While private players worried about lack of adequate capital, government officials focused on alternative models for revenue generation
Funds for urban development in India is just about 20% of what is needed, experts said on Thursday in Ahmedabad. Long gestation periods and low revenue realisation have raised questions about bankability of the projects, they said.
Kenichi Yokoyama, country director – Indian resident mission of Asian Development Bank (ADB), said India would require about Rs 3 lakh crore in next 20 years against which only 20% would be coming. He was speaking at the two-day Regional Conference on "Úrban Development – Technological Solutions and Governance Challenges". Most Asian countries are better placed with availability of about 50% funds. Even peers in the developing world are in a better position with 5% of budget spending going towards urban projects, as against one percent in India.
While private players worried about lack of adequate capital, government officials focused on alternative models for revenue generation. Kumar Pratap, joint secretary in the Union Ministry of Finance said that while middle class feels they are facing a financial burden, in reality, it is the poor.
"While you may be paying about 50 paise for a bucket of water, the poor are paying as much as Rs10 for the same water," he said, lamenting that just 2% of funds allocated for smart cities is being utilised.
Mukesh Puri, principal secretary of Urban Development Department in Gujarat, said that in addition to the allocation by the government, funds are also flowing through Special Purpose Vehicles (SPVs).
While there may be bottleneck in revenue mobilisation at municipal bodies elsewhere, the civic body in Gujarat have over 90% collection of property tax. The recent appointment or regional municipal commissioners will also address the issue of lower tax collection in municipalities.
EXPERT SPEAK
- OP Mathur, head of Urban Studies at Institute of Social Sciences, New Delhi, said urban projects have been planned, managed and financed by the government in India, and this is adequate, considering the rate of urbanisation.
- While pvt investment can’t be a substitute of govt expenditure, it has to compliment central funding if the country wants to grow at a rate of 9-10%.
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