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Urbanization and Urban Infrastructure Management – Indian Scenario

Conference Paper · November 2014

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 Urbanization and Urban Infrastructure Management – Indian
Scenario

Dr. Vanita Ahuja

Associate Professor and Program Director, School of Construction, RICS School of Built
Environment, Amity University, Noida, INDIA
vahuja@rics.org

Abstract
India is experiencing large scale urbanization. To facilitate this scale of urbanization and
to realize its potential towards development of the country, required urban infrastructure
needs to be developed and urban renewal projects need to be executed. In India, due to
administrative, political and other related issues, urban infrastructure projects specifically
the projects planned and executed by state level authorities lack project management
approach and are not successful. From 2005 – 2014, Government of India had initiated
and implemented a scheme of JNNURM (Jawaharlal Nehru Urban Renewal Mission)
under which holistic approach towards planning, adoption of project management
methodologies and statutory reforms to improve service levels had been specified. The
scheme was implemented in two Phases and had mixed review. A High Powered Expert
Committee setup by the Government of India has reviewed the efficacy of the scheme
and has further suggested reforms under new improved JNNURM scheme. This paper
discusses the above stated issues and highlights the requirement to adopt Project
Management principles and methodologies for planning and executing urban
infrastructure projects.

Key Words: Urbanization, Urban Infrastructure projects, India, Project Management

Introduction

Urbanization is primarily a result of migration from rural areas as urban areas provide
higher productive job opportunities as compared to agriculture. The process facilitates
full realization of economic potential of the country. To facilitate this, urban areas need to
be ready with physical infrastructure, jobs, and livelihoods. The McKinsey Report
(2010) on India’s urbanization prospects estimates that over the period 2010 – 2030,
urban India will create 70% of all new jobs in India and these urban jobs will be twice as
productive as equivalent jobs in the rural sector (HPEC, 2011). India’s urban population
is expected to increase from 377 million (31%) in 2011 to 600 million in 2031 leading to
40% urbanization. The number of cities with a population of 1 million and above is
projected to increase from fifty three to eighty seven over this period (Ahluwalia, 2014).

Social and urban infrastructure leads to overall development of the state economy.
Requirement is not only to have physical infrastructure, but also to have acceptable
quality of services which is an important component of stakeholder management. Indian

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urban areas are deficient in quality of services and need to be effectively managed to
sustain and be ready for sustaining the economic productivity. To ensure the contribution
of cities to economic growth, Ministry of Urban Development had set out service norms
in 2008 (HPEC, 2011).

Eight major urban infrastructure sectors are water supply, sewerage, solid waste
management, storm water drains, urban roads, urban transport, traffic support
infrastructure and street lighting. Apart from creating new physical infrastructure, focus
also needs to be on reforming governance for improvement in delivering services and
operations and maintenance of existing infrastructure.

In India, an urban area is defined as a statutory place with a Municipality, Corporation,

Cantonment Board, or Notified Town Area Committee, and all places satisfying the
following three criteria simultaneously (HPEC, 2011):
i. a minimum population of 5000
ii. at least 75 per cent of male working population engaged in non-agricultural
pursuits
iii. a population density of at least 400 per sq. km (1000 per sq. mile)

Urban agglomeration is defined as an urban spread constituting a city and its adjoining
urban outgrowths or two or more physically contiguous cities/towns together and any
adjoining urban outgrowth of such cities/towns. Currently the urban population of India
occupies only 3% of the total land area in the country (Ahluwalia, 2014). But, situation is
changing fast and urban landscape is expanding.

In India, cities are categorized as Class I cities and Class II or smaller towns with
population of less than 100,000 (HPEC, 2011). Larger cities have Municipal
Corporations with elected Councillors as members and smaller cities/towns have
Municipalities or Nagarpalikas. Municipal Corporations as well as Municipalities are
split into Wards with elected members, usually one for each Ward. Areas in transition
from rural to urban areas have Nagar Panchayats which also have elected bodies with a
Chairperson. In addition there are Census towns, Cantonment Boards/Industrial Notified
Areas/Estate Offices.

Urban Infrastructure projects fall under two categories.

 Projects planned and executed by Central Government organizations. For example
Metro Projects, Airports etc.
 Projects planned and executed by local Municipal Corporations and State Public
Works Departments (PWDs) For example road projects, water works etc.

It has been observed that projects falling under the first category are primarily
successfully executed. But, projects falling under second category lack in adoption of
Project Management methodologies and successful execution and are the area of study
for this paper. Individually these projects may be of lesser economic value, but
collectively these projects contribute to high national expenditure. When not executed

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successfully, these projects are a tremendous strain on the national exchequer. Also, these
projects affect the day to day lives of public and require high stakeholder management.

