Download the latest issue of Business Today Magazine just for Rs.49
JNNURM: Urban India's best hope

JNNURM: Urban India's best hope

India's largest urban infrastructure improvement programme has been a patchy success story because many states are still dragging their feet on the reforms tagged to the scheme.

Two years ago, Nagpur Municipal Corporation (NMC) had a leaking water supply system and defunct meters. It decided to launch a pilot project in the Dharampeth area, and put in new pipes and meters. Today, over 6,000 connections there have water round the clock— and are happy to pay for this privilege.

In 2006, Thane Municipal Corporation (TMC) decided to build a flyover to reduce commuting time to the railway station. "It used to take more than 30 minutes to cross a 1.5-km stretch between the station and the central business district. The flyover has reduced the time to five minutes," says Sanjay Deshmukh, Town Planning & Development Officer, TMC.

The Jawaharlal Nehru National Urban Renewal Mission (JNNURM), at Rs 1,20,000 crore the largest-ever urban spending initiative in India, is spawning many such success stories—but not in the numbers it should. All the success stories put together cannot convince urban dwellers that their quality of life has improved significantly.

Out of the 523 projects sanctioned initially, only 60 have been completed so far. There are several reasons for this poor show, and lack of central funding is not one of them. The main problem with the JNNURM is the states are not keen on implementing the policy reforms that are linked to the release of funds. The result: Only a third of the total funds under the JNNURM have been disbursed so far to the states.

  • Only 60 of the 523 projects sanctioned initially have been completed so far
  • Service-level benchmarks set in areas like water supply quality and sewerage
  • States resist reforms in key areas like municipal accounting, stamp duty
Says M. Ramachandran, Secretary, Ministry of Urban Development: "Implementation of reforms is a complex process. The states keep deferring implementation and ask for more time." The states, instead, keep putting pressure on the Centre to release JNNURM funds even if the reforms have not been put in place. Their plea: The people should not be denied the benefits.

States seeking JNNURM funds have to implement 23 reforms, some mandatory and some optional. The reforms relate to e-governance, municipal accounting, property tax, lower stamp duty, community participation law, public disclosure law and levy of user charges, among other things. On the ground, only 30 civic bodies have shifted to double entry accounting, 13 claim to have e-governance in place and just nine states have reduced stamp duty.

Then there is a systematic flaw: Most civic bodies do not have the capacity (trained manpower and processes) to complete the projects. However, the Centre is helping out with training programmes and project management units. The ministry has laid down service level benchmarks for six sub-sectors. Says Ramachandran: "Luckily, the Finance Commission has endorsed our stand."

State governments also have to transfer powers and responsibilities to urban local bodies or ULBs to enable them to become financially sustainable institutions.

"The functions of the local bodies are very limited in states such as Punjab and Haryana. ULBs are seen as one more government body and largely depend upon the state funding. This has to change," says Ramachandran. Rakesh Mehta, Chief Secretary, Government of Delhi, says: "It should be a bottom-up approach, not the other way round. We need to prepare ward-level action plan where every ward should be able to raise its own resources."

ULBs also lack quality staff. "In certain cities, the staff, including engineers and clerks at the ULBs, does not understand things such as financial analysis," notes Chetan Vaidya, Director, National Institute of Urban Affairs.

To be fair, the JNNURM has changed the urban landscape in pockets. Every state now realises the importance of managing the process of urbanisation. Local governments are also keenly aware of the need to develop plans, identify priorities, raise matching funds and execute projects. And they are willing to do bigger projects.

Under the mission, 34 cities have introduced organised urban transportation systems where there were none. Says S. Aparna, Commissioner, Surat Municipal Corporation (SMC): "The mission has enabled us to create a high quality of habitat for all the citizens. Under the JNNURM, we are carrying out various projects worth Rs 2,428.99 crore."

The JNNURM's Phase II will include another set of reforms, and a tighter monitoring mechanism. Also, the central government has learned that one-size-fits-all model doesn't work, so every state will have a different set of reforms. The private sector may get a bigger role as the ULBs and states cannot match their level of efficiency.