JNNRM&Reform Framework Overview RTP MOD

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JnNURM Overview and Reform Framework
JNNURM Rapid Training Programme
Governance & Reforms
Foreword 1. 2. 3. 4. 5. 6. 7. 8. 9. Urbanization Trends JnNURM An Overview Reform Framework Implementation of the 74th Constitutional Amendment Act (S1) Integration of City Planning and Delivery Functions (S2) Rent Control Reforms (S3) Rationalization of Stamp Duty (S4) Administrative Reforms (O8) Structural Reforms (O9)
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Centre for Good Governance
Administrative Staff College of India
Foreword
With urbanization and growth of cities, there is need and urgency for better governance. Urban governance is no more limited to provision of infrastructure and operation of civic services. Conventional methods of governance with top-down approaches are considered inadequate, inappropriate and restrictive. Good urban governance is characterized by sustainability, equity and efficiency, transparency and accountability, civic engagement, security development of partnerships, etc. Livability, competitiveness and bankability are the other features of a modern city. There is a need for prudent and efficient financial and asset management to increase their capacity to facilitate market borrowing for investment in city development. Keeping these emerging challenges of 21st century, the Government of India launched Jawaharlal Nehru National Urban Renewal Mission with three interrelated and complimentary components governance, infrastructure development and provision of basic services to poor. Implementation of governance reforms like enactment of community participation and public disclosure laws, earmarking of funds for poverty alleviation by local bodies, levy and collection of user charges, simplification of procedures, etc., in identified areas is a precondition for accessing funds under JnNURM. The Mission was launched in 2005 and has a timeframe of seven years. The Ministry of Urban Development, GoI has initiated a Capacity Building Program to all municipal functionaries mayors, chairpersons, councilors, commissioners and executive officers, engineers, town planners, project officers, etc., who are responsible to implement the project to bring an awareness on the need, significance and urgency of implementation of reforms to improve civic management as well as the quality of life of civic communities. The objectives of the programme are: Awareness building and understanding on the context, mission, objectives and significance of reforms and expected impact on the city; To develop political will and administrative commitment; Explain their roles and responsibilities in initiation and implementation of reforms and projects relating to infrastructure and basic services to the poor To develop ownership and positive attitude towards the programme, and To create an enabling environment & managerial capabilities to accelerate and manage change. The capacity building programmes are organized jointly by the Administrative Staff College of India and Center for Good Governance with the support of Ministry of Urban Development, Government of India. The training material, developed and prepared by CGG and ASCI, is presented in six volumes each of which dealing with a set of reforms. This volume deals with urbanization trends and an overview of JnNURM covering the context, the mission and objectives, process, admissible components, financing pattern, and list of eligible cities. It also covers four important reforms viz. Implementation of 74th Constitution Amendment Act, 1992 (S 1), Integration of City Planning and Delivery Functions (S 2), Rent Control Reforms (S 3), Rationalisation of Stamp Duty (S 4), Administrative Reforms (O 8), and Structural Reforms (O 9) Under each reform current scenario, objectives and suggestions for implementation of reforms are discussed. We hope the material presented in six volumes will help the municipal functionaries in understanding the context of reforms and taking them forward with a view to ensure their impact on the city and the community with in the Mission period. It is also hoped that implementation of these reforms make the cities participative, financially vibrant, transparent and accountable, sustainable and livable. Every effort has been made to ensure that the material and data presented is correct and authentic. We take the responsibility for mistakes that may have crept in inadvertently. Centre for Good Governance

