Most of India’s cities are overcrowded already and projections indicate that even more rapid urbanization is on the way. This report prepared by Booz & Co. for the Confederation of Indian Industry in 2010, sets a path for a system of “Intelligent Urbanization” - a model for inclusive growth that is socially equitable, economically viable and environmentally sustainable
5. FOREWORD Urbanization comes with proven benefits of economic growth and development.
Cities are centres of innovation in terms of ideas, knowledge, and their commer-
cialization. Consequently, cities serve as magnets for talent and human capital
seeking basic economic sustenance and fulfilment of dreams.
However, urbanization also comes with its social and environmental challenges.
Cities are characterized by strained infrastructure which manifests itself in terms
of power cuts and water shortages, high cost of living, and unaffordable real estate
resulting in urban sprawl and slums, high volume of traffic resulting in pollution
and delays.
India is at the cusp of a wave of urbanization. The sheer pace and scale of urban-
ization expected in the foreseeable future is unprecedented and will bring India to
the tipping point where majority of its population will reside in urban areas. This
presents both a challenge and an opportunity.
The challenge lies in our ability to cope. Our cities are already strained to meet the
demands of their residents. Incremental demands on our existing cities are likely
to degrade quality of life even further. Significant investments will be required to
fulfil basic demands. Even if, for a moment we ignore financial constraints, the
environmental impact of doing so is likely to be significant.
However, if done right, India can walk the path of intelligent urbanization that not
only serves as a driver for growth but also is socially inclusive and environmen-
tally sustainable. For this to happen, India needs to base its tomorrow on fresh
thinking and original ideas provoked within a local context. The unprecedented
and unmatched urban growth that we are experiencing today demands a radical
and proactive response. This will necessitate a wide range of policies and practices
to be conceptualized around new ‘socially inclusive’ and ‘environment-friendly’
paradigms.
Technology has a role to play and the global community is waking up to it. CII in
collaboration with Cisco and Booz & Company as knowledge partners presents
a point of view on the integral role of technology in meeting India’s urbanization
goals. The report extensively covers issues pertaining to urbanization and sug-
gests a way forward with specific recommendations on the use of technology for
inclusive and sustainable communities. I thank Wim Elfrink, Chief Globalisation
Officer, CISCO Inc for leading CII in this important area of work and sincerely
believe that this report would help and guide all stakeholders in making urbaniza-
tion more inclusive and sustainable.
Chandrajit Banerjee
Director General
Confederation of Indian Industry (CII)
A Report on Intelligent Urbanization iii
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6.
7. PREFACE The year 2010 marks a defining moment in human history when, for the first time
ever, more of mankind is urban than rural. In India, the urbanization process is
marching at an unprecedented pace creating a unique set of opportunities and
challenges that calls for a concerted societal response. Today alone, approximately
thousand Indians will migrate from India’s villages to its cities. As is true of
most of India’s opportunities and challenges it is not just the pace but the sheer
scale at which urbanization is manifesting itself that is staggering. It is encourag-
ing to note that there is an increasing acceptance and understanding of the many
ramifications of urbanization in India and the urgency of solutions entailed.
India is probably the only country which needs to not only revitalize some of the
densest urban agglomerations in the world but also ensure the delivery of basic
services to the lesser privileged in an efficient manner during this urban transfor-
mation. The opportunities and challenges are unique to India and therefore the
solutions must be transformational, not incremental.
Our solutions must embrace and address the imperatives of social equity and in-
clusive growth in a sustainable fashion. Our response needs to be well balanced.
The country requires a massive investment of over a trillion dollars from the gov-
ernment and corporate sector. There is great potential for technology to be the en-
gine that ensures the optimal use of these investments and there is an urgent need
for smart government regulations and strategic public–private partnerships.
Most importantly, our approach should be based on sustainability— social,
economic and environmental. We call this approach, Intelligent Urbanization—
enhancing the quality of life of citizens and ensuring social inclusion, boosting
economic growth and decreasing environmental impact.
During the course of developing this report, our colleagues at Booz & Company
have not only attempted to capture the unique features of Indian urbanization, but
also worked on a recommendation of specific solutions in the Indian context while
highlighting some of the success stories.
We have already made a beginning at trying to embrace these opportunities and
challenges. This is our chance to get this right by making our solutions scalable,
replicable, and sustainable. On behalf of the CII Steering Committee on Intelligent
Urbanization, it is our hope that this report will serve to encourage you to better
understand not just the benefits of Intelligent Urbanization in India, but also its
applicability and execution requirements so that we can together make this hap-
pen.
