Efficient functioning of our cities can influence labour costs and social conditions, which bear directly on India’s competitiveness and growth prospects, writes Inder Sud in ‘Urbanization and public services: creating functioning cities for sustaining growth,’ an essay included in ‘India 2039: An affluent society in one generation,’ edited by Harinder S. Kohli and Anil Sood (www.sagepublications.com). In a global world, Indian businesses will need to compete globally for highly skilled Indian professionals, who will increasingly consider the quality of life as a factor in their own location decisions, he reminds.
Dysfunctional cities
The author’s lament, however, is that most Indian cities are dysfunctional, suffering from serious deficiencies in the quality and quantity of infrastructure. Pointing out that most cities suffer from poor roads, uncollected garbage, regular flooding, stagnant storm and waste water, and unreliable supplies of drinking water, he adds that the quality of life in Indian cities compares unfavourably with that in other lower-middle income countries, and is far from the level India should aspire to as an affluent country.
Inadequate resources are only part of the story, Sud notes. A bigger problem is one of poor management, with proper systems and processes lacking, low quality of staff, and widespread corruption. These considerations, he says, have ostensibly led most states to keep a tight grip on city administrations, controlling most functions to the point that cities function essentially as departments of the state government.
Need for autonomy
Reasoning that such tight grip leaves little room for local initiatives to improve the provision of services and the quality of life in cities, the author avers that only self-governing cities functioning as autonomous corporate entities can alter the current situation. “That was the spirit of the 74th Amendment of the Constitution, approved in 1993. With that amendment, Parliament sought to decentralise power from states to urban local bodies by defining an illustrative list of 18 municipal responsibilities and functions.”
To make Parliament’s aspiration a reality, we should at least start with the 100 largest municipal corporations, the author urges. “These would cover all cities with populations over 5,00,000, today accounting for some 160 million people. Most of these cities, if not all, will have million-plus populations by 2039.”
By focusing on these large cities first, policymakers would recognise that these cities have the potential to mobilise significant resources to meet their own needs and are more likely to have the active civil society organisations that are crucial to ensuring good governance, Sud suggests.
Per capita numbers
An instructive table in the essay is about the urban government expenditures and revenues per capita, in India and comparable countries. At less than $50 of expenditure per capita and less than $40 revenue, India is far behind Brazil ($210 and $195 respectively), Poland ($358 and $355), and Russia ($349 and $347).
The author cautions that urban government finances are not tracked systematically in India, so any assessment of resources has to be based on secondary sources or data collected sporadically for other purposes, as for the 12th Finance Commission and the current 13th Finance Commission. For instance, data collected by the World Bank for Karnataka, Maharashtra, and Tamil Nadu, and published in 2004, indicate that the larger urban bodies classified as corporations spent between Rs 944 (Karnataka) and Rs 2,300 (Maharashtra) per capita annually on infrastructure services.
Declining share
In relative terms, the share of public spending going to urban expenditures has been steadily declining, the essay informs. The decline has been from nearly 8 per cent in 1960/61 to 4.5 per cent in 1977/78 and about 2 per cent in 1991/92, even though the share of the population living in cities has increased, Sud outlines. One reason for the low expenditures, he finds, is the poor job most Indian cities do at mobilising their own resources.
“Self-generated revenues cover only 70-85 per cent of current expenditures, and cities must rely on resource-constrained state governments for the balance. Since salaries and wages alone account for more than half – and as much as 80 per cent – of cities’ current expenditures, the resulting tight budgets mean that maintenance is neglected.”
One learns that, currently, revenue generated by cities in India is a mere 0.75 per cent of GDP (gross domestic product), in contrast to 4.5 per cent in Brazil and 6.0 per cent in South Africa. And, that property tax is estimated to account for 0.2 per cent of GDP in India, compared with an average of 0.5 per cent for all developing countries and about 2 per cent for industrialised countries.
Good governance
A section in the essay is devoted to ‘good governance,’ where the author makes a case for appointing an inspector-general with the power to investigate citizen complaints. The reports should be in the public domain and provide a basis for elected officials to initiate action against city officials and for the electorate to judge the performance of individual councillors, he recommends.
Of value, again, is the exhortation for public information and disclosure of all aspects of the functioning of the municipal government, particularly in the areas of budget, expenditures, procurement, personnel, land use planning and modifications, building permits, property valuation and taxes, and all deliberations of the council.
Recognising the role of watchdog citizen organisations in monitoring the performance of the city government, Sud advises Indian business houses to support the efforts of these organisations, such as the issue of citizen report cards on the effectiveness of various government functions.
Educative reference.
