India’s Minister of Finance presented the
national budget for the financial year 2021–2022 on 1 February 2021. We look at the budget from the perspective of urban local bodies (ULBs), to understand the wide-ranging implications it has for the ULBs. The budget has made some enhanced provisions for the physical and social infrastructure of cities. These will directly contribute to the expansion and improvement of certain urban services. There are others where outlays are in sectors that are not purely urban or are not in the functional domain of ULBs. However, indirect benefits are likely to flow out of these to positively impact city economy, services, and quality of life. Overall, there appears to be a mounting realisation that in the context of growing urbanisation, the Government of India (GoI) needs to step in and assist the ULBs.
In the context of the COVID-19 pandemic, the budget has announced a new centrally sponsored scheme titled ‘PM AtmaNirbhar Swasth Bharat Yojana’ which is applicable to both urban and rural areas. This has been given an outlay of INR 641,800 million over six years. The scheme is designed to augment “capacities of primary, secondary, and tertiary healthcare systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.” The scheme would provide support to 11,024 urban health and wellness centres, and establish integrated public health labs and critical care hospitals. Besides, the National Centre for Disease Control (NCDC), its five regional branches and 20 metropolitan health surveillance units would be strengthened. The Integrated Health Information Portal would be expanded to all States/UTs, and 33 existing public health units at points of entry such as airports, seaports, and land crossings would be reinforced. A regional research platform for WHO Southeast Asia Region, bio-safety laboratories and regional virology institutes would also come into existence. In view of the COVID-19 pandemic making urban centres its primary target, the proposed health infrastructure would enable ULBs to have greater capacity to contend with any future onslaughts of a similar nature.
Indirect benefits are likely to flow out of these to positively impact city economy, services, and quality of life.
With a view to achieve universal coverage of water supply, the budget proposed the launch of the Jal Jeevan Mission (Urban
). “It aims at universal water supply in all 4,378 ULBs with 28.6 million household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be implemented over five years, with an outlay of INR 2,870,000 million.” This Mission has huge significance, as it targets one of the key urban infrastructures that have large urban deficits. If properly implemented, it should rid many Indian cities of their water and wastewater problems.
For greater hygiene in urban India, the budget focuses on complete faecal sludge management and wastewater treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution by effectively managing waste from construction and demolition activities, and bioremediation of all legacy dump sites. The ‘Urban Swachh Bharat Mission 2.0’ will be implemented with a total financial allocation of INR 1,416,780 million over a period of five years from 2021 to 2026. Quite clearly, this has been an area of heavy shortfall in cities, leading to not merely poor urban hygiene but also seriously impacting the quality of water bodies on which rural areas depend for their drinking water needs.
The Jal Jeevan Mission has huge significance, as it targets one of the key urban infrastructures that have large urban deficits.
To tackle the burgeoning problem of air pollution, the budget provides an amount of INR 22,170 million for 42 urban centres with a million-plus population. A voluntary vehicle scrapping policy, to phase out old and unfit vehicles is being separately announced. This will help in encouraging fuel efficient, environment-friendly vehicles; thereby reducing vehicular pollution. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles. Given the national commitments made under the Paris Agreement and the e-mobility targets, cities are required to play a huge role in their achievement. This provision will go a long way in meeting those commitments and giving India’s major cities a better breathing environment.
The budget has turned its attention to urban transport in a big way. It aims at “raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service.” The budget looks to launch a new scheme at a cost of INR 180,000 million to support augmentation of public bus transport services. For this purpose, it wishes to encourage innovative public private partnership (PPP) models “to enable private sector players to finance, acquire, operate, and maintain over 20,000 buses.” It is hoped that this will provide a fillip to the automobile sector, lead to greater economic growth, create employment opportunities, and enhance ease of mobility for urban residents. The budget also plans to provide metro rail systems at a much lesser cost with same experience, convenience, and safety in Tier-2 cities and peripheral areas of Tier-1 cities. The budget assures central counterpart funding to further phases of metro railways of Kochi, Chennai, Bengaluru, Nagpur, and Nashik.
The modernisation of ports on a PPP mode would also encourage the growth of urban economies.
Other infrastructures that are outside the functional domain of ULBs but will contribute to the well-being of cities are the extension of gas pipelines, warehousing assets, and sports stadia and the development of airports in Tier II and III cities. The modernisation of ports on a PPP mode would also encourage the growth of urban economies.
While these multiple provisions for capital asset creation deserve a compliment, past experience shows that the withdrawal of the central hand immediately after asset creation leaves ULBs seriously handicapped in the task of maintenance and replacement of worn-out assets. Their own budget incomes, overwhelmingly dependent post-GST on a single tax — the property tax, fails to fully support quality maintenance and finds it even more difficult to fund the replacement of atrophied assets. GoI’s
High-Powered Expert Committee (HPEC) 2011 that estimated investment requirements for urban infrastructure for eight major services (water supply, sewerage, solid waste management, roads, storm water drains, transport, traffic support services, and street lighting), also made an assessment of maintenance costs. For cities between 1 and 5 million, the maintenance cost was one-seventh of the capital cost per capita per annum for water, one-tenth for sewerage, and one-fifteenth for transport (bus and rail). In real terms, at the current costs, a city with a population of 1 million would need INR 1,250 million, INR 750 million and INR 1,320 million per year for maintenance of the three mentioned functions alone. Bhopal, to cite an example, with a current estimated population of 2.3 million, would need a total maintenance cost of around INR 5,000 million per year merely for water, sewerage, and transport infrastructure. With a current annual budget of INR 30,000 million and a whole raft of functions that encompass creating capital assets, paying municipal salaries, doing other miscellaneous administrative chores, and then finding money to maintain services; it is quite clear that the one job that would be put on the backburner would be maintenance. And when asset replacement additionally crops up after a decade or two, the ULB would huff and puff to scrape out some money. The fate of BRTS (Bus Rapid Transit System) is a striking example. Aided by Jawaharlal Nehru Urban Renewal Mission (JnNURM) to erect BRTS in select cities, most such urban services are currently struggling to survive.
The failure of
BRTS is a warning signal for urban programmes crafted by GoI that ULBs are required to implement. Initial assistance is no guarantee of permanency of the investment. Cities may not have the capacity to continue to run them once the source runs dry. There is danger, therefore, that money invested in cities without looking at the overall financial sustainability of ULBs may find a lot of good money going down the drain.
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