Wim Elfrink
Chairman, CII Steering Committee on Intelligent Urbanization
Chief Globalisation Officer, Cisco and EVP, Cisco Services
A Report on Intelligent Urbanization v
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9. EXECUTIVE India’s Urbanization Challenge
This is the urban century— more peo-
• High density: Most of our cities are
extremely crowded—5 of the 20
SUMMARY ple are living in urban areas than rural most densely populated cities glob-
for the first time in recorded history in ally are Indian.
2010. Urban areas are the engines of
economic growth and centres of culture, • Predominantly brownfield: The
entertainment, innovation, education, growth of our cities is largely or-
knowledge, and political happenings. ganic in the sense that existing
urban centres are expanding and
Along with the world, India has also exploding economically, geographi-
been experiencing rapid urbaniza- cally and demographically rather
tion marked largely by a bottom-up, than new planned cities emerging
self-driven approach. This bottom-up from scratch.
urbanization model in India has some
unique characteristics (Exhibit E.1): While urbanization has fueled eco-
nomic growth in our cities, it has also
• Unprecedented scale: India is a resulted in a huge strain on existing
country of daunting numbers; it is physical infrastructure. Overcrowding,
estimated that nearly 140 million rampant growth of slums, disparities in
people will move to our cities by living conditions and inequity in access
2020 and 700 million by 2050. Not to services are endemic in India. In most
only that, each state has urbanized cities the critical infrastructure is now
in its own way, resulting in the co- woefully inadequate, technologically
existence of multiple urbanization outdated, increasingly fragile, and inca-
models. West Bengal has a single pable of meeting even the current needs
large urban core similar to South of all its residents. If India is to improve
Korea or Thailand, whereas Kerala the quality of urban life, we have to
and Gujarat have small dispersed significantly improve and enhance our
multiple urban growth areas similar existing cities, and the systems which
to that of Germany. govern and administer them.
Exhibit E.1
Challenges of Indian Urbanization
Largest urban movement in the Mumbai and Kolkata are the ~ 60% of urban growth through
world, matched only by China world’s most densely populated natural population increase
>700M new urban residents by cities (~10X New York) Unplanned growth
2050 5 of the 20 most densely
populated cities in the world ~ 5-10 planned Greenfield
Multiple models of urbanization projects
are Indian
Limited transparency Municipal expenditure only 0.5%
Fragmented accountability of India’s GDP
Incongruent city divisions (e.g. Narrow revenue base
Bangalore has 88 wards for Inadequate capabilities
policing, 39 for electricity etc.)
‘Leakage’of resources
Source: Booz & Company
A Report on Intelligent Urbanization vii
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10. Tackling the Challenge health, education etc. We estimate that Furthermore, it is evident that the sheer
Getting urbanization right requires that meeting these basic requirements will magnitude of the challenge requires so-
we address some core execution chal- require in excess of USD 1 trillion of lutions that are more efficient, cheaper,
lenges. There is severe shortfall in gov- public investment over the next decade. and holistic. Technology has proven to
ernance capability and resources at our In contrast, JNNURM—laudable for be the key—and arguably the only—
third tier of government— the very same being independent India’s flagship ur- enabler of sustainable outcomes (Ex-
Urban Local Bodies (ULBs), which need ban renewal programme—represents a hibit E.3 on page ix).
to lead this transformation. Further, corpus of USD 25 billion.
the process of revitalizing our existing Both in India and abroad, there are
thickly-populated cities must be carried many examples—along the multiple
through without interrupting ongoing SuBAH Framework for Sustainable dimensions of demand—of technol-
services or disrupting lives of their many Urbanization ogy being applied to provide socially
residents. Finally, cumbersome over- However, merely investing in enhanc- equitable, economically viable and
heads in governance arise from multiple ing infrastructure is not sufficient. environmentally sustainable solutions.
