May 25, 2020
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The Invisible Cities

Towns should have power to levy taxes, raise money from markets

The Invisible Cities
Urbanisation in general is an important aspect of development in any country which is in transition from an underdeveloped stage to a developed one. In India, just 15 per cent of our population fell within the ambit of urbanisation in 1947. Today it is 30 per cent. In the next 20-30 years, it will grow further and cover 50 per cent of our population. Politically and historically, urbanisation has not happened in India because of the federal relations between the Centre and the states. Indian cities have not grown because many state governments did not want cities to be strong. This is quite strange because cities have the power and the land, and should have grown into stronger entities as it is in many developed countries. Today, we all know that Mr Bloomberg is the mayor of New York because it is such a strong centre of power, while most do not even know who the mayor of Bangalore or Mumbai is.

Most of our cities have 30 per cent urban poor and lack public facilities. But that is as much a financial issue as it is a political one. State governments would rather have the cities weak so that they are dependent on the state. Another problem is that urban infrastructure is a state subject and the Centre can do little about it. There is of course the Union ministry of urban development, but it does more for Delhi than for other large cities—its mandate is limited to that. Most of the ministry's work is concentrated on looking after Delhi and its gardens, and allocating houses for ministers in Lutyens' Delhi.

One of the biggest changes in urbanisation happened through the efforts of Rajiv Gandhi in the 1980s—although the bill finally got passed much later in the 1990s—in the field of panchayati raj and urbanisation of local bodies. The next big effort in this direction is happening today through the Jawaharlal Nehru National Urban Renewal Mission. The programme—which covers 63 cities, including nine heritage cities like Mysore—has a massive outlay of Rs 50,000 crore and is probably the biggest push towards development of urban infrastructure in independent India. But we have to remember that urban infrastructure-building is not just about money but also the reform process and some of these reforms have to be related to issues like land ceiling and tenancy.

We realised we had to empower Indian cities through a sustainable development model. This would be possible through the use of technology to maintain records, by creating a process of disclosure so that information could flow to all the stakeholders and let people know, just like in case of a company, how their city is performing. It would also need to look at citizens' participation through adequate legislation so that people would have a role to play in urban development efforts.

The cities should be empowered to raise money from the financial markets for which we need to create a corporate bond market. In western countries, cities have more power to levy their own taxes and raise money from the markets. In the US, the municipal bond market is bigger than the capital market. Unfortunately, In India, our cities do not have the power to levy tax or raise money. Only Delhi, which is a city state, can come closest to that. Others have to depend upon the Centre. That is the basis of the Bombay argument, which says that Bombay pays 40 per cent of India's income tax, but is lacking in urban infrastructure and other facilities.

There have been projects with the help of loans or grants from multilateral agencies like the ADB project in Karnataka, but we have to remember that these funds have to be returned and there is a cost involved. We need to look at more fundamental issues like making our cities stronger, which would be a long-term sustainable model for development. And if you have to look at 400 cities for development, this has to be the way to do it as quick-fix methods will not work.

Comparisons are often drawn with the China growth model, but we have to remember that China is run by a one-party government, which can take fast decisions. In the Chinese system, cities are very powerful and their ability to build infrastructure is far higher than us. When they built Shanghai, they moved people away, we can't do that. In China, Zhu Rhongji, who was the mayor of Shanghai, became the premier. In India have we seen mayors ever reach that level?

(The author is CMD, Infosys.)
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