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I. JNNURM OVERVIEW AND REFORM FRAMEWORK
1. Urbanization Trends 1.1 The twenty-first century is being characterized as the first Urban Century with a majority of world population living in cities. India, the second largest urban system in the world, is witnessing increased pace of urbanization and growing importance of cities in national economy and development contributing over two-thirds of gross domestic product. Its urban population increased from 26 million to 285 million and from 10 percent to 28 percent during 1901 and 2001.It is the second largest urban system in the world with an urban population of over 300 million and 35 metropolises. Cities are the engines of national economic growth and generators of wealth. The projections indicate that by the middle of this century, the country would become more urban more than fifty percent of its people loving in cities and towns. 1.2 Gujarat, Maharashtra and Tamil Nadu are the most urbanized states in the country and Himachal Pradesh least urbanized. With a few exceptions the regional pattern of urbanization is quite stable over the past few decades. The western and southern states are relatively more urbanized than northern, central and eastern states. All four southern states, Maharashtra and Gujarat of west, Punjab of north and West Bengal of east have urbanization levels higher than the national average. 1.3 Urban population growth is the results of natural increase, rural to urban migration, reclassification, and boundary changes of the existing urban areas. As per the SRS data, natural increase during 1991-2001 was almost 55 percent and the remaining growth is due to rural to urban migration, reclassification or boundary changes. Distribution by Size Class 1.4 A significant feature of Indias urbanization is the growth of Class I cities, stagnation of Class II and III cities and decline of Class IV, V and VI towns. As per 2001 census more than two-thirds of the urban population live in Class I cities. In each size class there are some fast growing cities and towns and some slow growing. The emergence and dominance of metropolitan cities is a challenging aspect of Indias urbanization. In 1901 Calcutta was the only city with more than a million population, but the number increased to 35 by 2001. The metropolitan cities together absorb about 11 percent of total population and 38 percent of urban population of the country. One significant aspect of metropolitan growth is their spatial spread contributing to balanced urban growth. To day Mumbai is the most populous city in the country followed by Kolkata, Chennai and Delhi. Governing Cities 1.5 Urbanization is inevitable and needs to be considered as a positive aspect in national development. Projections indicate that by 2026 Indias population would be around 140 crores of which about 34 percent or about 47 crores would be urban. Some projections also indicate that the urban population may even cross forty percent. The number of metros is expected to reach 75. Better governance of cities should accompany such an urban growth. Growing urbanization makes the scale and complexity of urban governance daunting. The 74th Constitution Amendment Act, 1992 and the launching of the Jawaharlal Nehru National Urban Renewal Mission in 2005 are significant initiatives to make urban local bodies as institutions of self-governance and to improve their governance. Good Urban Governance 1.6 Urban governance in the past, was equated with urban management i.e., operation of civic services and provision of infrastructure. Discussions on urban governance tended to be state-centric and are mostly silent on local governments. Conventional methods of governing the city with top down approaches have proved to be restrictive and inadequate. There has been an increasing demand for avenues for participation in urban governance and to increase transparency in civic management, modernize administration, improve service delivery, etc. The need and significance of to adopt new systems and methods of governing the cities that are inclusive and facilitate active and effective participation of stakeholders is being increasingly realized. There is also a realization that the existing capacity of the urban local bodies is limited and need to be substantially and systematically enhanced. Only this will contribute to good urban governance.
1.7 Good urban governance is characterized by several criteria - sustainability, subsidiary equity, efficiency, transparency and accountability, civic engagement, and lastly security. Good urban governance contributes to sustainable urban development. It brings civil society, private lector, etc., into a political process. Sustainable cities have four important characteristics viz., good governance, liveability, and competitiveness and bankability. Through good governance, urban local bodies can develop competitiveness, make the city livable and through prudent and efficient financial and asset management, increase their rating to facilitate market borrowings for investment on city development. 1.8 Because of the critical importance of cities in national development, efforts are being made during the last two decades to improve urban governance. The passage of 74th Constitution Amendment Act in 1992 was the first step. This was followed by several urban governance reforms in the states. Launching of Jawaharlal Nehru National Urban Renewal Mission (JnNURM) - a prestigious programme for promoting reforms and investments in select 63 cities - by the Government of India (GOI) in 2005, has brought a paradigm shift in urban development strategy. Similarly, the GoI launched two other programmes Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP) for nonmission cities. These Programmes also have mandatory reform component. Excerpts of Speech by Dr. Manmohan Singh - Honble Prime Minister of India Launching the JnNURM 1.9 With urbanization comes the need to invest in infrastructure and to improve the quality of life in our cities. Rapid urbanization has not only outpaced infrastructure development, but has also brought in its train a terrible downside - the downside of proliferating slums, the downside of increasing homelessness, the downside of growing urban poverty and crime, of relentless march of pollution and ecological damage. This gives you an idea of the massive challenge that lies ahead. 1.10 This Mission is the single largest initiative of the Government of India for a planned development of our cities. It responds to the long-standing demand for tapping the vast potential and vitality of our cities. 1.11 To improve urban infrastructure and provide urban services for the poor, we need urgently urban governance reform. I am happy that this Mission has been structured with a clear focus on these two important components urban infrastructure and basic services to the urban poor, with governance reform as an overarching third component. 1.12 The Jawaharlal Nehru National Urban Renewal Mission is a city-based programme. It will seek to build the capacity of our cities for management. Cities have the financial muscle and the technical resources to rebuild themselves. We see the governance reform-related proposal in the Mission for a participation law and a disclosure law, as enabling the cities to locate the needed human and financial resources for improving its services. This is a major reform for the governance of our cities. 1.13 Cities need to develop a long-term planning framework. The Planning Commission and the Ministries, in consultation with States, have developed an agenda of reform to persuade urban local bodies to look ahead. All previous efforts in city planning have been limited by a narrow-focused project approach. The problems of inadequate service and infrastructure levels, of inadequate investment in them, and the non-availability of adequate land and housing are much deeper. Our legal systems, our systems of work and procedures, and the inability of local bodies to effectively use their powers and responsibilities, make it difficult to deal with the many problems facing our cities. 1.14 The Jawaharlal Nehru National Urban Renewal Mission addresses the problems of law, systems and procedures reform and aims to align them to the contemporary needs of our cities and towns. The Mission seeks to do away with those statutes that inhibit the functioning of land and housing markets; it seeks to bring in those improvements that will enable the city-level institutions to become financially strong and viable and our development programmes relating to the removal of poverty becoming increasingly bankable. 1.15 This Urban Renewal Mission is designed to assist city governments in improving property tax collection and bring user charge to the levels that cover at least operating and maintenance costs and
change their accounting methods. The Mission is meant to bring in transparency in local budget making, as also a higher degree of community participation in decision-making processes. 1.16 The success of the Mission will depend on its ability to enlist the support of a large number of partners and stakeholders. There is no shortage of finance in the infrastructure sector, especially if we seek public-private partnerships. I hope our State and local Government authorities will be able to draw up programmes that can attract financial support from outside Government as well. 1.17 The Mission has to walk on two legs of improved urban infrastructure and improved urban basic services. The role of governance reform in the Mission should be to catalyze a process that enables both these to move forward. 1.18 I am happy that among the list of cities being covered initially, there are some that are important from the point of view of our national heritage, tourism potential and religious pilgrimage It would be a challenge before this Mission to see that these cities are restored to their historical glory. 1.19 I have great pleasure in launching this Mission. Like many Indians living in our cities, I look forward to it with great hope. Excerpts of Speech by Shri. S. Jaipal Reddy - Hon'ble Minister of Urban Development, Government of India 1.20 This Mission is an ambitious plan conceived by the Government of India for integrated and planned development of cities in a focused manner. 1.21 ... Quite clearly, the cities and towns of emerging India, which is in the midst of fundamental economic restructuring, will play a pivotal role as centres of economic activity, competing with each other to attract global investment, capital and business. The Government of India, the State Governments and the city administrations have to, therefore, work together to provide the enabling support systems, including infrastructure and services, which will help the cities and towns realize their full potential. 1.22 Under this revised strategy of urban renewal, assistance to the cities is linked to the implementation of reforms, which basically aim at improving the efficiency of services provided in the cities, removing constraints on the exploitation of land as a resource and in turn enabling the urban local bodies to improve their financial condition. They are expected to become vibrant and financially sound entities that function as efficient instruments of city governance. In this manner, the strategy will also ensure that assets created are operated and managed efficiently and become sustainable over a period of time. 1.23 I wish to emphasize before this august gathering that JnNURM is merely a platform being provided by the Central Government to the States and Urban Local Bodies (ULBs) for improving the urban infrastructure. Therefore, active involvement and support of the State governments and ULBs is essential in this endeavor. Only through a combined effort of all of us, will it be possible to achieve this gigantic task. 1.24 I am quite conscious of the capacity constraints of the ULBs, particularly now that they would be required to play a major role in the implementation of the Urban Renewal Mission. Therefore, capacity building has to be a thrust area of our strategy. We will provide all the feasible assistance in the form of infrastructure support, resource persons and funding for capacity building efforts of the ULBs. I also wish to bring to the notice of the Honble Chief Ministers, Mayors, and Municipal Commissioners that JnNURM permits preparation of City Development Plans and Detailed Project Reports with the assistance of outside experts, for which purpose financial assistance up to a maximum of 5% of the project cost will be provided from the funds of the Mission. This should help the ULBs in the initial stages, till they are able to acquire in-house expertise for this task. 1.25 We believe that public participation is essential to improve the credibility of any organization, particularly the ULBs, which provide essential services to the residents of a city. For this purpose, I would like to submit for the consideration of Honble Chief Ministers to set up a Task Force or an
Advisory Group to collectively understand the problems of the urban phenomenon and advise the State governments and city administrations to adopt appropriate strategies and programmes to resolve these in a productive and equitable manner. Needless to say, this group should have the requisite expertise and experience of the sector and also knowledge about how other developed countries are handling the urban transition. This group could also include representatives from the civil society, which could provide useful inputs on the problems faced and perceived needs and aspirations of the citizens. Such a structured arrangement will also provide a good interface between the government and the citizens and help us address the challenges faced by the cities. 1.26 In conclusion, I will only like to assure you once again that the Government of India is fully committed to work with the State governments in developing city-specific strategies and interventions necessary to improve the urban governance and provide resources required for the same. I trust the Jawaharlal Nehru National Urban Renewal Mission will result in providing the citizens a better environment to live, work and invest in cities and towns. I solicit your full cooperation and support for successful implementation of the Mission.
2. JnNURM - An Overview Background Need for Urban Sector Development 2.1 According to the 2001 census, India has a population of 1027 million with approximately 28per cent or 285 million people living in urban areas. As a result of the liberalization policies adopted by the Government of India is expected to increase the share of the urban population may increase to about 40 per cent of total population by the year 2021. It is estimated that by the year 2011, urban areas would contribute about 65 per cent of gross domestic product (GDP). However, this higher productivity is contingent upon the availability and quality of infrastructure services. Urban economic activities are dependent on infrastructure, such as power, telecom, roads, water supply and mass transportation, coupled with civic infrastructure, such as sanitation and solid waste management. Investment Requirements in the Urban Sector 2.2 It is estimated that over a seven-year period, the Urban Local Bodies (ULBs) would require a total investment of Rs. 1,20,536 crores. This includes investment in basic infrastructure and services, that is, annual funding requirement of Rs. 17,219 crores. It is well recognised that in order to fructify these investments, a national level initiative is required that would bring together the State Governments and enable ULBs catalyze investment flows in the urban infrastructure sector. Table 1 shows the investment requirement in urban sector. Table 1 Urban Sector Investment Requirement (Rs. crores) Category Number of Cities 7 28 Investment Requirement (over 7 years starting 2005-06) 57,143 57,143 Annual Funds Requirement 8163.3 8613.3