city departments with unclear decision Projects that focus primarily on ex- Governments are utilizing technology
rights and accountability. Paucity of panding capacity are not necessarily to enhance the competitiveness of exist-
funds is a major obstacle, since current most effective in serving community ing cities, and investing in the creation
revenue sources are not sufficient. needs, and neither are they sustainable of new ‘Connected Cities’. South Korea
in the long run. For instance, building is building a new city leveraging tech-
Encouragingly, several initiatives have new roads to accommodate increasing nology to improve the quality of life of
been taken by the government to fur- traffic is neither a socially equitable its residents. Masdar in the UAE has
ther the cause of urban India. The 74th nor an environmentally sustainable been planned as the world’s first zero-
Constitutional Amendment Act (CAA) solution. More roads have in the past waste settlement. New York has lever-
was one such landmark initiative intro- simply resulted in an increase in the aged technology to tackle its security
duced in 1992. More recently, under volume of traffic, increasing the mag- scenario, while Seoul and Singapore
the JNNURM, an investment of INR nitude of the same problem and wors- have implemented smart transporta-
100,000 crore has been envisaged in ening pollution levels. A more long tion solutions which discourage use of
urban infrastructure. term solution may be to implement an personal transport and offer good pub-
intelligent multi-modal transportation lic options.
The demand for urban services in the network, with participation from pub-
oncoming decades will continue to lic as well as private entities, to arrive Green shoots are also visible in India:
grow exponentially. Our cities need to at a solution which meets the param-
make substantial investments in physi- eters of social equity, economic viabil- • Leveraging a smart teacher alloca-
cal infrastructure first and foremost to ity and environmental sustainability. tion and monitoring system in Del-
meet the basic needs of the citizenry. Therefore, for urbanization to be truly hi’s schools has contributed to the
This infrastructure deficit is appar- sustainable, India needs to adopt the increase in student pass percentage
ent across all aspects of urban services Framework for Sustainable Urbaniza- to 84 per cent in 2008, from 48 per
—be it housing, power, water, security, tion (Exhibit E.2). cent in 2004.
Exhibit E.2
SuBAH Framework for Sustainable Urbanization
Source: Booz & Company
viii A Report on Intelligent Urbanization
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11. Exhibit E.3
Technology Solutions
‘Smart metering’ systems Remote systems for diagnostics and treatment Intelligent transport systems
– Real-time usage metering, saving – Enhance patient experience and penetration – Direct traffic flow based on real-time information
~10-15% energy of direct care
– Improve emergency responses Automatic systems for reducing congestion
‘Smart distribution’ systems
– Dynamic demand handling
– Intelligent networked transmission/distribution – Systems like car sharing, multi-modal transport
– Real-time network condition monitoring scheduling etc.
Systems for interactive two-way content delivery Intelligent real-estate solutions that manage Intelligent systems
to students and teachers building energy efficiency, security, utility – City-wide monitoring, sensor tracking, alerting,
– Monitoring systems supply, etc. controls
– Remote access – Reduce total cost of ownership over building Dynamic resource management systems
– Access to quality content life-cycle – Quick emergency response
– Provide environmentally sustainable properties
Source: Booz & Company
• Delhi has announced the introduc- Given the unique characteristics of To make it happen…
tion of smart grid solutions to im- Indian urbanization, a top-down ap- In order to make Intelligent Urban-
prove the quality and reliability of proach will not work. Each urban area ization a nation-wide phenomenon
service while reducing transmission will have to pick the technologies and in India, there is an urgent need to
and commercial power losses. solutions that best suit their needs, and strengthen our urban basics i.e., gover-
have the ability to implement them. nance and financing, while enhancing
• The Ministry of Health, Centre for Successful ‘Intelligent Urbanization’ capabilities, and embedding technology
Disease Control (CDC) and UNI- thus requires many fathers. (Exhibit E.4).
CEF launched a pilot programme
where they used GIS mapping to
support expansion of Patna’s vacci-
nation programme. ‘Aarogya Jaal’, a
tele-healthcare facility, was launched Exhibit E.4
in Rui, a taluka hospital in Baramati, Recommendations for Change
Pune District, Maharashtra in 2006.
• Ahmedabad Municipal Corporation
and Gujarat Urban Development
Corporation have developed a Bus
Rapid Transport System (BRTS) to
provide reliable and secure public
transport with the primary objective
of reducing travel time.
Going forward, the challenge is to scale
up such solutions, and make our over-
all urbanization process intelligent.
