Managing Urban India (V) (Need for rethinking about urban governance)

Dr. Devendra K. Kothari

Population and Development Analyst

Forum for Population Action

 

To boost economy as well as human development, Modi government must invest resources in urbanization where they are really needed. 

 

 “The Prime Minister Modi said revamping urban governance should be at the core of the vision of the Ministry of Urban Development while chairing a high-level meeting on urban development issues,” a statement released by PMO.

In spite of constitutional amendments to empower urban local bodies, India's cities continue to reel under poor basic services, poor planning and lack of funds. Most of these are the spinoff or by-product of the poor governance. How can we revamp the urban governance system? 

Answer is: It is time to think local. While there are multiple reasons for India’s urban woes, one of the underlying problems is the absence of powerful and politically accountable leadership in the city. Our cities have a weak and fragmented institutional architecture in which multiple agencies with different bosses pull the strings of city administration. Understandably, the most touted urban governance reform is that of having a directly elected Mayor/Chairman. Recent reports indicate that Prime Minister is keen on this reform and has asked the Urban Development Ministry to consider ways of introducing it. [1]

It is almost 25 years since the 74th constitutional amendment mandated setting up of municipalities as institutions of self-government. But the spirit underpinning the amendment has been ignored by states even as they ask for decentralization and more powers from the Centre. Now rethinking is urgently needed.  It is because projections indicate that urban population will increase by another 200 million in the next 15 years, change cannot be postponed.

Nandan Nilekini, co-founder of and former CEO of Infosys,  is absolutely right in making a case for empowering the mayors and chairpersons of cities to deliver services and for effective crisis management.“Indian cities have been passive and subordinate to the state governments. The bulk of city taxes are collected by the state and central governments and administration is dominated by state-run agencies. The power of city administrations has been deliberately hollowed out since independence, as state governments superseded city authority and co-opted its power”. [2]

In other words, states have been reluctant to cede powers of taxation and control over their cities. The possibility of competition from the grass roots has made state political parties wary of an 'hour glass' effect, of being squeezed in the middle between a strong Centre and powerful cities. And no state chief minister wants to let go of the money and patronage that comes from controlling urban land, argues Nilekini. 

Urban governance reforms must be based on the principle of accountability. It is time to narrow accountability to a single office such as an elected mayor, as successful cities across the world do. For responsive urban governance, we need a powerful political executive in the city with more autonomy, whether directly or indirectly elected. The mayor should be the executive head of a city, equipped with sufficient legal powers and financial resources to get things done. Congress leader Shashi Tharoor introduced a private member’s bill to get balkanised urban governance system to function as a coherent body with appropriate legislative backing. But this should be done by states without any prompting, as noted by the TOI editorial.[3]

For local bodies to be able to function better, funds, functions and functionaries have to be devolved to them, municipal cadres have to be restructured and strengthened and the role of city officials   needs to be redefined clarifying their accountability to the elected system. The immediate ingredients of a revamped urban governance system could be:[4]         

• Empowering the mayors/chairpersons, making them accountable to the people;
• Enabling the city bodies to raise more resources;
• Meaningful devolution;
• Strengthened capacities of local bodies so that they can perform better in line with the aspirations and requirements of today’s urban dwellers; and
• Evolving mechanisms whereby the citizen is in a position to actively and effectively participate in the urban governance process.

The foregoing discussion strongly argues that without local governments that answer directly to its civic citizens, it will be difficult to manage urban issues. India’s urban nightmare can be ended with legislative changes and capacity building. In this respect, vesting the executive powers of the Municipal Corporation and/municipality with the Mayor/Chairman would be a very positive move. Do we have the political will required to undertake this critical task?

Discussion and conclusion:

Prime Minister Modi has made a lucid and compelling case for why the government should focus and invest in urbanization while launching flagship program Smart Cities Mission in 2015. While launching 14 smart city projects in Pune in 2017, he said: “People in the economic field consider cities as a growth centre.... If anything has the potential to mitigate poverty it is our cities”. His argument should now be taken to its logical conclusion with a strategic move to empower the urban centres, as noted in this paper. 

In their recent paper, Massimiliano Calì and Carlow Menon, examined the extent to which the growth in urban areas reduced poverty in surrounding rural areas in India. [5]  Using a large sample of Indian districts, they find that urbanization has a substantial and systematic poverty-reducing effect in the rural areas.

