Urban Population Growth and Infrastructure Needs
India’s urban population will double from 400 million to 800 million over the next 30 years.
Estimated ₹70 lakh crore needed by 2036 for urban infrastructure.
Government currently invests ₹1.3 lakh crore annually, but ₹4.6 lakh crore per year is needed, primarily for basic services (50%) and transport (50%).
Issues at the Local Level
Since 2002, municipal finance has stayed at just 1% of GDP. Municipalities contribute 45% of urban infrastructure investments.
Tax revenue grew by just 8% (2010-2018); grants by 14%, and non-tax by 10.5%.
The share of own revenue for municipalities has dropped from 51% to 43%.
Cities like Bengaluru and Jaipur collect only 5%-20% of potential tax revenue.
Nationwide property tax collection is very low (₹25,000 crore, 0.15% of GDP).
23% of municipal revenue remains unspent, and major cities like Hyderabad and Chennai only spent 50% of their capital expenditure in 2018-19.
Public-private partnership investments in urban infrastructure have fallen drastically from ₹8,353 crore (2012) to ₹467 crore (2018).
The Need for Reform
Long-term structural reforms:
Strengthen State Finance Commissions.
Empower municipal governments with more financial and administrative autonomy.
Attract private capital through mechanisms like municipal bonds and debt borrowing.
Medium-term measures:
Develop a robust pipeline of projects: Around 600-800 projects need to be prepared annually to meet the ₹70 lakh crore investment target, with 15% from PPPs.
Decouple project preparation from financial assistance: Ensure projects are financially, socially, and environmentally sustainable, to avoid delays.
Leverage Digital Public Infrastructure (DPI): Improve service delivery, especially in public transport, using modern digital tools.
Capture land value in transport projects: Integrate metro/rail projects with urban development to improve land utilization and job creation.
Collaboration for Success
Addressing these financial and structural challenges requires collaboration:
Government: At central, state, and municipal levels.
Private sector: Participation in financing and project development.
Innovation and governance: Focus on efficiency and sustainable development to meet the needs of India’s growing urban population.
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