Cities with over 4 million population Cities with 1-4 million population Selected Cities with less than 1 million population Total Need for Reform Initiatives
28 63
6,250 1,20,536
892.9 17219.5
Harnessing the Potential of Reforms in Urban Infrastructure 2.3 While several reform initiatives have been taken up, e.g. the 74th Constitutional Amendment Act and model municipal law, there is potential for further reform-oriented steps in order to meet the development objectives. Reform initiatives also need to be taken further and articulated by the State Governments in order to create an investor-friendly environment. Need for National-Level Reform-Linked Investments 2.4 There is a need to integrate the reform initiatives and scale up the effort to catalyze investment in urban infrastructure across States in the country. There is a felt need to set up an initiative that will provide reform-linked assistance to State Governments and ULBs in the country. Need for Sustainable Infrastructure Development 2.5 Another crucial aspect requiring immediate attention is that physical infrastructure assets created in urban areas have generally been languishing due to inadequate attention and/or improper O&M. The fiscal flows to the sector have laid emphasis only on the creation of physical assets. Not much effort has been made either to manage these assets efficiently or to achieve self-sustainability. It is therefore necessary that a link be established between asset creation and management, as both
are important components for ensuring sustained service delivery. This is proposed to be secured through an agenda of reforms. Need for Efficiency Enhancement 2.6 Concurrent with statutory reforms, such as the enactment of a model municipal law, reduction in stamp duty, repeal of the Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) etc, there is an urgent need to take measures to enhance efficiencies in urban service deliveries. Rationale for the JnNURM National Common Minimum Programme of the Government of India 2.7 The National Common Minimum Programme attaches the highest priority to the development and expansion of physical infrastructure. Accordingly, it is proposed to take up a comprehensive programme of urban renewal and expansion of social housing in towns and cities, paying attention to the needs of slum dwellers. Commitment to Achieving the Millennium Development Goals 2.8 The Millennium Development Goals commit the international community, including India, to an expanded vision of development as a key to sustaining social and economic progress. As a part of its commitment to meet the Millennium Development Goals, the Government of India proposes to: (i) facilitate investments in the urban sector; and (ii) strengthen the existing policies in order to achieve these goals. Need for a Mission-led Initiative 2.9 Since cities and towns in India constitute the second largest urban system in the world, and contribute over 50 per cent of the countrys GDP, they are central to economic growth. For the cities to realise their full potential and become effective engines of growth, it is necessary that focused attention be given to the improvement of infrastructure. Jawaharlal Nehru National Urban Renewal Mission Mission Statement 2.10 The aim is to encourage reforms and fast track planned development of identified cities. Focus is to be on efficiency in urban infrastructure and service delivery mechanisms, community participation, and accountability of ULBs/ Parastatal agencies towards citizens. Objectives of the Mission 2.11 The objectives of the JnNURM are to ensure that the following are achieved in urban sector: (i.) Focused attention to integrated development of infrastructure services in cities covered under the Mission (ii.) Establishment of linkages between asset-creation and asset-management through a slew of reforms for long-term project sustainability (iii.) Ensuring adequate funds to meet the deficiencies in urban infrastructural services (iv.) Planned development of identified cities including peri-urban areas, outgrowths and urban corridors leading to dispersed urbanization (v.) Scale-up delivery of civic amenities and provision of utilities with emphasis on universal access to the urban poor (vi.) Special focus on urban renewal programme for the old city areas to reduce congestion; and (vii.) Provision of basic services to the urban poor including security of tenure at affordable prices, improved housing, water supply and sanitation, and ensuring delivery of other existing universal services of the government for education, health and social security. Scope of the Mission 2.12 The Mission shall comprise two Sub- Missions, namely: Sub-Mission for Urban Infrastructure and Governance: This will be administered by the Ministry of Urban Development through the Sub- Mission Directorate for Urban Infrastructure and Governance. The main thrust of the Sub-Mission will be on infrastructure projects relating to water supply and sanitation, sewerage, solid waste management, road network, urban transport and redevelopment of
old city areas with a view to upgrading infrastructure therein, shifting industrial and commercial establishments to conforming areas, etc. Sub-Mission for Basic Services to the Urban Poor: This will be administered by the Ministry of Urban Employment and Poverty Alleviation through the Sub-Mission Directorate for Basic Services to the Urban Poor. The main thrust of the Sub-Mission will be on integrated development of slums through projects for providing shelter, basic services and other related civic amenities with a view to providing utilities to the urban poor. Strategy of the Mission 2.13 The objectives of the Mission shall be met through the adoption of the following strategy: Preparing City Development Plan: Every city will be expected to formulate a City Development Plan (CDP) indicating policies, programmes and strategies, and financing plans. Preparing Projects: The CDP would facilitate identification of projects. The Urban Local Bodies (ULBs) / para-statal agencies will be required to prepare Detailed Project Reports (DPRs) for undertaking projects in the identified spheres. It is essential that projects are planned in a manner that optimizes the life-cycle cost of projects. The life-cycle cost of a project would cover the capital outlays and the attendant O&M costs to ensure that assets are in good working condition. A revolving fund would be created to meet the O&M requirements of assets created, over the planning horizon. In order to seek JNNURM assistance, projects would need to be developed in a manner that would ensure and demonstrate optimization of the life-cycle costs over the planning horizon of the project. Release and Leveraging of Funds: It is expected that the JnNURM assistance would serve to catalyze the flow of investment into the urban infrastructure sector across the country. Funds from the Central and State Government will flow directly to the nodal agency designated by the State, as grants-in-aid. The funds for identified projects across cities would be disbursed to the ULB/Parastatal agency through the designated State Level Nodal Agency (SLNA) as soft loan or grant-cum-loan or grant. The SLNA / ULBs in turn would leverage additional resources from other sources. Incorporating Private Sector Efficiencies: In order to optimize the life-cycle costs over the planning horizon, private sector efficiencies can be inducted in development, management, implementation and financing of projects, through Public Private Partnership (PPP) arrangements. Duration of the Mission 2.14 The duration of the Mission would be seven years beginning from the year 2005-06. Evaluation of the experience of implementation of the Mission would be undertaken before the commencement of Eleventh Five Year Plan and if necessary, the program calibrated suitably. Expected Outcomes of the JnNURM 2.15 On completion of the Mission period, it is expected that ULBs and para-statal agencies will have achieved the following: (i.) Modern and transparent budgeting, accounting, financial management systems, designed and adopted for all urban service and governance functions (ii.) City-wide framework for planning and governance will be established and become operational (iii.) All urban residents will be able to obtain access to a basic level of urban services (iv.) Financially self-sustaining agencies for urban governance and service delivery will be established, through reforms to major revenue instruments (v.) Local services and governance will be conducted in a manner that is transparent and accountable to citizens (vi.) E-governance applications will be introduced in core functions of ULBs/para-statal resulting in reduced cost and time of service delivery processes. Assistance under JnNURM Financial Assistance under JnNURM 2.16 The Government of India has proposed substantial assistance through the JnNURM over the seven-year period. During this period, funds shall be provided for proposals that would meet the Missions requirements. Under JnNURM financial assistance will be available to the ULBs and
parastatal agencies, which could deploy these funds for implementing the projects themselves or through the special purpose vehicles (SPVs) that may be expected to be set up. Assistance under JNNURM is additional central assistance, which would be provided as grant (100 per cent central grant) to the implementing agencies. Further, assistance from JNNURM is expected to facilitate further investment in the urban sector. To this end, the implementing agencies are expected to leverage the sanctioned funds under JNNURM to attract greater private sector investments through PPP that enables sharing of risks between the private and public sector. Areas of Assistance under JnNURM 2.17 Assistance for Capacity Building, City Development Plan (CDP), Detailed Project Reports (DPRs), Community Participation, Information, Education and Communication (IEC). The JNNURM will provide assistance for the above-stated components with a provision of 5 per cent of the total central assistance or the actual requirement which ever is less. In Addition, not more than 5 percent of the Central grant or the actual requirement, whichever is less may be used for Administrative and Other Expenses (A&OE) by the States For capacity building, ULBs and para-statal agencies could engage consultants, in consultation with the SLNA, and seek reimbursement from the Ministry of Urban Development (MoUD) of the Ministry of Urban Employment and Poverty Alleviation (MoUEPA). Investment Support Component 2.18 Investment support will be provided to implementing agencies on a project-specific basis for eligible sectors and projects proposed to be undertaken in eligible cities subject to approval of the Central Sanctioning and Monitoring Committee (CSMC) of MoUD/ MoUEPA. As part of the process for seeking investment support, each ULB seeking assistance from the JNNURM would be required to prepare a CDP that shall inter alia include strategy to implement reforms, city-level improvements and an investment plan to address the infrastructure needs in a sustainable manner. Assistance under investment support can be deployed in the following forms: (i.) Enhancing Resource Availability: The JNNURM assistance can be used to leverage additional resources available with the ULBs in addition to their existing resources and transfers from the State. These resources could be utilized for capital investment and O&M investments in a project. (ii.) Enhancing Commercial Viability of Projects: In respect of projects, which are not Commercially viable on a stand-alone basis, assistance under the JNNURM may be sought for enhancing project viability. This assistance could be in the nature of viability gap support to projects. (iii.) Ensuring Bankability of Projects: Cash flows of infrastructure projects having long gestation periods are susceptible to variations in cash flows, rendering a project non-bankable. To enhance predictability of underlying cash-flows, credit enhancement mechanisms such as establishing liquidity support mechanisms, up-front debt-service reserve facility, deep discount bonds, contingent liability support and equity support are required in order to make the projects bankable. The JNNURM assistance could therefore be used for funding such support mechanisms. Cities, Sectors and Projects eligible for Assistance under the JnNURM 2.19 The JnNURM shall give assistance for infrastructure development in the eligible cities/ Urban Agglomerations (UAs) (refer Annex) across States in the country. These cities/ UAs have been selected based as per the following criteria: (i.) Cities/ UAs with 4 million plus population as per 2001 census (ii.) Cities/ UAs with 1 million plus but less than 4 million population as per 2001 census (iii.) Selected Cities/ UAs (State Capitals and other cities/ UA of religious/historic and tourist importance) The cities should have elected bodies in position. 2.20 The Sectors and Projects eligible for Assistance under the Sub-Mission Directorate for Urban Infrastructure and Governance are: (i.) Urban renewal, that is, redevelopment of inner (old) city areas [including widening of narrow streets, shifting of industrial and commercial establishments from non-conforming (inner city) areas to conforming (outer city) areas to reduce congestion, replacement of old and worn out pipes by new and higher capacity ones, renewal of the sewerage, drainage, and solid waste disposal system etc.]; (ii.) Water supply (including desalination plants) and sanitation. (iii.) Sewerage and solid waste management. (iv.) Construction and improvement of drains and storm water drains. (v.) Urban transportation including roads, highways, expressways, MRTS, and metro projects.
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(vi.) Parking lots and spaces on PPP basis. (vii.) Development of heritage areas (viii.) Prevention and rehabilitation of soil erosion and landslides only in cases of special category States where such problems are common; and (ix.) Preservation of water bodies. NOTE: Land cost will not be financed except for acquisition of private land for schemes and projects in the North Eastern States and hilly States, namely Himachal Pradesh, Uttaranchal and Jammu and Kashmir 2.21 The Sectors and Projects eligible for Assistance under the Sub-Mission Directorate for Basic Services to the Urban Poor. (i.) Integrated development of slums, housing and development of infrastructure projects in slums in the identified cities. (ii.) Projects involving development, improvement, and maintenance of basic services to the urban poor. (iii.) Slum improvement and rehabilitation of projects. (iv.) Projects on water supply, sewerage, drainage, community toilets, and baths etc. (v.) Projects for providing houses at affordable cost for slum dwellers, urban poor, economically weaker sections (EWS) and lower income group (LIG) categories. (vi.) Construction and improvement of drains and storm water drains. (vii.) Environmental improvement of slums and solid waste management. (viii.) Street lighting. (ix.) Civic amenities like community halls, child care centres etc. (x.) Operation and Maintenance of assets created under this component. (xi.) Convergence of health, education and social security schemes for the urban poor NOTE: Land cost will not be financed except for acquisition of private land for schemes and projects in the North Eastern States and hilly States, namely Himachal Pradesh, Uttaranchal and Jammu and Kashmir. Inadmissible Components for JnNURM Assistance 2.22 The Projects pertaining to the following are not eligible for JnNURM assistance: (1) Power, (2) Telecom, (3) Health, (4) Education, (5) Wage employment programme and components, and (6) Creation of fresh employment opportunities