The focus on urbanization, therefore, is particularly relevant, as it is the country with the largest number of poor especially in rural areas. There is an urgent need to increase the pace of migration from rural areas, since over 58 per cent of the rural households or around 50 percent of total labour force in India depends on agriculture as their principal means of livelihood. However, as per estimates by the Central Statistics Office (CSO), GOI, the share of agriculture and allied sectors (agriculture, livestock, forestry and fishery) was 15.3 per cent of the Gross Domestic Product (GDP) during 2015–16 at 2011–12 prices. It means per capita GDP or productivity of labour force engaged in agriculture is very low. Since non-agricultural sectors will drive most of India’s future growth, three is an urgent need to shift access labour force from agriculture to non-agriculture activities. As such, India has to invest heavily in manufacturing and service sectors, which encouraged farmers/rural people to move to more productive jobs. So far, India has encouraged rural people to stay home by subsidizing rural incomes through programs like:  NAREGA (National Rural Employment Guarantee Act), Food Security Bill, etc.

India and China are both urbanizing rapidly, but China has embraced and shaped the process, while India is still waking up to its urban realities and opportunities, as per a study by the McKinsey Global Institute. [6]  According to the findings, in 1950, India was a more urban nation than China (17 percent of the population lived in cities, compared with China’s 13 percent). But from 1950 to 2015, China urbanized far more rapidly than India, to an urbanization rate of 55.6 percent, compared with 32.7 percent in India; and, this pattern to continue, with China forecast to add 400 million to its urban population, which will account for 64 percent of the total population by 2025, and India to add 215 million to its cities, whose populations will account for 38 percent of the total in 2025.

McKinsey’s Richard Dobbs and Shirish Sankhe noted  that “India has underinvested in its cities; China has invested ahead of demand and given its cities the freedom to raise substantial investment resources by monetizing land assets and retaining a 25 percent share of value-added taxes. While India spends $17 per capita on capital investments in urban infrastructure annually, China spends $116. India has devolved little real power and accountability to its cities, but China’s major cities enjoys the same status as provinces and has powerful political appointees as mayors. While India’s urban-planning system has failed to address competing demands for space, China has a mature urban-planning regime (emphasizing the systematic development of run-down areas) consistent with long-range plans for land use, housing, and transportation”.  [7]

We hope that this paper will help the government in informed decision making and help formulate a stratified urban policy. It is expected to help policy makers in taking forward the newly launched Missions, namely, Pradhan Mantri Awas Yojana, Smart Cities Mission, Swatch Bharat Mission and Atal Mission for Rejuvenation and Urban Transformation in a bid towards building a vibrant and inclusive urban India. We hope that this contributes to a better understanding and appreciation of the vital importance of medium and small sized towns in the national economy, and helps to increase their role in making relevant local contributions to the solution of shared developmental challenges.

In short, to mitigate the strains that will develop as cities expand, and to maximize the potential economic opportunity that well-managed cities can offer, India urgently needs a fresh, proactive approach to addressing the challenges of urbanization India. So India must develop policies to expedite the process of urbanization

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[1] Mathew Idiculla. 2016. Should mayors be directly elected?  At¨

http://www.thehindu.com/opinion/columns/Should-mayors-be-directly-elected/article14583765.ece

[2] Nandan Nilekani. 2008. It's Time To Think Local athttp://timesofindia.indiatimes.com/edit-page/TOP-ARTICLE-Its-Time-To-Think-Local/articleshow/3829429.cms?

[3] Refer TOI editorial: Cut cities free: India’s urban nightmare can be ended with legislative changes and capacity building at: http://blogs.timesofindia.indiatimes.com/toi-editorials/cut-cities-free-indias-urban-nightmare-can-be-ended-with-legislative-changes-and-capacity-building/

[4] Refer article:  Rethinking Urban Governance by M. Ramachandran at: http://inclusion.skoch.in/story/67/rethinking-urban-governance-367.html

[5] Refer: Cali, Massimiliano; Menon, Carlo. 2013. Does Urbanization Affect Rural Poverty? Evidence from Indian Districts. Oxford University Press on behalf of the World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/21003 License: CC BY-NC-ND 3.0 IGO.

[6] For details, see: India's urban awakening: Building inclusive cities, sustaining economic growth, A Report - McKinsey Global Institute - 2010.

[7] Richard Dobbs and. Shirish Sankhe.  2010. Comparing urbanization in China and India, the McKinsey Global Institute. A version of this article appeared in the Financial Times on May 18, 2010. Also see at:

 http://www.mckinsey.com/global-themes/urbanization/comparing-urbanization-in-china-and-india.