IMPRI Centre for Habitat, Urban and Regional Studies (CHURS), IMPRI Impact and Policy Research Institute conducted a panel discussion on Cities and the Union Budget 2023-24 on 7 February 2023 under the IMPRI 3rd Annual Series of Thematic Deliberations and Analysis of Union Budget 2023-24, as part of IMPRI #WebPolicyTalk.
The moderator for the event Dr Saumyadip Chattopadhyay, Associate Professor, Visva Bharati, Santi Niketan; Visiting Senior Fellow, IMPRI, commenced the program by raising the contemporary policy issues that have arisen in the urban development space, most of which got aggravated post covid. Raising the issues of building sustainable urban settlements in the wake of climate change, and the deterioration of urban health infrastructure post covid among others, he pointed towards the 2022 World Bank Studies on urban governance reforms that mention how Indian cities need an investment of $840 Billion along with the need of financial autonomy for city governments.
In the budget announcements, he mentioned that there is an emphasis on building sustainable cities through the provision of setting up a National Urban Infrastructure Development Fund, with an allocation of ₹10000 crore per year, coupled with reforms on Property Tax Governance, improving credit worthiness of city governments among others, however, he was skeptical of what it meant for the common people and how such a roadmap would facilitate further effective transformation.
Reiterating Dr Soumyadip’s points, the chair for the session Dr Rumi Aijaz, Senior Fellow and Head, Urban Policy Research Initiative, Observer Research Foundation, India talked about the Importance of Urban Policy Making today. Stating his inferences from the budget, he mentioned an overall increase in the net amount in budgetary allocation, which is around a 3% increase. Second, the percentage increase is the highest for AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and Swachh Bharat Mission (for Urban it has doubled since the previous period). Next is the decrease in budgetary allocation for Smart Cities and Pradhan Mantri Awaas Yojana (Urban) and finally, the share of allocations is the highest for Metro Rail Projects and PMAY whose shares comprise around 60% of the total allocations of the Urban Ministry.
Dr Aijaz infers that there is a larger emphasis on creating sustainable cities and transforming existing cities into sustainable ones through transit-oriented development. He mentioned how municipalities and statutory organizations often face a resource crunch and that through the budget, the center has sent a strong message to mobilize resources more efficiently through the creation of Urban Infrastructure Development Fund and Municipal Bonds which effectively strengthens transit printed development.
Emphasizing green mobility, artificial intelligence, the launch of the hydrogen mission, and scientific management of solid waste among others, he pointed towards making cities more resilient and financially and technologically strong.
Followed by the Chair’s opening remarks, Professor Kala Sridhar, Professor, Centre for Research in Urban Affairs, Institute for Social and Economic Change (ISEC), Bengaluru talked about the National Gati Shakti Policy and tackling the issue of urban primacy through this newly adopted policy. There’s a resource and infrastructure crunch in smaller cities, and hence firms are more concentrated in larger cities like Bengaluru, Delhi, etc. The Gati Shakti policy, she opines, is a good way to prevent the primacy of cities by improving logistics. Firms are spending a lot more on operations and maintenance rather than on capital expenditures, which justifies the poor state of logistics and supply chain Infrastructure of our country. However, all of this is not covered in the budget, since the budget is just a partial reflection of the state of the economy
Then she talked about how a big sum of transport infrastructure aims at coal, oil, and fertilizers, which could become a huge hindrance in phasing out fossil fuels, largely used by the urban poor. She further said that some of the most pressing issues that our cities face require solutions of transit-oriented development and systematic investment, she mentions. But she reiterates that there is not enough evidence as to how to meet these challenges in the long run.
Continuing further Prof Sridhar mentioned that even though urban development is a state subject with the limited role of the Centre it can provide resources and skills for a better roadmap to the state for Systematic Investment Planning. She also mentioned how states can leverage their 15th finance commission funds while accessing the Urban Infrastructure Development Fund, which, she opines, is not enough for urban development.
She summarized by mentioning how it is a good budget in terms of its attempts to improve infrastructure investment, yet well below required standards. Another issue she mentioned is the need for periodic availability of data.
Professor Chetan Vaidya, Independent Urban Advisor; Former Director of, the School of Planning and Architecture (SPA), New Delhi, and the National Institute of Urban Affairs (NIUA), New Delhi mentioned two points that he thinks need to be emphasized more. First is the National Action Plan for Mechanised Sanitation (NAMASTE) with an allocation of 100 crores, which plans to provide financial support to sewage workers in 500 cities. The fact that the finance minister has at least talked about its importance in the budget speech is a significant moment, he states. This budget has provisions through which the IFSC Authority can allow new units to register just like they can in SEZ through the SEC Act 2019.
