs 1,41,678 crore for five years. Here, too, a successful implementation story has been rewarded. So far, 4,327 urban local bodies have been declared ODF (open defecation free), with construction of more than 66 lakhs individual household toilets and over 6 lakh community/public toilets. The mission has iterated towards its ODF+ and ODF++ protocols, with 1,319 cities certified ODF+ and 489 cities certified ODF++ so far.
Incentivising urban public transportation, bus transport received Rs 18,000 crore for 20,000 additional buses. Herein, facilitating innovative PPP models to catalyse private sector participation has been envisaged. Given the advancement in clean energy, this allocation may be deployed with non-fossil fuel-based buses. Along this front, to tackle air pollution, Rs 2,217 crore has been allocated for 42 urban centres with a million-plus population. There has also been an emphasis on augmenting the operational 702-km and under-construction 1,026 metro and RRTS lines with ‘MetroLite’ and ‘MetroNeo’ for tier-2 cities.
The FFC anticipates
In order to promote urban locales as engines of economic growth, the FFC has recommended total grants to the tune of Rs 1,21,055 crore for urban local bodies for the period 2021-26, as against the Rs 87,144 crore recommended by the Fourteenth Finance Commission. An amount of Rs 8,000 crore has also been set apart for incubation of eight new cities.
For cities with a million-plus population, 100% grants have been recommended as performance-linked through the Million-Plus Challenge Fund incentivising improvement in air quality, service-level benchmarks for urban drinking water supply, sanitation and solid waste management. For the non-million-plus cities, 60% of the grants have been tied to supporting and strengthening the delivery of sanitation, solid waste management and attainment of star ratings as developed by the MoHUA.
The FFC has laid out entry-level conditions for local bodies to receive grants. These include setting up of state finance commissions, publicly disclosing both audited and unaudited annual accounts in a time-bound manner, and finally notifying the floor rates of property tax from 2022-23 while showing consistent improvement in collection in tandem with the growth rate of a state’s own GSDP.
Linking funds with outcomes, Rs 70,051 crore has been suggested for health grants to local governments for strengthening primary healthcare facilities and infrastructure in which Rs 2,095 crore will be provided over a period of five years for urban public health centres and Rs 24,028 crore for urban health and wellness centres. Most importantly, an amount of Rs 450 crore has been recommended for undertaking steps to create an enabling ecosystem for states and urban local bodies to enhance own revenues, access municipal borrowings and implement shared municipal services.
As the economy advances towards incentivising wealth creation, environmental sustainability and technologically proficiency, the urbanisation acceleration is inevitable. The Budget and the FFC have rightly acknowledged and anticipated the importance of fast-tracking pending urbanisation reforms and also building anew for this upcoming reality.
Authors are consultant and young professional, respectively, at the NITI Aayog. Views are personal