State of urbanization in India and its future growth

The urban population in India as measured in the census of 2011 was 31%. But, there is
also some unacknowledged urbanization which makes the share of urban population look
smaller than what it actually is. This unacknowledged urbanization is due to following
factors:
 Restructuring of electoral constituencies is not done at the required periodicity.
Last such exercise was conducted in 2008 and next is due in 2026. Thus, increase
of urban representation in legislatures would happen by 2030-31, though
urbanization is happening at a fast pace (Ahluwalia, 2014).
 There is differential funding structure for rural areas and differential and less
favourable urban tax regime. Due to this many gram panchaytas (village local
governments) resist/refuse to be converted to nagar panchayats or municipalities
even when they fulfil the criteria laid down in the census to graduate from a
village to a city (Ahluwalia, 2014).
 In the outskirts of urban agglomerations, real estate organizations try to delay the
conversion from rural to urban.

Due to above factors, though the number of areas defined by the census as ‘towns’
increased by over 2,000 from 1,362 in 2001 to 3,894 in 2011, the number of towns with
statutory urban local bodies increased by less than 250 over the same period. This means
that the census of 2011 added more than 2,000 ‘laavaris’ (unowned) urban areas to its list
of towns; laavaris because they do not have statutory Urban Local Bodies but otherwise
fulfill the census definition of urban areas (Ahluwalia, 2014). Thus, these areas lack
administrative structure to plan for the urban growth that would lead such areas to
become economies of agglomeration. Instead such areas experience haphazard growth
and have low levels of service delivery. Since many such areas are adjacent to existing
urban areas, they attract rural migration and requirement of adding urban infrastructure
and its management becomes more important.

During the last decade Government of India has proposed and implemented multiple
social welfare schemes that have contributed and would further contribute in providing
incentive to rural population to stay back in rural areas. Many such rural areas would
further qualify to be categorized as urban areas. As per Census of 2001, there were
18,760 villages with more than 5000 population each in 2001 (HPEC, 2011). Such areas
also need to have legitimate urban administration so that they do not get categorized as
‘laavaris’ urban areas, but experience planned urbanization and contribute to the
economy of the country.

A High Powered Expert Committee set up by the Government has made projections for
investment on urban infrastructure from the Twelfth Five Year Plan to the Fifteenth Five
Year Plan, i.e. 2012-31. Excluding cost of land, the investment for urban infrastructure

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over the 20-year period is estimated at Rs 39.2 lakh crore (USD 0.65 trillion) at 2009-10
prices (HPEC, 2011). Fig. 1 shows the breakup for different sectors. Urban roads are
assigned the highest share as the backlog for this sector is very large, ranging from 50 per
cent to 80 per cent across the cities of India. 50 per cent of total estimated investment is
towards operations and maintenance requirements for new and old assets (HPEC, 2011).

Traffic Support  Street Lighting,  Other Sectors, 

Infrastructure,  0.47% 7.91%
2.50%
Capacity 
Building, 
2.60%

Water Supply, 
Sewerage, Storm  Urban Roads, 
Water Drains,  44.12%
Solid Waste 
Management, 
20.50%

Urban 
Renewal and  Transport, 
Redevelopment  11.47%
including slums, 
10.44%

Fig. 1: Projections for Investment on Urban Infrastructure from 2012 - 31

Issues of urban infrastructure management

Urban Infrastructure effectiveness is defined by the satisfaction of the urban population,
which is further defined by the service levels in urban areas. Service is provided by the
administrative and political team managing the projects and service standards are defined
by the political environment and institutional framework in which our cities function. In
India, Urban Management Administrative structure has an issue of multiplicity of
organizations with institutional framework being politically weak and administratively
cumbersome. Different urban infrastructure components are managed by different ULBs
and comprehensive planning and management of urban infrastructure is lacking.

Urban local governments in India are among the weakest in the world both in terms of
capacity to raise resources and financial autonomy. ULBs’ tax bases are narrow, and
inflexible and lack buoyancy, and they have also not been able to levy user charges for
the services they deliver to cover Operations and Maintenance (O&M) and depreciation
costs (HPEC, 2011).

Considering the requirement to upgrade the existing urban infrastructure combined with a
structure for reforms in urban infrastructure management, Government of India proposed
and implemented a scheme ‘Jawaharlal Nehru National Urban Renewal Mission’
(JNNURM).