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Agenda of Reforms 2.23 The thrust of the JnNURM is to ensure improvement in urban governance and service delivery so that ULBs become financially sound and sustainable for undertaking new programmes. It is also envisaged that, with the charter of reforms that are followed by the State governments and ULBs, a stage will be set for PPPs. The agenda of reforms is given in the section below. The National Steering Group (NSG) may add additional reforms to identified reforms. A Memorandum of Agreement (MoA) between States/ULBs/Para-statal agencies and the Government of India, a prerequisite for accessing the Central assistance, would spell out specific milestones to be achieved for each item of reform. All mandatory and optional reforms shall be completed within the Mission period. Mandatory Reforms at Local Government level 2.24 The following are Mandatory Reforms at the Level of ULBs and Para-statal Agencies: (i.) Adoption of modern accrual-based double entry system of accounting in ULBs and para-statal agencies. (ii.) Introduction of a system of e-governance using IT applications, such GIS and MIS for various services provided by ULBs and parastatal agencies. (iii.) Reform of property tax with GIS. It becomes a major source of revenue for ULBs and arrangements for its effective implementation so that collection efficiency reaches at least 85 per cent within next seven years. (iv.) Levy of reasonable user charges by ULBs and Para-statals with the objective that the full cost of O&M or recurring cost is collected within the next seven years. However, cities and towns in the North East and other special category States may recover only 50 per cent of O&M charges initially. These cities and towns should graduate to full O&M cost recovery in a phased manner. (v.) Internal earmarking, within local bodies, budgets for basic services to the urban poor.
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(vi.) Provision of basic services to the urban poor including security of tenure at affordable prices, improved housing, water supply and sanitation. Delivery of other existing universal services of the government for education, health and social security is ensured. 2.25 The following are Mandatory Reforms at the Level of States: (i.) Implementation of decentralisation measures as envisaged in 74th Constitutional Amendment Act. The State should ensure meaningful association and engagement of ULBs in planning the function of para-statal agencies as well as the delivery of services to the citizens. (ii.) *Repeal of ULCRA. (iii.) *Reform of Rent Control Laws balancing the interests of landlords and tenants. (iv.) Rationalisation of Stamp Duty to bring it down to no more than 5 per cent within next seven years. (v.) Enactment of the Public Disclosure Law to ensure preparation of medium-term fiscal plan of ULBs and para-statal agencies and release of quarterly performance information to all stakeholders. (vi.) Enactment of the Community Participation Law to institutionalize citizens participation and introduce the concept of the Area Sabha in urban areas. (vii.) Assigning or associating elected ULBs with city planning function. Over a period of even years, transferring all special agencies that deliver civic services in urban areas to ULBs and creating accountability platforms for all urban civic service providers in transition. * Note: In respect of people oriented schemes relating to water supply and sanitation, the undermentioned State level mandatory reforms may be taken as optional reforms: b) Repeal of Urban Land Ceiling and Regulation Act, c) Reform of Rent Control Act
Optional Reforms 2.26 The following are Optional Reforms common to States, ULBs and Para-statal Agencies: (a) Revision of byelaws to streamline the approval process for construction of buildings, development of site etc. (b) Simplification of legal and procedural frameworks for conversion of land from agricultural to nonagricultural purposes. (c) Introduction of Property Title Certification System in ULBs. (d) Earmarking at least 20-25 per cent of developed land in all housing projects (both public and private agencies) for EWS and LIG category with a system of cross subsidisation. (e) Introduction of computerised process of registration of land and property. (f) Revision of byelaws to make rainwater harvesting mandatory in all buildings and adoption of water conservation measures. (g) Byelaws for reuse of recycled water. (h) Administrative reforms i.e. reduction in establishment costs by adopting the Voluntary Retirement Scheme (VRS), not filling posts falling vacant due to retirement etc., and achieving specified milestones in this regard. (i) Structural reforms. (j) Encouraging PPP. Note: Cities under the JnNURM will have the freedom to opt for any two reforms from the optional category in each year of implementation. Table 2 gives the list of identified cities under JnNURM. Table 2 List of Identified Cities Eligible for JnNURM Category A Mega Cities/ UAs (1) (2) (3) (4) (5) (6) (7) Delhi Greater Mumbai Ahmedabad Bangalore Chennai Kolkata Hyderabad
Category B Million plus Cities/ UAs (1) (2) (3) (4) (5) (6) (7) Patna Faridabad Bhopal Ludhiana Jaipur Lucknow Madurai
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Category C* Cities/ UAs with less than one million population (1) Guwahati (2) Itanagar (3) Jammu (4) Raipur (5) Panaji (6) Shimla (7) Ranchi
(8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28)
Nashik Pune Cochin Varanasi Agra Amritsar Vishakhapatnam Vadodara Surat Kanpur Nagpur Coimbatore Meerut Jabalpur Jamshedpur Asansol Allahabad Vijayawada Rajkot Dhanbad Indore
(8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28)
Thiruvananthapuram Imphal Shillong Aizawl Kohima Bhubaneshwar Gangtok Agartala Dehradun Bodhgaya Ujjain Puri Ajmer-Pushkar Nainital Mysore Pondicherry Chandigarh Srinagar Mathura Haridwar Nanded
* The National Steering Group (NSG) may consider addition or deletion of cities/ UAs/towns under Category C (other than State capitals) based on the suggestions received from State Governments. The total number of cities under the Mission shall, however, remain around 60.
JnNURM Institutional Overview 2.27. The JnNURM, as discussed in the previous section, has two submissions viz., Submission on Infrastructure and Governance and Submission on Basic Services to the Urban Poor. The former is administered by the Ministry of Urban Development and the latter by the Ministry of Housing and Urban Poverty Alleviation, Government of India. 2.28. To operationalise the Mission activities a National Steering Group under the leadership of Minister for Urban Development (Chair) and Minister of State for Housing and Urban Poverty Alleviation (Co-chair) and Central Sanction and Monitoring Committee under the Secretary of the Ministry of Urban Development have been constituted. A separate Mission Directorate has been established for ensuring effective coordination with the state and city governments and other agencies for expeditious implementation of programs under the Mission in the Ministry of Urban Development. The Joint Secretary, who is also designated as the Mission Director, heads the Mission Directorate. 2.29. At state level for implementing the projects under JnNURM a State Level Steering Committee and State Level Nodal Agency have been established. The former prioritises the projects, monitors their implementation and reviews the implementation of reforms. The latter appraises the projects submitted by the ULBs and parastatals, obtains the sanction of the Steering Committee, manages funds under the Mission, operates the revolving fund and monitors progress of implementation of sanctioned projects as well as implementation of reforms as per the MoAs. To enhance the ownership of the Mission Technical Advisory Groups are being set up at state and city levels. 2.30. The Mission strategy is to ensure planned urban development over a period of 20 25 years focusing on policies, programs and strategies, private sector participation, integrated development of infrastructural services, securing effective linkages between asset creation and asset management to facilitate sustainability and redevelopment of inner city areas. 2.31. The number of cities identified under the Mission, admissible components for funding and the reforms to be implemented, etc., have already been discussed in the previous section. One important feature for the Mission is that the state governments and the ULBs/parastatals should execute a
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Memorandum of Agreement with the Ministry of Urban Development, Government of India indicating their commitment to implement reforms along with milestones and timelines for implementation. Signing the MoA is a pre-condition to access funds under the Mission. Capacity Support to State Nodal Agency 2.32. State Level Nodal Agency (SLNA) is responsible for the implementation of the projects sanctioned under JNNURM. But the relative role and capacity of the SLNA vary considerably across the states. With a view to strengthen the capacity of the SLNAs to manage and implement the varied tasks under JNNURM, the Ministry of Urban Development evolved a scheme to support Program Management Unit (PMU) at the SLNA. Similarly, to enhance the capacity of the ULBs to implement the projects and reforms under JNNURM it is proposed to assist them in establishing Project Implementation Units (PIU). Program Management Unit 2.33. The PMU will be established as a unit of SLNA under and is designed to extend strategic, technical and managerial support to SLNA to ensure effective implementation of JNNURM. The PMU is expected to ensure that the CDPs prepared through consultative process remain as living documents, investment proposals are in tune with CDP, formulate strategies to design and implement infrastructure projects, coordinate with state and city level technical advisory groups and coordinate and liaise with central and state governments and implementing agencies. They are responsible to support and monitor implementation of projects and reforms, facilitate selection of quality consultants, appraise utilization of funds and ensure timely reporting of implementation of reforms and projects to MoUD. They also support capacity building initiatives including lateral entry of professionals into the ULBs. 2.34. The professionals/specialists suggested to function in the PMU apart from the Team Leader/Program Manager who will also be responsible for HRD, are from the fields of Project Management and Procurement, Public Works and Public Health, MIS, Municipal Finance and Social Development. The MoUD reimburses the professional fee and travel expenses of the team subject to a ceiling of Rs.1 crore per annum for period of three years without any increase in remuneration. The SLNAs have to submit proposals to seek support for the establishment of PMUs. Project Implementation Units 2.35. The PIUs ware proposed at the ULB level on the lines of PMU at the state level. The PIU will supplement the existing skill sets and works in tandem with the municipal staff. The PIU will extend technical support to manage, coordinate and implement reforms and projects under JNNURM, ensue quality in planning, designing, implementation and service delivery, monitor project progress and coordinate with convergent departments and agencies, engage experts and prepare reports to SLNA and MoUD. They liaise with SLNA, state government and Mission Directorate of the MoUD regularly. 2.36. The PIU may consist professionals drawn from the areas of IT, municipal finance, public health, social and community development, urban planning, procurement, HRD, and environment. The recruitment of these processionals should be undertaken by the ULB as per the existing practices. For each professional the GoI extends financial support at the rate of Rs. 15,000 to Rs. 25, 000 per month. The continuation of support will be based on performance and financial support to PIU will be limited to 75% and 50% in the second and third years. The ULBs intending to establish PIUs with GoI support have to submit proposals to the MoUD, GoI. Community Participation Fund 2.37. One of the objectives of JNNURM is to facilitate and ensure participatory urban development to contribute to sustainability. The CDPs prepared by the cities are the result of stakeholder consultations. One of the mandatory reforms under JNNURM is the enactment of Community Participation Law to provide platforms for the participation of the community of stakeholders in decision making and governance at ward and sub-ward levels. But it is recognized that the communities have little capacity to participate and fully utilize the space provided meaningfully. With a view to create capacity in the communities to effectively engage and contribute in improving the living environment a Community Participation Fund has been established under the Sub-mission on Governance and Infrastructure with an initial corpus of Rs. 90 crores.. It is meant to be participatory incubator to enable the communities to experience the process of collective decision making and to take full accountability for the decisions.
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2.38. The projects under CPF are eligible to a maximum funding of Rs. 10 lakhs and there should be a community contribution of 10% which may be relaxed to 5% in case projects involving the poor. The projects should be completed within a year. The projects should meet the following principles to be eligible to access funds: Does it enhance community capacity to effectively engage and take responsibility? Is there a clear plan for operation, maintenance and sustenance? Is it the result of consultations; is it comprehensive and the benefits reach the wider community? 2.39. The examples of the projects include water distribution in slums managed by the user group, establishing a crche, centers for the elderly, educating hawkers, setting up mechanisms for interface with ULB, community based information system, etc. the applications for funding should be made through the Area Sabha to be constituted under the Community Participation Law. But until the Area Sabhas are constituted they can be submitted by CBOs, RWAs, neighbourhood groups, etc. The proposals should be endorsed by 51% of the voters in the project area. There is a four stage process in undertaking the projects viz., community consultation and project and implementing agency identification; project appraisal and sanction; implementation and fund flow and monitoring and impact evaluation. . Progress 2.40. The JnNURM is under implementation for over two years and the Mission has made substantial progress over the period. All the Mission cities have formulated city development plans which were appraised and approved by the Ministry, 58 cities signed MoAs with the Ministry for implementation of reforms, several projects have been approved and their implementation is in different stages of progress in the Mission cities. The progress of projects approved state-wise under the Mission (as on 30th September 2007) is given below. Number of Projects sanctioned : 248. Value of Projects : Rs.21, 403 crores Number of states for which projects have been sanctioned : 22 Number of cities for which projects have been sanctioned : 46 2.41. The following Figure 1 gives state-wise details of the projects sanctioned. Figure 1
State/UT Scenario (as percentage of project value)