Intelligent urbanization is an Indian
imperative. Source: Booz & Company
A Report on Intelligent Urbanization ix
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12. Strengthening Basics initiatives in order to ensure sustain-
• Governance: Through constitutional ability
amendments and increased power to
ULBs • Mandating SLAs: Leverage technol-
ogy to meet Government Citizen
• Financing : Measures to ensure fi- SLAs and introduce performance
nancial independence and viability scorecards
of ULBs
• Broadband and Connectivity: En-
Enhancing Execution Capabilities courage networking amongst local
• Building personnel capabilities: In- governments and building of data
stitute state level municipal cadre; management capabilities
appoint city CIO and institute sys-
tems for capability building and skill In conclusion
up-gradation Given the current scenario and huge
opportunities in the near future, it is
• Broadening resources: Explore av- critical for India to act immediately. To
enues to minimize strain on existing attain the ideal of inclusive growth, it is
municipal resources important that urbanization be socially
equitable, economically viable and en-
• Encouraging PPPs: Introduce initia- vironmentally sustainable. Different
tives to promote PPPs in develop- examples from across the world have
ment of urban infrastructure proved that technology is a key enabler
to help achieve these goals at the lowest
Embedding Technology cost and in the most efficient manner. It
• SuBAH Framework: Aim for manda- is now for India to make this happen,
tory adoption of SuBAH framework and this report attempts to lay out a
while visualizing and executing new roadmap to do so.
x A Report on Intelligent Urbanization
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13. TABLE OF 1. The Urban Century 1
2. The State of Indian Cities 3
CONTENTS 3. Policy Initiatives and Impact 5
4. Urbanization Challenges in India 7
4.1. Structural challenges to urbanization in India 7
4.2. Execution challenges to urbanization in India 10
5. Dimensions of Urban Demand 12
6. Framework for Sustainable Urbanization 15
7. Building the Future through Intelligent Urbanization:
Better, Cheaper, and Faster 16
7.1. Energy/ Utilities/ Water 18
7.2. Healthcare 19
7.3. Transport 20
7.4. Education 23
7.5. Housing 23
7.6. Security 25
8. The Roadmap 26
8.1. Strengthening the Basics 26
8.2. Enhancing Execution Capabilities 28
8.3. Embedding Technology 32
Endnotes 34
A Report on Intelligent Urbanization xi
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15. 1 Ban Ki-moon, the Secretary General of
the United Nations, recently remarked
transformative processes of human
civilization in terms of social and eco-
that we are living in the ‘urban centu- nomic parameters and reference points.
ry’. For the first time in recorded his- Cities have changed the development
THE URBAN tory, more people are living in urban paradigms of entire nations and have
CENTURY areas than in rural. The urbanization laid the foundation for modern econ-
trend has accelerated in the last cen- omies. They are the engines of eco-
tury—whereas in 1950 only about 30 nomic growth and centres of culture,
per cent of the world population lived entertainment, innovation, education,
in cities, today the figure stands at just knowledge, and political power. There
over 50 per cent. By 2030, UN forecasts cannot be high economic growth with-
estimate that more than 70 per cent of out a high degree of urbanization. There
the world population will be urbanized is a clear positive correlation between
(Exhibit 1.1).1 the GDP of a country and its degree of
urbanization. While not all urbanized
Urbanization, defined as a spatial con- economies are developed, there is not
centration of people and economic one developed country that is not ur-
activity, represents one of the most banized. Statistical evidence unambigu-
tatistical
Exhibit 1.1
Urbanization and Economic Growth
DISCUSSION
Urbanization is strongly correlated to
prosperity
All high-income countries are
70-80% urbanized
Tokyo/ NY are as big as India in
GDP terms; cities are able to create
and sustain above-trend economic
growth
Indian policy has been largely geared
to dispersal, and ‘de-congestion’ of
the major economic centres
Source: World Bank; UN-Habitat Report on ëState of the worldís cities; UNFPA; Ni Pengfei, Chinese Academy of Social Sciences
A Report on Intelligent Urbanization 1
Sample chapter 01.indd 1 5/4/2010 4:31:14 AM
16. ously underscores the importance of past, when growth was led by indus- cities irrespective of the countries they
cities—GDPs of mega cities such as To-
GDPs trial enterprises and the manufacturing are geographically situated in. Thus the
kyo and New York are similar to that sector, there was limited flexibility in concept of urban competitiveness is
of India as a whole! the choice of physical locations of these rapidly gaining credence where cities,
enterprises. Today, in the context of rather than countries, compete for re-
Not only do cities catalyse growth, they the modern service-based industry in a sources and investments (Exhibit 1.2).