About the New Sustainable Cities Fund, Professor Vaidya mentioned how there is already an AMRUT fund in place that can be further utilized, rather than having a separate fund. He further questions the capability of the National Housing Bank which is set to fund this sustainable infrastructure program, adding that the NHB has limited access to the technical know-how of urban development policy frameworks. In NULM, the allocation has been reduced from ₹50 crore in the revised budget to ₹0.1 crore which according to him is a major reduction. He feels that there should have been a larger focus on incorporating the aspect of climate change into the budget as far as urban development is concerned.
Talking about improving logistics through PM Gati Shakti Policy, Mr T Chakavorty, Urban Economist mentioned how urban planning must incorporate issues of strengthening financial positions especially by accessing instruments such as the bonds market which is crucial in incentivizing production-linked development. In this, the re-initiation of municipal bonds is a significant step forward. As far as housing is concerned, the issue of congestion can be tackled through the Pradhan Mantri Awas Yojana Policy initiatives, he mentioned.
Professor Tathagata Chatterjee pointed out two policy trends in the budget that he thinks will have repercussions for the urban sector in the future: first is the clear thrust on infrastructure, roads, and railways. Second, is the larger reference for green growth, with an allocation of 33000 crores towards energy transition. While talking about the impetus given to the Urban Infrastructure fund, also noticed programs such as the likes of the Smart cities have been losing out on budget allocations over the years. The next question he put forward was regarding the complexities that exist within the Indian federal framework, where urban development exists in the state list, and hence, politically motivated tussles are imminent. The issue of incentivizing these reforms is equally important.
Professor Vishwa Nath Alok, Professor of Public Finance, Indian Institute of Public Administration (IIPA), New Delhi talked about the provision of the 50 years of interest-free loans provided to states, which, coupled with its performance-based incentives, can be crucial in the years to come. As far as the hike in allocations for Swacch Bharat is concerned, he forecasts larger spending on advertisements given that the election session is near. He talked about the provision given for establishing the center for excellence in Artificial Intelligence which is another crucial aspect in improving city infrastructure.
Professor Mahalaya Chakrabarty, Professor, Centre for Urban Economic Studies, Department of Economics, University of Calcutta talked about the total allocations for the Ministry of Housing and Urban Development, where she finds no significant urban project placed in the “core of the core”. For her, urban development should’ve been more than just Infrastructure development, contrary to which, she mentions, it has been overwhelmingly emphasized in the budget.
She talked about the National Urban Policy Framework (NUPF) which according to her has lost its relevance ever since its initiation back in 2018. She also pointed out the fact that transit-oriented development of cities often has its own set of leakages, in terms of resource loss among others, which needs to be addressed more effectively. In reference to the provision of 75 biogas plants in urban areas, she is of the opinion that the number is too low given that there are 7000 urban areas in India.
Mr. Tarun Sharma, Co-Founder, Nagrika sounded optimistic about the fact that urban development has been given higher priority in budget documents over the last few years. He mentioned that the capital expenditure of Bombay Municipal Corporation is around 27000 Crores which comes down to around 3 times the total amount allocated under Urban Infrastructure Development Fund.
He reiterates that tier-II and tier-III cities have a lot of potentials to come under Urban development programs given that there are around 2000 such cities. Regarding the increase in allocation to Swachh Bharat Programme, he mentions that it might provide additional capacity for city administrations to augment social sector spending. Finally, he remarked on the need for larger discourses on UIDF on setting right the institutional arrangements that would allow effective utilization of such a fund. Practical learnings from the implementation of the Rural Infrastructure Development Fund would be crucial in utilizing the UIDF, he stated.
After this, the house was opened for comments from the individual panelists. The panelists reiterated some of the main points that were raised during the discussion. Firstly, the importance of learning from previous experiences from programs such as the National Rural Infrastructure Development Fund, secondly, the need to shift from Mission mode to Program oriented Approach, the balancing of programs and projects.
The Chair Dr Rumi Aijaz concluded by talking about the need for more transparency with data while arriving at the budgetary numbers for the urban sector. He also mentioned that administrative units need to be more accountable and transparent while implementing new policies and schemes. The enlightening session then ended with Dr Chattopadhyay stressing the operational issues in urban planning and the two major problems of lack of local data and capacity building.