Rajasthan 7% Punjab 1% Nagaland 3% Maharashtra 9% MP 8% Kerala 4% Karnataka 6% J&K 2% TN 8% UP 1% West Bengal 11% AP 14% Assam 1% Bihar 3% Chhattisgarh 7% Gujarat 7% Haryana 9%
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The details of projects sanctioned state wise along with value of projects is given in the Table 3 below: Table 3 Details of Projects Sanctioned Value (Rs. Crs) State 2, 253.91 Kerala 89.19 Madhya Pradesh 35.16 Maharashtra 36.95 Manipur 56.98 Orissa 303.64 Pudichery 2, 497.69 Punjab 210.97 Rajasthan 26.13 Tamil Nadu 262.15 Uttar Pradesh 1, 654.62 West Bengal
State Andhra Pradesh Arunachal Pradesh Assam Bihar Chandigarh (UT) Chattisgarh Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka 2.42.
Projects 33 02 01 01 02 01 44 03 02 02 30
Projects 06 13 47 01 02 01 02 06 22 09 18
Value (Rs. Crs) 680.05 987.99 6, 396.19 25.80 504.93 203.40 328.83 474.53 2, 123.00 988.06 1, 263.58
The Projects sanctioned sectorwise is indicated below. Number of DPRs (Detailed Project Reports) received from ULBs Number of DPRs received from States % of projects sanctioned for augmenting and improving basic infrastructure Percent of the sanction towards public transport systems Figure 2 gives sector-wise details of the projects sanctioned. Figure 2 Sectorwise sanction of Projects
: 54 : 29 : 77 :11
Other Urban Urban Renewal Transport 1% Roads/Flyover/ot 1% hers 9% Public Transport 11% Solid Waste Management 6% Drainage 12%
Heritage Development 0% Water Supply 34%
Sewerage 26%
The details of projects sanctioned Sector wise along with value of projects is given in the Table 4 below: Table 4 Details of Projects Sanctioned Sector wise Sector Projects Value (Rs. Cr) Water Supply 74 7, 067.98 Sewerage 45 5, 660.82 Drainage / Storm Water Drains 33 2, 627.71 Solid Waste Management 23 1, 187.07 Mass Rapid Transport System 11 2, 427.41 Roads /Flyovers / RoB 47 1, 995.18 Other Urban Transport 08 270.47 Urban Renewal 06 124.03 Heritage Development 01 43.13
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3. Reform Framework Introduction 3.1 Reforms in the urban sector are not new in India. Both central and state governments and ULBs have been making efforts to improve the organization and working of the local bodies. During the last two decades, the reform process in the urban sector has been intensive and focused. The 74th CAA is itself a major reform effort to strengthen urban administration and to decentralize powers and functions to make them self-governing institutions. The Ministry of Urban Development, GoI, initiated several reforms and they included Urban Reforms Incentive Fund (URIF), City Challenge Fund, etc. The URIF itself consisted of several reforms like repeal of ULCRA, rationalization of stamp duty and rent control laws, implementation of commercial accounting, simplification of procedures, etc., implementation of which will only enable the local bodies to access funds under the scheme. Introduction of double entry accounting system across all local bodies in Tamil Nadu and introduction of e-governance across all the local bodies in Andhra Pradesh are examples of state level initiatives. Similarly, issue of municipal bonds in Ahmedabad and Bangalore, streamlining and simplification of issue of building permissions in Mysore and Hyderabad and introduction of self-assessment system of property taxation in Hyderabad and Lucknow are examples of city level reform initiatives. Most of these reforms were ad hoc and often project based. Because of weak implementation, they did not have the intended impact and, therefore, were unsustainable. 3.2 The JnNURM synthesized these reform initiatives of the past and designed an urban sector reform package to be implemented at state and local levels. JnNURM is a reform linked urban development project. Grants from Government of India for infrastructure provision will only be made available on implementation of reforms as indicated in the memorandum of agreement signed between the state and city governments and the Ministry of Urban Development, Government of India. The reforms are of both mandatory and optional and have to be implemented both at state and local levels. Even the optional reforms are also mandatory, as both state and local governments need to implement them during the Mission period i.e., before 2011-12. The only option to them is that they may choose any two reforms per year and implement them. They are optional only in this sense. A list of mandatory and optional reforms to be implemented at state and local body levels has already been given in the previous section. Objectives of Reforms 3.3 The Reforms under JnNURM aim at strengthening urban governments and to decentralize and devolve functions, finances and functionaries to them so as to enable them to function as selfgoverning institutions providing services efficiently and effectively. Broadly, the reforms aim to: Provide for an integrated governance framework with transparency and clear lines of authority and accountability to achieve the objectives of good urban governance; Facilitate and promote inclusiveness, civic engagement and effective participation of the civil society in city management; Contribute towards financial sustainability of cities - strengthen the financial base of the cities and make them bankable; Enable the cities to work towards planned and integrated provision and operation and maintenance of infrastructure; Develop partnerships with public, private and other sectors for better provision and delivery of services; Extend the canvas of IT and eGovernance to all aspects of city management for efficient, effective and timely service delivery; and Promote pro-poor urban governance and work towards slum free cities with universal, adequate and affordable housing and basic services; Ensure renewal and revival of inner cities; Contribute to municipal capacity enhancement. Implementation of Reforms 3.4 Implementation of governance reforms is central to JnNURM. These reforms address issues of urban governance and urban poverty in a sustainable manner. In what follows, an overview of four mandatory and two optional reforms is presented.
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4. Implementation of the 74th Constitutional Amendment Act (S1) 4.1 The Constitution (Seventy fourth Amendment) Act, 1992 (CAA) is an important initiative of the Government of India to strengthen municipal governance and to provide them constitutional status. The important provisions of the Act include constitution of three types of municipalities, devolution of greater functional responsibilities and financial powers, adequate representation of weaker sections and women, regular and fair conduct of elections, constitution of Wards Committees, District Planning Committees, Metropolitan Planning Committees and State Finance and Election Commissions. The CAA provided a basis to the state governments to strengthen municipal governance. The CAA has not been applied to certain Scheduled Areas and the Tribal Areas of India like parts of Meghalaya, Mizoram and Nagaland. In these states, however, traditional municipal institutions such as municipal board, notified area committee, etc., continue to function. Table 5 shows the status of implementation of decentralization measures as per 74th CAA in States of the country. Table 5 Implementation of decentralization measures as per 74th CAA S.No. State/UT WCs DPCs 1 Andhra Pradesh Y Y 2 Assam N Y 3 Chhattisgarh Y Y 4 Gujarat Y N 5 Haryana N N 6 Himachal Pradesh N Y 7 Karnataka Y Y 8 Kerala Y Y 9 Madhya Pradesh Y Y 10 Maharashtra Y Y 11 Manipur N N 12 Nagaland N Y 13 Orissa Y Y 14 Punjab Y N 15 Rajasthan Y Y 16 Tamil Nadu Y Y 20 Uttaranchal Y N 21 Uttar Pradesh Y N Source: The MoAs of cities of the respective states. MPCs N N N N N NA N N N N N N N N N N NA N
4.2 All states amended their municipal Acts and Laws in conformity with the constitutional provisions. As per the provisions of the CAA, ULBs have been constituted in all states as corporations, municipalities and nagar panchayats. The conformity legislation also makes provision for reservation of seats in the councils to women, SCs and STs and in some states like Andhra Prades and Kerala for BCs as well. Similarly, State Finance Commissions have been constituted in all the states and in some states like Andhra Pradesh and Kerala third generation Commissions have also been constituted. There are variations between states in the constitution and working of wards committees and District and Metropolitan Planning Committees as can be seen from the Table below. Elections to Local Bodies 4.3 Elections to urban local bodies are being held regularly in all states except in Chhatisgarh and Jharkhand. In states like Andhra Pradesh and Kerala elections were held thrice, the last being in 2005. One of the outcomes of the CAA is the election of large number of representatives from weaker sections of society like women, SCs, STs and BCs both as councilors and chairpersons. Functional Domain of Urban Local Bodies A Status Report 4.4 As per Article 243W of the 74th CAA, eighteen functions were listed in the 12th Schedule to be transferred to the urban local bodies. They are: (i.) Urban planning including town planning. (ii.) Regulation of land-use and construction of buildings.
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(iii.) (iv.) (v.) (vi.) (vii.) (viii.) (ix.) (x.) (xi.) (xii.) (xiii.) (xiv.) (xv.) (xvi.) (xvii.) (xviii.)
Planning for economic and social development. Roads and bridges. Water supply for domestic, industrial and commercial purposes. Public health, sanitation conservancy and solid waste management. Fire services. Urban forestry, protection of the environment and promotion of ecological aspects. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. Slum improvement and upgradation. Urban poverty alleviation. Provision of urban amenities and facilities such as parks, gardens, playgrounds. Promotion of cultural, educational and aesthetic aspects. Burials and burial grounds; cremations, cremation grounds and electric crematoriums. Cattle pounds, prevention of cruelty to animals. Vital statistics including registration of births and deaths. Public amenities including street lighting, parking lots, bus stops and public conveniences. Regulation of slaughterhouses and tanneries.
4.5 It was hoped that the states would undertake a comprehensive review of the municipal legislation and bring changes in conformity with the 74th CAA. But only a few states took the opportunity to review the functional domain of the local bodies in conformity with the constitutional provisions as indicated in the 12th Schedule. The Kerala, West Bengal, Tamil Nadu, Maharashtra, Gujarat Haryana, Madhya Pradesh and Punjab are some of the states who amended the municipal laws comprehensively. However, changes in the municipal laws by itself do not ensure the transfer of functions. Despite transfer of functions there may be several restrictions in the exercise of the transferred functions. There is the question of transfer of funds and functionaries to undertake the transferred functions. The situation, therefore, reflects considerable variation in reality. The Table 4 gives a picture of the functional domain of the urban local bodies in the context of the 12th Schedule of the 74th CAA. Wards Committees 4.6 As per the 74th Constitutional Amendment Act, wards committees have to be formed in all urban local bodies with more than three lakhs population to bring greater decentralisation of functions, proximity of the elected representative and civic administration to citizens and to enhance peoples participation in local governance. Varied Arrangements in States 4.7 The constitution of Wards Committees (WC) varies considerably in states. In states like Kerala and West Bengal WCs are constituted for each ward and in others for a group of wards. In Chennai, the 155 municipal wards are grouped into ten Wards Committees, each representing a population of close to four lakhs. Bangalore's Wards Committees cover an average population of about two lakhs. In effect, these are Zonal Committees and not Wards Committees. There are 16 WCs for 221 wards in Greater Mumbai Corporation. In Calcutta Corporation, in addition to the Wards Committees, the Borough Committees, which are for groups of contiguous wards, have been in existence for a long time. These are in effect a substitute for the Zonal Committees. Calcutta has a three tier decentralized system. In Delhi Zonal Committees for groups of 10 to 12 municipal wards have been formed comprising exclusively with ward councilors. 4.8 In Kerala there is a Wards Committee for every Ward with the Councilor as Chairman. The Committee consists of about 50 persons nominated by the Chairperson of the Municipality in consultation with the Councilor and drawn from residents associations, doctors, teachers, NGOs, CBOs, etc. They meet at least once in three months and they ate attended by Secretary and the Heads of Departments in the Municipality. The Committee will prepare and supervise the development schemes for the Ward, encourage harmony and unity among various groups, mobilise voluntary labour for social welfare programmes, give assistance for identifying beneficiaries for the implementation of welfare and development schemes related to the Ward. This is besides assisting timely collection of taxes, fees and rents for the Council. The duration of the Wards Committee shall be for five years. Functional Domain of ULBs as per the 12th Schedule is given in Table 6.