also nurture creativity and talent as they fully networked world, globalization is
offer space for interaction and engage- changing the very benchmarks of per- Within a country, the competitiveness
ment for gifted individuals with drive formance, growth and competitiveness of individual cities is determined by fac-
and aspiration. It has been argued that in urban areas. Ease of integration with tors such as quality of its infrastructure,
the spatial proximity allows intellectual the world economy is a key determi- ability to attract talent, medical facili-
spill-overs and free exchange of innova- nant of sustainable economic activity. ties and quality and cost of housing—
tive ideas, eventually honing skills and these are becoming increasingly critical
increasing productivity of the city and Globalization has released the power of to global investment decisions. In India,
its people2. The urban environment can markets, standardized products, proce- the competition between Hyderabad
also reveal and facilitate unexpected dures, quality parameters and regula- and Bangalore for incremental IT in-
synergies between seemingly unrelated tions. This, in conjunction with the vestment and Gujarat’s plan to develop
ideas that may provide important for- growth in service industries, has inten- GIFTa to challenge the dominance of
ward leaps in knowledge. sified competition across cities for at- Mumbai in financial services indicate
tracting economic activity. Investment this trend. Cities in the future will vie
Growth triggers and centres of an ur- location decisions are now strongly with each other for attracting talent
ban economy have been redefined and rooted in the assessment of compara- and investment, within the country as
reinvented by each generation. In the tive advantages offered by different well as across national boundaries.
Exhibit 1.2
Global Urban Competitiveness
DISCUSSION
Cities are emerging as centres of eco-
nomic traction, at times transcending
the national framework
Cities compete with each other for at-
tracting talent & investment
No Indian city appears in the Global
Top 100 - Mumbai ranks a poor 114,
and Delhi ranks 213
Top 10 cities with the fastest economic
growth are mainly from China; no In-
dian city makes the list
Source: World Bank; UN-Habitat Report on State of the World’s Cities, UNFPA; Ni Pengfei—Chinese Academy of Social Sciences
a
Gujarat International Finance Tec-City
2 A Report on Intelligent Urbanization
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17. 2 India has witnessed unbridled urban-
ization in the recent past. During the
This explosive growth of Indian cities
in the last decades of the 20th century
last fifty years, while the population has created a huge strain on the physi-
of India as a whole has grown two cal infrastructure of cities. Power short-
THE STATE OF and half times, that of urban India has ages, mismanagement of monsoon del-
INDIAN CITIES grown nearly five times over. The urban uges, collapse of law and order, traffic
population rose from 210 million in systems, pollution and congestion are
1992 (25 per cent of total population) a few of the innumerable instances
to approximately 400 million in 2008 that expose the fundamental issues in
(30 per cent of the total population).3 the delivery of services in urban India.
Overcrowding is endemic while the ur-
ban poor driven by unemployment and
This rapid urbanization has been the
low productivity suffer the outcomes of
marker of India’s economic progress,
inadequate housing and poor basic ser-
where its major urban centres make
vices provisioning. Paucity of afford-
substantial contributions to its GDP
able housing in cities has made India
(Exhibit 2.1). Although less than 1/3 of
home to the largest urban slum popula-
India’s people live in cities and towns,
tion in Asia. India has over 170 million
these areas generate over 2/3 of the
slum dwellers—this number surpasses
country’s GDP and account for 90 per
the populations of all but five countries
cent of government revenue.4 The ser-
in the world6. In fact, each major city
vices sector accounts for more than half faces its own set of challenges with re-
of India’s output, and growth of em- gards to electricity, transportation, wa-
ployment (main workers) in urban In- ter systems, housing, solid waste man-
dia during 1981–91 was recorded at 38 agement, infrastructure bottlenecks
per cent as against 16 per cent in rural and poor service delivery. Although
areas and 26.1 per cent in the country city-specific circumstances vary, over-
as a whole.5 all, critical infrastructure is technologi-
Exhibit 2.1
Impact of Urbanization on Growth
Source: Ministry of Urban Development (MOUD)
A Report on Intelligent Urbanization 3
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18. cally outdated, woefully inadequate, A comparison of quality of life indica-
increasingly fragile, and incapable of tors of Indian cities with global coun-
meeting even the current needs of all its terparts (Exhibit 2.2), highlights the
residents. In many cases the issue is not poor ‘liveability’ of urban India. This
simply one of poverty or the ability of
is a critical need for the Indian econ-
citizens to pay—it is as much a ques-
omy for growing at a rate of over 10
tion of urban agencies, institutions and
per cent in the next quinquennium, and
governments being unable to facilitate
access to these basic services for their for improving the quality of lives of its
citizenry. citizens.
