LOCAL ECONOMIC DEVELOPMENT STRATEGY FOR SUSTAINABLE URBAN DEVELOPMENT IN INDIA by Narayanan Edadan, PhD
• To ensure operational efficiency and sustainability of these interventions; and • The need to form city development partnerships with private sector and local community networks.
• Introduce sustainable community development and investment programming.
LED Funding Issues
Smaller urban local bodies with very limited economic potential and depend on rural hinterlands and other urban centers for economic growth have a bigger challenge in promoting economic development initiative and provision of improved infrastructure and services. This will call for a clustered approach in which the ULB is considered as part of an economic cluster. Investment and employment creation initiatives will have to be more strongly examined for viability and feasibility in the case of local economic development and economic clustered development.
At present, funding for local economic development activities mainly comes from the State and Central Governments through budgetary allocation dispensed through various uncoordinated programs. In the absence of an expense head for local economic development related activities, except for the central government aided urban infrastructure and poverty alleviation programs, the municipal funding supports for LED activities is practically nonexistent. Absence of an overall capital investment plan at ULB level and the general poor fiscal and financial health of the local governments further limit the funding contribution from the urban local governments.
It is necessary to formulate a comprehensive government strategy to implement the LED strategies in urban areas in phases depending upon their institutional context and economic potential. Government will therefore need to focus on four key strategies over the next five years to move closer to the vision of robust and inclusive local economies. These four strategic interventions are interrelated.
It is well recognized that unless and until local governments/ local economic development agencies have reliable sources of funds earmarked for LED actions, it is clear that in the initial phase the funding should come from other sources such as State and Central Governments, Development Institutions, Private Sector and Local Community Organizations. In the short term, the Government should support the organizational and management expenses of setting up LED Department and LED Units and prepare LED strategies and City Business Plans in a phased manner with an objective of building the necessary capacity at various levels of government for designing and implementing LED programs. To sustain the funding strategy, the Government shall align its operational strategies and tasks with the National Urban Development Strategies and Programs such as JNNURM, UIDSMT and SJSRY with an objective of utilizing the existing funds more efficiently as well as to leverage the available resources through appropriate financing structures.
These strategies are: • Improve good governance, service delivery, creating market confidence in urban local bodies to address the regulatory; • Spatial development planning exploiting the comparative advantage and competitiveness of the 28 urban local bodies and providing the regulatory environment for organized development. • Enterprise support and business infrastructure development in ULBs, including formulation of pro poor business strategy and business linkage fund.
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