LOCAL ECONOMIC DEVELOPMENT STRATEGY FOR SUSTAINABLE URBAN DEVELOPMENT IN INDIA by Narayanan Edadan, PhD small towns seems to be more plausible4.
than the actual costs, and many cases even the partial costs are not recovered. This has lead to poor operations and management of the urban assets and further risked investments in the infrastructure. Lack of policy and operational clarities in investment and operational and maintenance of urban infrastructure and other economic assets in urban areas has also risked the level of public private partnerships in urban areas.
However, there are successful efforts to leverage the municipal funds for promoting urban investments, through market instruments such as, market borrowing through bank financing and issuing of municipal bonds, leveraging municipal lands for partnering with private sector in municipal infrastructure and service management, and introduction of partial and full cost recovery mechanisms.
The launch of the Jawaharlal Nehru National Urban Reform Mission (JNNURM) in 2005 was a concerted effort by the Government of India to enable the integrated development of urban infrastructure and services as well as to boost urban management reforms. The Mission proposed for implementation over a seven year period, attempts to link central assistance with reforms in the urban local bodies. The JNNURM defines mandatory and obligatory reforms that, if implemented in letter and spirit will indeed create an enabling environment for attracting private investments in the areas of urban infrastructure and services and in economic development sectors at large in the urban areas. Despite aggressive assistance from the national government, progress towards reforms has been slow.
There is a positive relationship between the fiscal health of urban local governments and the level of capital expenditure. Fiscal health not only enhances the level of direct capital expenditure by ULBs, but it also diversify their sources of capital financing, particularly in leveraging own resources through market borrowing/ debt financing. In this context, it is recommended to replace a case by case municipal debt approval system followed by the State Government with a comprehensive debt limit policy, provided the debt limits are benchmarked conservatively to ensure efficient debt servicing and internal debt managing (Narayanan E and Sarma A, 2003)5.
Inclusive Urban Growth
Although most States have repealed the Urban Land Ceiling and Regulation Act, only one third of the States have transferred the 12th schedule of the functions outlined in the 74CA, transferred the city planning function, reformed the stamp duty, and enacted the community participation law. At the mission city level, the performance of urban reforms has not been encouraging either, only 13 cities have established egovernance, 29 implemented the accounting reforms, 16 cities achieved property tax reforms, 11 cities have recovered partial cost in water supply and sewerage and solid waste management and only 48 cities have earmarked funds for services to urban poor. However, some of these reforms at urban infrastructure development for small and medium town (UIDSMT) levels, have been encouraging, suggesting urban reforms in
Despite the best intentions, there are some challenges that inclusive urban growth faces. Infrastructure inadequacies in both rural and urban areas are the major constraints for India’s growth. Urban infrastructure plays an immense role in providing basic and ancillary urban services to citizens to ensure their quality of life. However, lack of long-term urban vision framework and urban development strategy, paucity of resources, weak managerial structure and operational deficiencies continue to hinder growth of efficient and environment friendly urban habitats. Lack of adequate education translates into lack of opportunity, making it much more difficult to break the cycle of poverty. Pro poor businesses and informal sec
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