Exhibit 2.2
Indian Cities do not Stack Up
Source: World Bank, UN Habitat, Booz & Company
4 A Report on Intelligent Urbanization
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19. 3 In the decade immediately following
India’s independence, economic policy
The 74th Constitutional Amend-
ment Act (CAA): The 74th CAA of
focused more on rural areas. It was 1992 recognized Urban Local Bodies
POLICY widely held that development of ru-
ral India was critical to the country’s
(ULBs) as the third tier of the gov-
ernment, and instituted a framework
INITIATIVES AND progress. Urban areas were treated as to significantly enhance their vi-
IMPACT sectors of residual investment (Exhibit ability as well as functional capacity.
3.1). Amongst other things, the 74th CAA
proposed the devolution of greater
However, over the last decade, urban functional responsibilities and finan-
development concerns have taken cen- cial powers to the local governments,
tre stage as India’s rise as a major glob- adequate representation of weaker
sections and women in ULBs, and
al economic force has revealed the true
regular and fair elections. This was
potential of its cities. The need for ur-
an important development since
ban reforms and policy level interven-
in many states local bodies had be-
tions in order to sustain India’s impres-
come ineffective due to failure to
sive economic growth rate has been felt
hold regular elections, prolonged
more acutely. As a consequence, several
supersessions as well as inadequate
initiatives have been taken by the Gov- devolution of powers and functions.
ernment of India. Consequently, the ability of ULBs to
function as vibrant democratic units
While many policy interventions have of self government had been severely
been able to provide impetus for urban hampered. Several state governments
development, the two major initiatives have now amended their Municipal
that have had the most impact are: Acts/Laws/Legislations to conform to
Exhibit 3.1
Timeline of Government Initiatives in Urbanization
Source: Government of India websites, Booz & Company
A Report on Intelligent Urbanization 5
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20. the Constitutional Provisions. How- for JNNURM funding, city admin-
ever, the economic viability of ULBs istrations must submit a three tiered
remains an issue and has significantly application with the following infor-
restricted the ability of the ULBs to mation:
fully discharge their responsibilities.
1. City Development Plan (CDP) de-
Jawaharlal Nehru National Ur- fining the vision for the city over
ban Renewal Mission (JNNURM): the next 20-25 years;
JNNURM is an INR 100,000 crore
(USD 26 billion) Government of In- 2. Detailed project report, enumer-
dia initiative launched in De cember ating the financial requirements;
2005. Administered by the Ministry
of Urban Development and Ministry 3. Timeline for implementation of
of Poverty Alleviation, the Mission the proposed initiatives.
is designed to support state and lo-
cal investment in urban develop- As of date, nearly 500 projects have
ment. The central government spend been approved and over INR 20,000
amounts to INR 50,000 crore (USD crore has been committed by the
11 billion) with matching contribu- Government8.
tion from cities/ states.7
JNNURM is a landmark in India’s
The overall objective of the Mission urbanization policy and has infused
is to ‘create economically produc- a sense of urgency amongst various
tive, efficient, equitable and respon- stakeholders to ensure timely results.
sive cities’. The aim is to encourage As a consequence of the JNNURM,
reform and fast track planned devel- the government has drafted various
opment of identified cities. The focus policies to address specific areas of
of JNNURM is on efficiency and in- urban development such as National
clusiveness in development of urban Urban Transport Policy (2006) and
infrastructure and service delivery the National Urban Sanitation Poli-
mechanisms, community participa- cy (2008).
tion and accountability of ULBs to-
wards citizens. The duration of the Though the steps taken by the govern-
mission is for 7 years and covers 63 ment are commendable, there are many
cities across the nation. To qualify challenges that still remain.
6 A Report on Intelligent Urbanization
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21. 4 Urbanization challenges in India
can be classified in two categories
Unprecedented scale
The scale of urbanization in India is un-
(Exhibit 4.1): precedented—it is estimated that nearly
140 million people will move to cities
URBANIZATION Structural challenges, driven by the by 2020 and 700 million by 2050 (Ex-
CHALLENGES IN nature of urbanization in India hibit 4.2). This is roughly 2.5 times the
current total population of USA.