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Table 6 Functional Domain of ULBs as per 12th Schedule S. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 State No 1 Andhra Y Y Y** Y Y Y Y** Y** Y Y Y Y Y Y Pradesh 2 Chattisgarh Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 3 Gujarat* Y Y Y 4 Karnataka Y Y Y Y Y Y Y Y(P) Y Y Y Y Y Y Y 5 Kerala Y Y Y Y Y(P) Y N Y Y Y Y Y Y Y Y 6 Maharashtra Y Y Y * 7 Orissa Y(P) N Y Y(P) N Y N N N Y Y Y Y Y Y 8 Tamil Nadu N Y Y Y Y Y N Y * Y* Y Y Y Y Y Y* 9 Uttar Y(P) Y(P) N Y(P) Y(P) Y N Y(P) Y(P) Y(P) Y(P) Y Y Y Y Pradesh 10 Uttaranchal Y Y Y Y Y Y Y Y 11 Madhya Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Pradesh 12 Haryana Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 13 Assam Y Y Y Y Y Y N N N Y Y Y Y Y Y 14 Manipur Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 15 Rajasthan N Y Y Y N Y Y Y Y Y Y Y Y Y Y 16 Jammu Y Y Y Y Y Y Y Y N Y Y Y Y Y Y &Kashmir 17 Nagaland N Y Y N N Y N Y Y Y N Y Y Y Y 18 Punjab Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 19 Himachal Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Pradesh Y Y, assigned to Municipalities; N N, Not assigned to Municipalities, P-Partly *Data varies within different cities in the state; ** Services transferred only by executive order Source: MoAs of cities of the respective states. 16 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 17 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 18 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y
Functions of Wards Committees 4.9 WCs have been assigned several responsibilities, such as maintenance of civic services, revenue collection/assistance in tax collection, drafting of annual budget, slum improvement, public grievances, formulation and execution of development schemes, monitoring the implementation of development programmes, recommendations on proposals regarding estimates of expenditure, granting approval and financial sanction to plans and municipal works, scrutiny of monthly progress report, etc. In Kerala and West Bengal the tasks to be performed by these committees have been elaborated in the Rules. Orders have also been issued for the Corporation/Municipal staff to be involved in their work in addition to some financial allocations within the city budget. District Planning Committees 4.10 The constitution of District Planning Committees (DPCs) is mandatory under article 243ZD of the Constitutions. They are responsible for integrated planning for urban and rural areas in the district. Both urban and rural areas need to share the physical and economic resources of the district such as communications, water resources and market places. Allocation of water for irrigation, drinking or industry has always been a contentious issue. Dealing with each other's wastes is another serious problem. Composition 4.11 The composition of the DPC and the manner in which the seats are to be filled have been left to the States, article 243ZD stipulates that four-fifths of the total number of members of DPC will be elected by, and from amongst, the elected members of the Panchayat at the district level and of the municipalities in the district in proportion to the ratio between the population of the rural areas and of the urban areas in the district. The rest are to be nominated.
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4.12 While most States have made enabling acts to constitute District Planning Committees, they have not been actually constituted in all states and where constituted not functional. This is because of both political apprehensions and bureaucratic problems. First is the fact that the provisions on District Planning are to be found in the 74th rather than in the 73rd Constitutional Amendment. Rural Development departments in the various State Governments have traditionally regarded district level planning as falling in their domain but since they find that the provisions for the DPC are now a part of the 74th Constitutional Amendment, under the Part IXA relating to Municipalities, their reaction sometimes has been that these Committees are the concern of the Urban Development or Municipal Affairs department in the State. These departments, on the other hand do not have a clue about the objectives and purposes of the District Planning Committee and expect that some other department like Planning, will take care of it. The result is that the item often became orphaned between disinterested departments. The political apprehension is about the DPC emerging as a dominant body deciding on public investments and thus reducing the influence and patronage of State level political leaders. 4.13 The State Governments have, therefore, been left to draw their own interpretations. In Assam, Karnataka, Kerala, Rajasthan and West Bengal the State laws envisage the DPC as a part of the Zilla Parishad. The Chairperson of the Parishad is also designated as Chairperson of the DPC. In Madhya Pradesh, a Minister of the State Government is the Chairperson of the DPC and is expected to lead and guide district planning with the help of the district administration. The Chairperson of the Zilla Parishad is a Vice-Chairman. Gujarat and Maharashtra have long had District Planning and Development Committees with a minister of the State Government as the Chairperson. The view of these two Governments has been that these district committees are an adequate substitute for the DPCs. The Table 5 indicates the varied arrangements in different States. 4.14 The designation of a Minister as the President of the DPC virtually makes it an extension of the State Government and goes against the intent of the Constitution and defeats the principle of decentralisation. In West Bengal, the organizational arrangements are similar to those in Kerala. West Bengal has revived a previous practice of District Planning and Development Co-ordination Committee (DPDCC) presided over by a Minister of the State Government. Though the President of the Zilla Parishad continues to be the Chairman of the DPC, the DPC is expected to consult the DPDCC thereby diluting the position of the Zilla Parishad. 4.15 In Rajasthan, DPCs have been formed in all districts with the President of the Zilla Parishad as the Chairperson and the Chief Planning Officer of the Zilla Parishad as the Secretary. In UP and Karnataka the DPCs have been set up but they are not functional. In Tamil Nadu until recently the DPC was perceived and operated as a non-PRI body with the Collector as the Chairman and the Zilla Parishad President as the Vice Chairman. Recently, the position has been changed with the President of the District Panchayat designated as the Chairman of the DPC. 4.16 The highly varied organizational and operational arrangements for the DPC confirm the fact that the provisions of the Constitution have remained very poorly understood and very badly implemented. Where the DPC has not been located within a Zilla Parishad the ownership of the process itself has been left to doubt. The induction of a State Government Minister appears to be a deliberate attempt to dilute the position of the district level panchayat and forestall possible attempts of that panchayat to assert its preeminence as a distinct body of elected representatives. The operational arrangements for the preparation of a district development plan and merely forwarding it to the State Government also reduces it to a paper exercise. If, on the other hand, district level planning becomes multi sectoral and inter-departmental and also covers project allocation, monitoring and supervision and if that district level planning becomes a part of the Zilla Parishads responsibilities it would undoubtedly enhance the Parishads power and influence. Composition of District Planning Committees is given in Table 7.
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Table 7 Composition of District Planning Committees State Kerala Madhya Pradesh Maharasht ra West Bengal Rajasthan Uttar Pradesh Karnataka Total Members 15 15-25 30-50 10-100 depending on district size 25 20-40 Elected Members 12 Four-fifths Four-fifths Four-fifths Nominated Members 03 One-fifth One-fifth One-fifth Chairperson President of the Zilla Parishad Minister nominated by the State Govt. Minister nominated by the State Govt. President of the Zilla Parishad President of the Zilla Parishad Minister nominated by the State government President of the Zilla Parishad Mayor/Municipal President of District Hq. Vice Chairman Collector; ZP President Vice Chairman Secretary District Collector District Collector District Collector District Magistrate Chief Planning Officer of ZP Chief Developmen t Officer of the District CEO of Z.P.
20 Four-fifths
5 One-fifths
Four-fifths
One-fifth
Tamil Nadu
Fourth-fifth
One-fifth
CEO of District Panchayat
Working of DPCs Kerala Experience 4.17 The Kerala Municipalities Act, 1994 provides for creation of DPCs and they have been in existence since 1995. As per the law the total strength of the DPC is 15. The President of the District Panchayat is the Chairperson. The District Collector is the ex-officio Secretary of the DPC. Twelve members are elected from the members of District Panchayat and from councilors of Municipalities and Corporations in the ratio of rural and urban population in the district as fixed by the Government. The election to the DPC is conducted under the guidance, supervision and control of the State Election Commission by a Returning Officer appointed by it. The election is made on the basis of proportionate representation by single transferable vote. Casual vacancy of elected members is filled up by elections. 4.18 The members of Lok Sabha and Members of Legislative Assembly representing the area comprising fully or partly are permanent invitees to the DPC. The members of the Rajya Sabha representing the State are permanent invitees to the DPC in the district in which he is a registered voter. If any of such member is a Minister, Speaker or Deputy Speaker, or Government Chief Whip or Leader of Opposition, such member may nominate a person to represent him in the DPC. 4.19 As the Grama Panchayats and Block Panchayats have no representation in the DPC, the government has decided that two representatives of the Presidents of Grama Panchayats and a representative of the Presidents of Block Panchayats are designated as permanent invitees of the DPC. The Association of the Presidents of Block Panchayat and Grama Panchayat suggests the names of the invitees respectively. 4.20 The government nominates one member who has considerable experience in administration and planning. The district level officers of Government departments are designated as Joint Secretaries of the DPC but do not have any voting rights. The powers of the District Planning Committee are:
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(i) Vetting the plan projects prepared by local governments for their technical soundness and adherence to mandatory guidelines prepared by Technical Advisory Committees, constituted by the DPC with official and non-official experts. (ii) While the general guidelines for Plan preparation are issued by Government, the DPC has been given some powers to decide on avoidance of unproductive schemes and for giving priority to certain developmental areas. (iii) Review of the annual plan performance of local government and conveys its views to that local government. (iv) Prepare the District Plan. (v) Develop a District vision on future development and translate it into a broad perspective plan (vi) Appraises all Plans prepared by local governments with the help of TACs. The DPCs cannot change local government priorities or choices but they can ensure adherence to mandatory guidelines and technical standards. 4.21 The District Planning Offices function as the secretariats of the DPCs and provide support for the socio-economic planning. District Town Planners have help them do spatial planning and the District Statistical Office also extends support. Functioning of District Planning Committees 4.22 The DPCs have been constituted in 10 states viz., Bihar, Chhatisgarh, Haryana, Karnataka, Kerala, Madhya Pradesh, Orissa, Rajasthan, Tamil Nadu and West Bengal. The number of members of DPCs varies between states. They generally comprise the minister-in-charge of district, mayor of corporation, chairperson of council, chairperson of zilla parishad/ panchayat, elected members of local bodies (both rural and urban), special invitee members (i.e., MPs, MLAs, MLCs), nominated members, divisional commissioner, deputy commissioner, additional deputy commissioner, district collector, district planning officer, district statistical officer, etc. It is understood that in Karnataka, Kerala and Tamil Nadu, DPCs have been constituted and technically they are functioning. However, in Karnataka they have not been functioning as expected. In fact, Kerala is the only state in the south where DPCs are active and functional. In Madhya Pradesh, the DPC has no executive powers and in Chhatisgarh, they are not functioning and no meetings of DPCs are held. Metropolitan Planning Committees 4.23 Metropolitan areas are engines of growth and economy in the country. Urban transport, water supply, waste management, police, public health, etc., require metropolitan level planning, implementation and coordination. Besides the scale of services needed in the metros is huge and it is not possible for the urban local bodies to address. Since the 74th Constitution Amendment, mayors and chairpersons are moving increasingly to assume executive leadership for managing their respective areas. Constitution of a MPC is a constitutional requirement. In most states conformity legislation or enabling laws have been passed more or less reproducing the language of the Constitutional Amendment but no state, except West Bengal has set up MPCs. 4.24 In the composition for MPC it is envisaged that one-third of its members are to be elected by and from amongst the elected representatives of urban and rural local bodies in the metropolitan areas. The others are to be nominated representing central and state government agencies and other institutions including private sector responsible for various services in the metropolitan areas. The manner of choosing the Chairperson of the MPC, and the planning and coordination functions to be entrusted to it, is left to the State Legislature. In preparing the draft development plan the MPC should have due regard to the plan prepared by the Municipalities and the Panchayat, matters of common interest to them, objectives and priorities of the Government of India and the State Government, available financial and other resources for integrated development of infrastructure, environmental conservation, etc. The MPC is expected to hold wider consultations with different institutions and organisations. The MPC is envisaged as an inter- governmental and inter-organizational forum for providing a vision, a strategy and a metropolitan wide development perspective. 4.25 MPC has been constituted only in West Bengal. The Kolkata Metropolitan Planning Committee (KMPC) comprises 60 members, including chief minister of state, minister-in-charge of municipal affairs and urban development, elected members of local bodies and nominated members. Of the 60 members, 2/3rd members are elected and 1/3rd are nominated. Chief Minister of the state is the Chairman of KMC and the Minister-in-charge of Municipal Affairs and Urban Development
