Urban infrastructure: Call for user-charge approach
Smaller cities find the going tough due to financial crunch

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Fresh approach
User-financed charges by institutions will lead to better access to capital markets.
Jawaharlal Nehru National Urban Renewal Mission is a key step forward.
Detailed planning is crucial to successful implementation.

BURSTING AT THE SEAMS: A crowded bus in Chennai. The Economic Survey has painted a grim picture of the urban infrastructure scenario in the country.
BURSTING AT THE SEAMS: A crowded bus in Chennai. The Economic Survey has painted a grim picture of the urban infrastructure scenario in the country.

Our Bureau

New Delhi, Feb. 27

The Economic Survey noted on Monday that the accelerating process of urbanisation is putting severe strain on urban infrastructure and services. It suggested a user-charge financed approach to facilitate a massive increase in capital expenditure on urban infrastructure.

"The process of urbanisation has gathered momentum in recent times and this has put urban infrastructure and services under severe strain. Smaller cities because of their inadequate financial resources have found it particularly difficult to cope with the increasing demands on services. Urban areas in India present a grim picture with regard to availability of basic infrastructure," the pre-Budget Economic Survey said.

Urban infrastructure consists of drinking water, sanitation, sewage systems, electricity and gas distribution, urban transport, primary health services and environmental regulations.

Commenting on the financing pattern, the survey said that the foundation of urban infrastructure has to be `user charges.' "It is possible for urban institutions to access resources from the capital markets to finance a large portion of urban capital expenditure when it can be serviced by user charges in the future. While municipal bond issues have indeed taken place, the magnitude of resources involved is yet insignificant." The user-charge-financed approach can facilitate a massive increase in the capital expenditure on urban infrastructure without worsening fiscal problems."In addition, the tariff restructuring or subsidy reign in the context of a restructuring process allows for a more efficient and targeted impact on the poor," the survey pointed out.

It said that the Jawaharlal Nehru National Urban Renewal Mission, launched by the Prime Minister in December 2005, was a significant step to address the key issues of urban infrastructure. However, detailed planning would be crucial to successfully implement schemes all over India. For better connectivity within the National Capital Region, an Integrated Rail-cum-Bus Transit (IRBT) system is being contemplated. Two special purpose vehicles (SPVs) are to be formed, one for the UP corridor and another for the Haryana corridor with the participation of the respective State Governments and the Centre.

The Karnataka Government has proposed a Bangalore MRTS with East-West and North South metro corridors, it said. A Group of Ministers has also been set up to decide on the gauge and legal issue of various Metro Railway projects.

Referring to the Delhi Metro Rail System, the survey said, "The proposals in respect of IIT-Qutab Minar portion of the Central Secretariat to Qutab Minar line is to be reviewed and cost benefit analysis of alternative proposals to be carried out in the context of its impact on the Qutab Minar... Revised proposals for this section of Central Secretariat-Qutab Minar line to be brought back to the GoM for consideration," it added.

(This article was published in the Business Line print edition dated February 28, 2006)
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