INDIA Execution challenges, faced in imple-
menting initiatives to improve urban This scale of urbanization is expected
infrastructure to transform existing urban agglomera-
tions into mega-cities. Mumbai, Delhi
4.1 Structural challenges to urbaniza- and Calcutta are slated to emerge as the
tion in India three largest cities in the world. In this
Urbanization issues that India faces proliferation will lie, the origin of nu-
today have their genesis in three struc- merous urban communities. There were
tural challenges: 12 cities with population greater than 1
million in India in 1981. By 2001, that
Unprecedented scale number had grown to 35. According to
some projections, there may be 68 such
High density cities cities by 2020.9
Brownfield urbanization
Exhibit 4.1
Challenges of Indian Urbanization
Largest urban movement in the Mumbai and Kolkata are the ~ 60% of urban growth through
world, matched only by China world’s most densely populated natural population increase
>700M new urban residents by cities (~10X New York) Unplanned growth
2050 5 of the 20 most densely
populated cities in the world ~ 5-10 planned Greenfield
Multiple models of urbanization projects
are Indian
Limited transparency Municipal expenditure only 0.5%
Fragmented accountability of India’s GDP
Incongruent city divisions (e.g. Narrow revenue base
Bangalore has 88 wards for Inadequate capabilities
policing, 39 for electricity etc.)
‘Leakage’of resources
Source: Census Bureau; Goldman Sachs Research; United Nations Department of Economic and Social Affairs; City Mayors; UNFPA State of the World Population Report 2007; Indian
Statistical Institute; Aijaz, Rumi (2007) ‘Challenges for urban local governments in India’. Working Paper, 19. Asia Research Centre, London School of Economics and Political Science,
London, UK; Booz & Company
A Report on Intelligent Urbanization 7
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22. Exhibit 4.2
Unprecedented Scale
Source: Census Bureau; Goldman Sachs Research; United Nations Department of Economic and Social Affairs
Exhibit 4.3
Multiple Models of Urbanization
(2001)
Delhi is 93% urban
330 due to the state’s
65% unique composition
36
291 Centralized Model 60%
(as in South Korea) West Bengal
25
55%
244
17 50%
129
198 108 45%
10
85
40% Maharashtra
153
9 68
35%
115 Karnataka
6 50 30%
82 35 Gujarat
4 158 165 25% Jharkhand Andhra Pradesh
56 23 142
120 20% Kerala Tamil Nadu
12 3 94 Bihar
74 Punjab
41 55 15% Haryana
Rajasthan
10%
1981 1991 2001 2011 2021 2031 2041 2051 Uttar Pradesh Madhya Pradesh
Decentralized Model 5%
No. of cities >5M (as in Germany)
No. of cities >1M 0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
No. of cities>0.5M
Source: Census Bureau; Goldman Sachs Research; Booz & Company
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23. The challenge is compounded by the High density cities The higher density of population results
fact that multiple models of urbaniza- Not only will Indian cities be amongst in greater pressure on infrastructure.
tion (with respect to urban centraliza- the largest by 2050, they will also be On the other hand, limited flexibility
tion) have evolved simultaneously in among the most densely populated in land use, and lack of resources will
India and co-exist within its geogra- worldwide. The current population continue to hinder infrastructure devel-
phy. Some states such as West Bengal density of Mumbai is already 10 times opment and land use for community
are centred on a single large tier-1 city. that of New York (Exhibit 4.4). This facilities. This will impact the creation
Others such as Gujarat or Kerala have is likely to go up significantly as the of sustainable living environments.
a relatively large number of compara- population of Mumbai rises to over Policies formulated and solutions con-
tively small cities. This makes a ‘one 20 million by 2020. This situation is structed must acknowledge this high
size fits all’ solution infeasible (Exhibit further exacerbated by low per capita density–low per capita income scenario
4.3). incomes. in all its manifestations.
Predominantly brown-field urbaniza-
tion
In India, the most significant challenge
will be to revitalize our existing urban
centres, while strengthening capacity to
support the future growth.
Exhibit 4.4 Contrary to conventional belief, ur-
Population Density of Indian Cities - among the highest in the world banization in India is driven by natural
population growth as opposed to mi-
gration. Consequently, India will con-
tinue to grow its existing towns and
smaller cities in the future—cities with
histories, cultures, populations, proper-
ty rights, and deeply embedded politi-
cal interrelationships, all of which de-
mand cognizance and respect in policy
administration. A city cannot be wiped
clean and planned anew. The process
of revitalizing our existing cities must
be carried through without interrupt-
ing ongoing services or disrupting lives
of millions of people. This poses sig-
nificant implementation challenges on
ground and makes upfront consensus,
robust design and speedy execution
very important.
Our cities were not built for the in-
creases in populations that they are
experiencing or will experience in the
future; nor were they designed for this
rate of expansion.
Source: citymayors.com, 2007
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24. 4.2 Execution challenges to urbaniza- Exhibit 4.5
tion in India Governance Challenges
Efficiency in governance
Governance suffers from policy limita- Limited policy alignment
Lack of oversight with
Limited number respect to ULB portfolios in
for increasing private sector
tions and administrative problems (Ex- of ‘smart regulations’
participation
the case of policies/planning
at national/state levels
hibit 4.5).