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Department of the state is the Vice-Chairman. Kolkata Metropolitan Development Authority (KMDA) is the technical secretariat of KMPC and Secretary; KMDA is the Secretary of KMPC. Why MPCs are not being setup? 4.26 The reasons for not setting up MPCs appear to be a mixture of lack of political interest, bureaucratic confusion about the purpose and role of the MPC, and fear of the urban development authorities that their domain will be undermined. The state governments are apprehensive about the large staff, which these development authorities have acquired over time, which would become surplus in the event separate MPCs are established. This is a totally mistaken perception. The MPC is expected to be a high level democratic set up providing a constitutional basis to metropolitan development planning. The development authorities could serve these MPCs as technical secretariat. State Finance Commissions 4.27 The State Finance Commissions (SFCs) attempted a detailed review of the financial position of ULBs and local-level issues of governance and made recommendations to overcome the prevailing constraints confronting ULBs. Bihar is an exception, where the report could not be submitted due to various reasons. The state governments process the recommendations and have accepted most of the recommendations fully, partly or in a modified form. There are, however, a few recommendations which have either not been accepted or are under consideration. The decision to accept or reject a recommendation lies with the state government and is based on a number of factors, such as the financial condition of the state/local government, priority areas of concern, etc. The number of accepted recommendations is high in the states of Haryana, Himachal Pradesh, Tamil Nadu and Uttar Pradesh, and moderate in Andhra Pradesh, Goa, Gujarat, Kerala, Rajasthan, Delhi and Pondicherry. In some states the SFCs have given importance to devolution of functions, functionaries and powers along with a transfer of funds. The SFCs have also emphasized participation of the community and the private sector in the delivery of urban services and training for municipal official and non-officials to improve their efficiency and attitude.
5. Integration of City Planning and Delivery Functions (S2) Objectives and Expected Outcomes of the Reform 5.1 The proposed reform measure was expected to bring about the process of planning and delivery of all urban infrastructure provision and management functions and services converge with the functioning of ULBs. The objectives of the reform measure are: Need for institutional convergence at city level Assign or associate elected ULBs with City Planning & Delivery Functions 5.2 In the management of the city, particularly the metropolises, several state government agencies and parastatals play a very significant role along with urban local bodies. Often these organisations work independent of the ULBs thereby contributing to uneasy relations as can be seen from the Figure 3. Public Health Engineering Departments/Water Boards are responsible for water supply; town planning departments and urban development authorities are responsible for spatial planning and development, police for traffic management, etc. In some cases several organisations including the ULBs are responsible for certain functions. For example, welfare departments are responsible for poverty alleviation, provision and maintenance of roads is the responsibility of ULB, Department of Roads and Buildings of the state government and in some cases Nation Highway Authority also shares the responsibility. Such over lapping of functions and divided responsibility makes accountability very difficult. Figure 3 below shows the institutional responsibility of municipal functions.
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Figure 3 Institutional responsibility of municipal functions
SCBs Slum Infrastructure &
UDAs Spatial Planning
Town Planning Department
PHED Water/ Sewerage
ULBs
Police Department
Traffic Management
Water Boards
Water/Sewerage
Welfare Departments
Poverty Alleviation
Housing Boards
Housing
R & B Department
Roads & Buildings 5.3 74th CAA accords a constitutional status to ULBs and makes it responsible for provision and delivery of functions listed in the 12th Schedule. This entails that the ULB should be responsible for delivery of these functions. The performance of functions and delivery of services by different organisations continues even after 15 years of enactment of 74 CAA. Therefore, the JnNURM incorporated a reform making it mandatory for the integration of city planning and delivery functions. This entails that all the agencies responsible for delivery of functions should be integrated with the local body. Alternately, the local body should be associated with the delivery of functions within the city jurisdiction and should have a role in the decision making in relation to these functions. It is left to the state and city governments to work out mechanisms of such association. The MoAs signed by state and city governments have given time frames to implement this mandatory reform.
6. Rent Control Reform (S3) Objectives: 6.1 The objectives of the reform are: To protect the rights of people living in rented houses To control rents and stop eviction of tenants To balance the rights and obligations of landlords and tenants To encourage construction and development of more housing stock To promote an efficient and robust rental market To improve the availability of housing across all income categories To abolish rent control regulations What is Rent Control Law? 6.2 Rent control is imposing a ceiling on the rents in the housing markets. Rent control refers to laws that limit the amounts of rent and the amounts that rent can be increased. It prevents the landlords from charging exorbitant rents and evicting. In India housing is a state subject and enactment and enforcement of rent control legislations is the responsibility of the state governments.
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As a result it is very difficult to have any holistic and comparative analysis of legislations. Rent control laws dont just concern rent limits or rent increases, they also deal with the landlords responsibility to make repairs, lease renewals, evictions, etc. Why Rent Control Law? 6.3 Housing is considered a human right all over the world. The rent control legislation, therefore, is important for the following reasons: Keeps the rents low for tenants, Tenants will have security against arbitrary increase in rents and threat of evictions, Ensures housing to economically weaker sections of society and the poor, Enables the families to provide proper education to their school-going children without botheration of changing the houses periodically, Facilitates promotion of community organizations, and Benefits the landlords as rent control laws protect them against decrease in rents. Problems of Rent Control 6.4 Despite these apparent advantages there also several problems that go with the rent control laws and they include: Disincentive to invest in rental housing, Reduces housing supply in the market leading to scarcity of rental houses, Withdrawal of houses from rental market leading to reduced supply of affordable housing, Emergence of uncontrolled and black rental housing market, Poor squat on government or private lands, Rapid deterioration of housing stock and due to low returns land owners show no interest to maintain and renovate the houses which affects housing quality and contributes to low living standards of the tenants, Benefits the non-poor as they pay ridiculously low rents at the cost of numerous poor immigrants who are unable to obtain decent, affordable housing, Due to tenancy regulations the land owners are forced to sell the property to the tenant at ridiculously low prices and the latter sell the same property at market prices to others as owners, Reduces labour employment opportunities as the laws governing rent control and land development restrict the growth of housing sector, Affects the mobility of people as they are afraid of losing their low rent houses if they move out, and Reduces the scope for investments because of peoples unwillingness to invest in real estate and housing for fear of their properties being put under rent control, Erosion of municipal revenues. 6.5 Housing activity in the country is mostly led by the private sector including real estate agencies and very little by the public or government agencies both in urban and rural areas. If rent control and restrictive building byelaws are amended, private sector can play a very significant role in the provision of rental housing in the country. With the availability of housing stock the rents will stabilize bringing succor to the tenants and the poor in particular. Rent control reduces the quantity and quality of housing. This has a direct impact on the poor who have no alternative but to live in slums and squatter settlements because of lack of affordable housing. Freeing up the housing market from the shackles of rent control will create sufficient housing in the long-term for all. It will help the poor and the tenants. Keeping these factors in mind rent control reforms has been identified as one of the mandatory reforms at the state level.
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7. Rationalization of Stamp Duty (S4) Objectives 7.1 The objectives of the reform are: Establishing efficient real estate market with minimum barriers on transfer of property. To facilitate putting properties to more productive use Making property transactions cheaper and easier What is Stamp Duty? 7.2 Stamp Duty is one type of tax that has to be paid to the state government. It is payable on instruments and not on transactions. The term instrument refers to Agreements, Exchanges, Gifts, Certificates of Sale, Deeds of Partition, Power of Attorney to sell immovable property when given for consideration, Deeds of Settlement and Transfer of Lease by way of assignment, etc. Under Entry 91, List 1, Schedule VII of the Indian Constitution, the Centre is vested with powers to prescribe the rates for instruments of commercial character Bills of exchange, letters of credit, insurance policies, share transfers, and so on. This is to ensure uniformity in duty for such instruments across India. State governments are empowered to prescribe the rates on all other instruments. The Indian Stamp Act, 1899 has been adopted by various states with suitable amendments. Maharashtra, Gujarat, Karnataka, Kerala and Rajasthan, however, have enacted their own stamp duty legislations. Stamp Duty is payable on instruments before or at the time of execution. The duty is payable on the agreement value of the property or the market value, whichever is higher, and is stated in the document. Why Stamp Duty Reform? 7.3 The Stamp Duty framework in India has not kept pace with changes. Laws relating to rates of Stamp Duties, registration charges, etc., were initially governed by the sole objective of revenue mobilisation, without any consideration of the market needs. With reforms to promote economic development and to compete with global markets there is an reform this Stamp Duty structure to meet the needs of the economy and market. While the maximum Stamp Duty rate levied in most developed markets worldwide is in the range of 1-2 per cent, some states in India have double-digit rates. Thus, there is an urgent need for rationalization in this area. Current Scenario 7.4 The maximum rate of stamp duty levied in most developed countries is in the range of 1-2 per cent as can be seen from the following Table 8. Table 8 Rates of Stamp Duty/ Registration Tax in Asia Country Malaysia Hong Kong Thailand Philippines Singapore Korea Stamp Duty/ Registration Tax 1 % on first RM 4,00,000; 3 % on the remaining market value 3.75 % on the market value of the property; 0.2 % on stock transactions 0.5 % except in cases where the seller is subject to a specific Business Tax + 2% transfer Fee and 0.5 % stamp Duty 1.5 % on the consideration paid or the fair mkt. value (whichever is higher) +0.75 % of gross selling price as Transfer Tax. 1 % on first S $ 1,80,000; 2 % on next S $ 1,80,000; thereafter 3 % 3.6 % Registration Tax + 2.2 % Property Acquisition Tax (both on the acquisition value)
