With the somewhat partial success of the first round of JNNURM, the Mission hopes to leverage the advantage of learning experiences, both of its success and stumbling blocks, as it gears up to address many more cities in the second round. Nisha Singh, Joint Secretary, Union Ministry of Urban Development, and Mission Director of JNNURM, in a written response to the questions by Shashidhar Nanjundaiah, outlines how those experiences will help in formulating the future of the Mission.
Our cities, oddly, seem short of money perennially for developmental activities and matching funds for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), as a result of which the scheme has taken a beating. Do you believe our cities' revenues need sustainable solutions?
It is true that most of the ULBs are not financially strong and self-sustaining. While transfers from state governments and the Government of India have incrÂeased in recent years, ULBs' tax bases are narrow, inflÂexible and lack buoyancy.
A High Powered Expert Committee (HPEC) chaired by Isher Judge Ahluwalia has recently recommended a re-engineered ULB model. Do you believe, as someone who is responsible for administering JNNURM, that ULBs need more support and empowerment? What financial model(s) do you envisage for them for viable solutions?
The ULBs need to be strengthened as local govÂernments with their own and sustainable sources of revÂenue, predictable formula-based transfers from state govÂernments as part of revenue-sharing arrangements, and other transfers from the Government of India and state governments to help them discharge the larger resÂponÂsibilities assigned to them by the Constitution. Some of the models proposed for financial sustainability include the formation of a corporation to fund urban infraÂstructure, Pooled Financing Mechanism and promoting PPP.
What are your views on the 'new improved' JNNURM that has been proposed in the above HPEC report? Do you see a need for financial reforms in JNNURM?
A sub-group has been set up to go into the recommendations of the report of HPEC. Reforms and new initiatives are an ongoing process. The challenges of urban development are so immense that action has to be taken constantly to improve governance and delivery mechanisms in our local bodies so that services are rolled out satisfactorily.
More cities are proposed to be under the JNNURM ambit. With its limited success in the first round, what learning experiences will you carry forward?
Based on the experience gained during the last six years of implementation of the Mission, it is felt that a programme-based approach rather than project-based approach is necessary to enhance service delivery. The duration of the programme should be more than five years, services should be extended to all the cities, whether it is small or big, enhance institutional and human resource capacity, financial allocation could be different for different states/UTs/class of cities depending on their capacity and need and reforms could be graded based on the capacity of individual cities.
Matching funds to JNNURM have been an issue for states and ULBs. Should the Centre step in? What is the recourse to break this Catch 22 situation?
To enhance the creditworthiness of the ULBs and to attract funds from the market to leverage the share of ULB, the Mission Directorate of JNNURM conducted the credit rating exercise for 69 ULBs in the 63 JNNURM cities. The exercise focused on providing an indication of creditworthiness to potential lenders also provides an opinion on the relative ability and willingness of the ULB or other entity to meet financial commitments such as interest, repayment of principal, counterparty obligation, etc. The rating exercise was conducted by four credit rating agencies recognised by the Securities and Exchange Board of India (SEBI).
Apart from this, the Ministry has established Pooled Financing Mechanism to leverage funds for small and meÂdium cities, but only a few states established this. Another effort is to promote PPP model in service delivery.
Apart from all these efforts from the Ministry, good initiatives are reported from the states such as formation of a corporation to fund urban infrastructure, mission mode programme to provide financial support, financing support to ULBs through land selling and formation of public limited company with established in partnership with private sector banks.
What successes have you experienced in the first round of JNNURM and would like to retain for the subsequent cities?
Being the first large scale intervention in the country's urban sector, JNNURM has been an experience in learning by doing for the Government of India, using project-oriented fund transfers as a driver of change for reforms in the second and third tiers of government to improve the state of our cities. The Mission has helped ULBs to take on projects on a scale they had never attempted earlier, and quite a few successful urban infrastructure projects have resulted from such support.
As far as reform implementation is concerned, there has been considerable progress both at state level and ULB level reforms. In particular, implementation of 74th CAA, Rent Control and ULCRA was taken up prior to the launch of the Mission in many states, and JNNURM proved to be a catalyst in completion of these reforms. Enactment of Community Participation and Public Disclosure Law are two new reforms triggered by the Mission in an attempt to strengthen the civil society and mobilise active involvement of people in governance of the ULBs to ensure transparency and accountability. Reforms like internal earmarking of funds for services to urban poor and shift to accrual based double entry accoÂunting have seen considerable progress during the Mission.
It must also be appreciated that JNNURM as the first intervention in urban areas, has achieved much by provisioning funds in urban infrastructure services and initiating institutionalised reforms in ULBs.