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"Cityscapes 2002"
Global Convention on Agenda for Urban Infrastructure
Reforms
October 21-22, 2002, New Delhi
Welcome Address by Mr Rajendra S
Lodha, President, FICCI
Respected Shri Ananth Kumar ji, Hon’ble Union Minister
for Urban Development & Poverty Alleviation
Shri Shyam Sunder Dawra ji, Secretary, Ministry of Urban
Development & Poverty Alleviation
Mr Len Duvall, OBE, Greater London Authority, UK &
Chairperson, CLGF
Mr Niranjan Hiranandani, Chairman, Housing & Public
Works Committee, FICCI
Friends,
It gives me great pleasure in welcoming you all today
at this Convention. I feel honoured to have the participation
of the Commonwealth Local Government Forum (CLGF) Members
who have kindly made it convenient to attend this event
and also agreed to share their country experiences at
a special session at this convention. I am thankful
to the Ministry of Urban Development & Poverty Alleviation
for extending its support in making this event happen.
Urbanisation in India has reached a stage where urban
economy has turned more important than the rural one.
- In terms of numbers Urban India is a larger market
than Urban USA. Urban population in India is 285 million,
which is more than that of in the United States of
America.
- The contribution of the urban sector to India’s
GDP is currently 60%
- Government revenue from the urban sector accounts
for more than 90% of the total government revenues.
Unfortunately despite growing importance of cities in
the overall development of the economy, Indian cities
woefully lack in infrastructure facilities. Most of the
cities and towns in the country have serious shortage
of power, water supply, sewerage, transportation and other
civic facilities. Two critical factors have led to this
sorry state of affairs :
- Dearth of funds with the civic bodies
- Woeful lack of proper service orientation
among the civic managers
The panacea for the two problems could be an intensive
private-public partnership. The private sector can bring
in the much needed efficiency and supplement the
government effort in development of infrastructure and
in ensuring adequacy and efficiency of urban services.
But there are a number of hurdles towards that goal :
- The biggest hurdle in promoting public private
partnership (PPP) is the absence of suitable
provisions in the State Municipal Laws. The laws require
that such services are to be provided by either municipal
bodies themselves or their agencies. None of
the municipal law has any provision, permitting private
sector to provide any of the municipal services.
- Institutions that are charged with the responsibility
to evolve PPP arrangements do not have clarity of
an implementation roadmap and a broad commercial orientation.
- Also missing is a regulatory framework that encompasses
service standards, quality and tariff issues and a
balance between the interests of industry & domestic
consumer.
- It needs to be recognised that considerable rigor
is required in project development through PPP.
There is lack of necessary project development funding
backed by appropriate technical assistance and process
management.
- Due to lack of strong regulatory framework, risk
management becomes critical. An assessment of
risks, mitigation measures and appropriate allocation
through standardised documentation are lacking in
the system..
- Many initiatives have been abandoned due to lack
of political support or changes in views as a result
of political changes. A case in point is the Hyderabad
Water supply Project, where there was lack of clarity
with respect to the support of the State Government
regarding tariff increase procedure.
- Under PPPs, the role of consumers and communities
has to become more important, especially in influencing
initial design decision through articulation of local
demand, better services as well as in monitoring contractual
performance.. In case of Tirupur, the local
industrialists association, a critical user group,
has been a major force in project development.
- Lack of wider city or utility level framework is
another bottleneck. For outsourcing of operational
tasks, a larger city or utility framework is necessary
to select the type and scale of appropriate activities.
For example in Hyderabad, after two years of contracting
for solid waste collection and transportation on a
limited scale, the Municipal Corporation has developed
a citywide approach in the context of public sector
employee strength and local private sector capacity.
- With the enactment of the 74th Amendment of the
Constitution - known as the first generation of urban
sector reforms, urban local bodies in the country
have acquired a statutory status. However, it has
been observed that while implementing many of the
provisions of the 74th Amendment Act, the spirit of
the Act i.e. “decentralisation” was not fully amended/implemented
by State Governments. Urban local bodies in many States
are still functioning as residuary agencies.
As a result of that, they are not able to fulfill
their assigned functions, particularly those, where
financial implications are involved. Probably the
representatives of the various states present here
today would be able to throw some light on this.
In spite of various hindrances, different forms of public
private partnership in urban infrastructure provision
are now being practised in India. Contracting out, convergence
of resources and raising funds from primary capital market
are the key innovations that have been taken by various
cities at different corners of the country. However, such
examples are few and need to be replicated in many more
cities.
Several urban legislations have created various distortions
in the markets. Sebveral steps are required to be urgently
initiated by the states and I list here few very urgent
ones :
- Adopt the Urban Land (Ceiling & Regulation)
Repeal Act,
- Revise the rent laws,
- Rationalize stamp duties
- Modify land acquisition procedures to promote development
and increase supply of land.
Hopefully we shall be able to deliberate on some of these
issues in detail in these two days and reach at some solutions.
We will have the pleasure of listening to the speakers
who have come from abroad for this event about the international
best practices and its relevance for India. I am sure
we will learn a lot from the deliberations & discussions
with the participants and be able to draw out a clear
road map for the next set of urban infrastructure reforms.
Thank you
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