7.5 In India, on the other hand, the rates vary from instrument to instrument1 and state-to-state, ranging anywhere between 6-15 percent. The states of Haryana, Himachal Pradesh, Rajasthan, Uttaranchal, Puducherry and Uttar Pradesh have double-digit stamp duty rates as can be seen from the following Table 9. Some states even have double stamp incidence, first on land and then on its development. High Stamp Duty structure in Haryana is in sharp contrast to the adjoining state of Punjab and UT of Chandigarh where it is only 6 per cent. With high rates in some states, India has one of the highest levels of duty amongst the major Asian countries. Table 9 shows an inter-state comparison in stamp duty rates.
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Table 9 Stamp Duty Rates An Inter-State Comparison S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 States Haryana^ Kerala Himachal Pradesh Rajasthan Uttaranchal^^ Pondicherry Uttar Pradesh^ Karnataka Delhi Maharashtra** NOIDA Andhra Pradesh** Chandigarh Stamp Duty (%) 15.50 13.50 12.00 11.00 10.00 10.00 10.00 8.65 5.00 8.00 8.00 6.00 6.00 6.00 1.00 1.00 3.00 2.00 2.00 1.00 2.00 0.50 Reg. Fee (%) Total 15.50 15.50 14.00 12.00 12.00 10.50 10.00 9.65 8.00 8.00 8.00 7.00 6.00 6.00
14 Punjab Within Municipal Limits; ^14% for gifts/lease **Andhra Pradesh Municipal Corporation Area Municipality Area Others Property transfer tax Stamp Duty (%) 8.00 7.00 6.00 5.00
**Maharashtra Upto Rs. 100,000 Rs.100,000 to Rs. 250,000 Rs.250,000 to Rs.500,000 Rs. 500,000 to Rs. 1500,000
Stamp Duty (%) Nil 0.50 3.00 6.00
Implications of High Stamp Duty 7.6 The implications of high stamp duty are: High Stamp Duty rates inhibit prospective purchasers from registering their properties to avoid payment of high duty and understate sale proceeds, Discourage land transactions, and as a consequence, reduce the supply of land to the market. Besides, there is gross under-declaration of the real value of land, Adversely affects the possibility of using land as collateral for construction financing or other economic activites, Deter prospective purchasers from legalising their transactions by stamping and registering the final transfer documents, People tend to look at short cuts sufficient enough to protect their possession and investment, Considerable financial loss to the state. Way Forward 7.7 Stamp duty rates in some states are very high. The states should: (i.) Bring down the Stamp Duty rates to a uniform level of 5 per cent or less as required under JnNURM (ii.) Simplify the registration process by: Simplifying the procedures and making them user friendly, Starting single window operations, and
28
Giving wide publicity to the process, including on the internet. 7.8 Rationalization of Stamp Duty leads to: Better compliance Increase revenue flows from taxes such as construction tax, property tax, etc. Generate higher revenues by promoting registration of properties, Encourage investments and reducing the cash element in property transactions.
7.9 Stamp Duty rationalization will have many economic advantages and impacts the state revenues. Reduction in Stamp Duty will boost development process in sectors like manufacturing, real estate and tourism. It enourages transparency and supports the implementation of futuristic property tax system. Social infrastructure and real estate projects like townships, software parks, hospitals, shopping malls, etc., have a tremendous scope for development. Bringing down the stamp duty rates at par with the international levels will encourage foreign investments including by Non-Resident Indians (NRIs). The stamp duty reforms can spur industrial growth in states, which in turn contributes to improve fiscal as well as economic health of the cities. Optional Reforms State and Local Levels Good urban governance without proper and adequate capacity is a misconception and inconceivable.
8. Administrative Reforms (O8) Introduction 8.1 Reforms to streamline administration mobilize resources, improve efficiency in service delivery, provision of basic services to the poor, etc., have been on the priority list and are being undertaken both by state and local governments for a long time. Several state governments even appointed committees and working groups to strengthen local government institutions. Recognising the need and urgency of reform in this critical area, the JnNURM has identified administrative reforms as critical and need to be achieved during the Mission period. Why administrative reforms? 8.2 Most urban local bodies suffer from serious financial problems. A large component of their revenues is spent on salaries and pensions. Several smaller local bodies often are not in a position to pay even the salaries regularly. Most ULBs are constrained to even maintain the existing infrastructure; leave alone provision of new infrastructure to meet the expanding needs of the cities and towns. The personnel have weak capacities and are not commensurate with requirements. If this situation is not changed, the ULBs will sooner be in greater difficulties. Objectives 8.3 The objectives of the reform measure are: Better human resource management Reduction in establishment expenditure Introduction of voluntary retirement schemes Non-filling up of posts falling vacant due to retirement Extensive use of Outsourcing Establish performance review management mechanisms Areas of Reforms 8.4 There are several areas that require reform like right sizing the personnel structure, reducing establishment expenditure, capacity building of institutions and individuals, providing longer tenure to senior functionaries, etc.
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Rightsizing 8.5 Rightsizing the local government is one important way to face the challenge. This is very critical for efficiency and to reduce the financial burden of the local bodies. There are several methods of right sizing. Existing Employees Introduction of Voluntary Retirement Scheme (VRS) by providing more benefits to the departing employee and abolition of the post thereafter, Appointment of serving officers to government jobs instead of retired officers, Provision of long-term leave without pay to explore avenues for jobs outside local government, Retraining and redeployment of personnel to reduce financial burden on the ULBs Restructuring and downsizing so as to reduce wage bill. New Employees Ban on new recruitment, including for posts rendered vacant due to superannuation. Review of the policy of appointments on compassionate grounds. Instead provision of family pensions, insurance, one-time payment, etc., may be considered. New work contracts to develop new work discipline to allow for retrenchment of staff declared surplus, with due notice. Abolition of all posts vacant for more than a fixed period after examining redundancy. Reduction in sanctioned posts and ban on creation of new posts. Review of recruitment proposals at the highest level. Outsourcing 8.6 The role of the state has changed from provider to facilitator; so is the case with local bodies. The private sector and civil society organisations can play a significant role in service delivery. Private players can bring resources, experience and expertise in areas hitherto not being performed by the ULBs. The ULBs need to limit their role to essential and core functions. Reduction in Expenditure 8.7 There is need to cut down the establishment expenditure substantially without compromising the quality of services being delivered by the ULB. Referring to the state governments, the Twelfth Finance Commission recommended that states should follow a recruitment and wage policy in a manner such that the total salary bill relative to revenue expenditure net of interest payments and pensions does not exceed 35 percent. This is equally applicable to the urban local bodies in the country; probably more so. This enables the local bodies to invest resources on development. Other areas that the ULBs may consider include: Higher capacity utilization Energy saving which in several ULBs eats away a large chunk of resources Cost control targets Capacity Building 8.8 Capacity building and regular training of municipal functionaries - both elected and appointedare critical inputs to improve administrative efficiency. As part of this exercise the ULBs may consider the following: Introduction of information technology, computerization and automation of municipal offices to improve efficiency and reduce manual workload, Use of common office support services instead of separate services, Formulation of training and transfer policies and their implementation, Redeployment of staff and rationalization of functions. Administrative Continuity and Performance Evaluation 8.9 Giving fixed tenure for senior municipal functionaries like commissioners/executive officers and sectional heads is important to provide continuity as well as accountability in municipal management. Regular review of performance of functionaries and different units of the ULB is critical
30
to establish proper intra-agency relations within the ULB and to understand performance constraints to take mid-course corrections. Performance Improvement 8.10 This comprises: Development of indicators for performance evaluation of individuals and institutions Introduction of report card system Periodic surveys and focus group discussions before taking major decisions Participatory decision making and budgeting Publication of annual subsidy report
9. Structural Reforms (O9) Why Structural Reforms? 9.1 As is well known, most ULBs have low levels of institutional strengths and capacities to meet emerging challenges of urban growth; larger cities in particular. The systems were designed decades ago and they continue even today with only marginal tinkering. In other words, ULB structures remained more or less intact despite growth, challenges and pressures. Structural reforms, therefore, was identified as one the optional reforms to be undertaken by the ULBs and completed during the Mission period with a view to improve municipal performance. Objectives 9.2 The objectives of the reform are: Review and revamping of the organization structure Decentralization Creation of Trained Cadres of Municipal Staff in technical disciplines Improve coordination amongst city level agencies Areas of Reforms 9.3 The reforms may include institutional strengthening, citizen charters, e-governance, changes in planning process, encouraging partnerships, participatory processes, etc. Some of these reforms like e-governance, encouraging PPP, etc., are part of optional reforms under JnNURM and are being taken up by the ULBs as well as state governments. Some of the other aspects are discussed below. a. Institutional strengthening Augmenting technical capacity of local bodies like establishment of new agencies and appointment of new functionaries Creation of new cadres of specialist like Accountants, Environmental Engineers, etc., to man technical positions in the ULB. b. Citizen Charters As is well known, in most cases citizen do not have access to proper information on municipal affairs. As a result they are not able to follow proper procedures nor can approach appropriate functionaries for redressal of their problems. Delays in performance and failure to reach out the target communities are the obvious fall out of lack of information. To overcome these structural limitations every local body should prepare a charter indicating the process and timeframe for service delivery. It is important to disseminate the charter widely, monitor its implementation and periodically revise the charter in tune with changing requirements. It is not a one-time activity. c. Institution of best practice and performance rewards to create healthy competition within the ULB and between ULBs d. Preparation and periodic revision and updation of city development plans through consultations and participations for development of city
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e. The following are some of the other changes to bring structural reforms to improve municipal performance. Define state municipal relations Provision to transfer employees from one ULB to another Control of ULB over land and infrastructure Utilization of MPLAD and MLALAD funds in the city with ULB consultations Define relations between ULB and parastatals respective areas of activity Mechanisms for inter agency coordination Overall control of ULB over other agencies in their jurisdictions Recall of Mayors (as in Madhya Pradesh) and Councillors Nomination of experts to ULBs and not on extraneous conditions Developing partnerships with CBOs, NGOs, etc. Simplification of procedures Reduction of discretionary powers of officials Reallocation of functions within the ULB through decentralization and realignment of sub-ULB level jurisdictions Some of these areas are no doubt in the domain of the state government.
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I.

JnNURM Overview and Reform Framework

JNNURM Rapid Training Programme

Governance & Reforms

Centre for Good Governance

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

I. JNNURM OVERVIEW AND REFORM FRAMEWORK

Centre for Good Governance

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Centre for Good Governance

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Centre for Good Governance

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

State/UT Scenario (as percentage of project value)

Centre for Good Governance

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Heritage Development 0% Water Supply 34%

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNURM Rapid Training Programme

Governance & Reforms

Administrative Staff College of India

JNNRM&Reform Framework Overview RTP MOD

JNNRM&Reform Framework Overview RTP MOD