Policy Limitations: Most initiatives
Existence of multiple
are focused on building new infra- Overburdened municipalities
Poor accountability agencies with minimum
with poor execution capabilities
structure—adding to scale, rather than coordination
sweating existing assets or more ef-
ficiently using available funds for sus- Source: Aijaz, Rumi (2007) ‘Challenges for urban local governments in India’. Working Paper, 19. Asia Research Centre,
tainable urban development. Regula- London School of Economics and Political Science, London, UK; Booz & Company
tions are thus not ‘smart’, and do not
incentivize use of technology/ IT for
increasing efficiency.
Municipal governance is assumed to be
a State Function by the Indian Consti-
tution; Entry 5 of the State List in the However, the list is merely advisory in and forward linkages associated with
Seventh Schedule of the Constitution nature. Whether or not states devolve their functions.
of India gives legislative power to the powers, and to what extent they do so,
State with regard to municipal laws, is entirely a matter of state choice. What- Additionally, multiple structures of
establishments, constitution, and pow- ever powers or functions are devolved, service delivery exist with criss-cross-
ers of local government. Except for will be subject to provisions in existing ing administrative jurisdictions. For
recognizing local self-government as an enactments. As a result, the powers of instance, a Janaagraha study10 high-
essential part of the system of govern- local bodies on all matters are subsidi- lighted that Bangalore’s service delivery
ment, the Constitution does not confer ary to those of the states. Consequently, structure is as follows:
independent status or powers to local ULBs are not empowered to function as
government bodies. independent arms of governance. Public works are carried out under
12 engineering divisions
The 74th Constitutional Amendment Administrative Problems: Municipali-
Act (CAA) of 1992 seeks to provide ties are overburdened, resulting in poor Garbage collection divides the city
more power and authority to ULBs. levels of service delivery. into 278 health wards
It is the first serious attempt to ensure
stabilization of democratic municipal The existence of a large number of de- Property taxes are collected through
government through constitutional partments, agencies and officers under- 30 Assistant Range Offices
provisions. It introduced the Twelfth taking similar, related or over-lapping
Schedule which lists the functions of functions, leads to conflict in opera- Electricity services are structured
ULBs, covering planning, regulation tion. These agencies operate in overlap- along 39 sub-divisions reporting to
and developmental aspects. ping jurisdictions and are often not in a 10 divisions
position to fully understand backward Water supply is managed through 5
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25. divisions, 17 sub-divisions and 74 Exhibit 4.6
service stations Property Tax Collection Efficiency
Collection Efficiency (2005–06, Select Indian Cities)
Bus service is monitored through 24
depots
Law and order is dispensed via 88
police stations, and traffic through
29 of these stations
Slum Development is coordinated
through 4 sub-divisions
Not one of these criss-crossing admin-
istrative jurisdictions is aligned to a
political unit. A political unit has an
inherent accountability associated with Source: ICRA
it. As a result, there is limited account-
ability in service delivery.
Resources Enhancement fore, the financial viability of municipal Resource constraints are not only finan-
Cities have narrow financial resource corporations is dependent on the trans- cial but also capability driven. Planning
bases leading to monetary constraints. fers from the State Governments. capabilities often do not match up to
requirements. Consequently, city devel-
Share of transfers from state govern- A city’s own revenues are mostly de- opment has mostly been short sighted
ments in the revenues of municipali- pendent on octroi and property taxes. and not holistic. Capacity to execute
ties was 31.7 per cent on an average Most urban districts have abolished has also traditionally been poor due to
(2001/02). Municipalities in several octroi; property tax collections suffer shortage of skilled personnel. Our in-
states are almost entirely transfer-de- from evasion and low levels of collec- terviews with Municipal Commission-
pendent for running local services. The tion efficiency (Exhibit 4.6). ers and Mayors clearly highlighted that
dependence was as high as 84 per cent the biggest limitation to project execu-
in case of Jammu & Kashmir, 83 per Consequently, Indian cities are unable tion is unavailability of skilled person-
cent in case of Rajasthan and 74 per to commit requisite financial resources nel. This is further exacerbated by the
cent in case of Uttar Pradesh. There- for development (Exhibit 4.7). use of archaic tools and processes.
Exhibit 4.7
National Municipal Government Expenditure: Global Comparison
Source: Goldman Sachs Research
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