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JNNURM – Phase I and Phase II

JNNURM was launched in December 2005 for a period of seven years and comprised
four schemes. Aim of the mission was to encourage reforms and fast track planned
development of identified mission cities. Focus was on efficiency in urban infrastructure
and service delivery mechanisms, community participation, and accountability of ULBs/
Parastatal agencies towards citizens (JNNURMa, 2014). Vision of JNNURM was
centered around implementation of 74th Constitutional Amendment Act. The Act
recognizes ULBs as the third tier of urban government and as per Section 12 of the Act,
specific civic functions are assigned to ULBs. As per the Act, State Governments need to
look at ULBs as means to strengthen local governance by being empowered with power
and authority to function as institutions of self-governance. ULBs are to own the political
accountability for the roles assigned to them and share the technical, financial, and
administrative accountability with others to whom they may assign their techno-
economic roles (JNNURMb, 2014).

Two schemes for 65 mission cities were:

 the Scheme for Urban Infrastructure and Governance (UIG)
 the Scheme for Basic Services to the Urban Poor (BSUP).
Two schemes for non-mission cities were:
 the Urban Infrastructure Development Scheme for Small and Medium Towns
(UIDSSMT)
 the Integrated Housing and Slum Development Program (IHSDP)

Under JNNURM, Government of India entered into partnership with state governments
and ULBs. As a first step, the ULB had to prepare a perspective plan or a City
Development Plan (CDP), which was to be followed by a Detailed Project Report (DPR)
in line with the priorities laid out in the CDP. The state government and the ULB of a
Mission city were required to sign a memorandum of agreement (MoA) with the
Government of India, where both the state government and the ULB committed to a set
of reforms and agreed to share in the funding of the project. Share of funding for different
levels of cities was planned as shown in Table 1 (HPEC, 2011).

Table 1: Share of Funding for Different Levels of Cities

Funding Allocation
Categorisation of Cities Government State Urban Local
of India Government Body (ULB)
Population > 4 million 35% 15% 50%
Population 1 - 4 million 50% 20% 30%
Other cities 80% 10% 10%
Jammu and Kashmir and North 90% 10% -
Eastern States

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Reforms could be categorized as Mandatory and Optional reforms for State Governments
and ULBs. Suggested reforms were in line with 74th Constitutional Amendment Act.
Upto December, 2010, total approved project cost was Rs. 109,700 crore (USD 18
billion), out of which 26% funds had been released (HPEC, 2011). By the end of the
scheme, Rs. 66,000 crore (USD 11 billion) had been disbursed (The EuroIndia Letter,
2012). Largest share was for water supply and roads and transport projects. Out of 65
identified mission cities, in 3 cities no project was funded, primarily because they could
not conduct reforms (HPEC, 2011).

JNNURM scheme was extended for two more years as JNNURM Phase II. Phase I
projects were completed under Phase II and additional projects were started.

Review

JNNURM scheme has been reviewed by different government agencies. Some of the
points are:
 Only 60 percent of the funds had been spent and only 18 percent of projects taken
up under its sub-mission, Urban Infrastructure and Governance (UIG), and 40
percent of projects under the other sub-mission, Basic Services to Urban Poor
(BSUP), had been completed (The EuroIndia Letter, 2012).
 Some states of Central and Southern India had performed better.
 Progress in implementing reforms under the JNNURM had been slow, and it had
been difficult to ensure conditionality of overall reforms in a project based
financing approach for a variety of reasons. The mission had more generally
exposed the lack of capacity at local government level to prepare and implement
projects in urban infrastructure (HPEC, 2011).
 Mandatory City Development Plan (CDP) under JNNURM was expected to
incorporate some basic principles of land use and take an integrated view of
public transport and housing. But, the projects that were proposed and approved
were standalone projects and not part of a comprehensive plan (HPEC, 2011).
 There was ‘poor planning’ and near absence of people’s participation leading to
‘lack of ownership’ (The EuroIndia Letter, 2012).
 There was lack of clarity in the nature of the reforms and inadequate specification
of the processes involved. The onus for this lies with Ministries of Urban
Development and Housing and Urban Poverty Alleviation in clarifying the
content of reform and on most of the State governments for not taking serious
initiatives to implement and sustain the reforms (HPEC, 2011).
 State governments and ULBs committed to many ambitious back-loaded reform
measures and got approvals and funding for projects. As physical implementation
of the asset creation started, the reform commitments were not honored. In this
scenario, technically the next instalment of funding for an ongoing urban
infrastructure project should have been stopped. But, not releasing the next
instalment would mean letting an infrastructure project unfinished. In some
projects beneficiaries also contribute partially to the cost of the project. Thus,
even with reforms not implemented, the project funding was continued (HPEC,
2011).

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  There was limited success in promoting PPP in urban infrastructure projects. Such
contractual arrangement was largely in the form of outsourcing of services to the
private sector. Financing from private partners was not successful mainly because
ULBs had not been able to undertake reforms in a convincing manner (HPEC,
2011).
 There was ‘one-size-fits-all’ approach to reforms. Larger and smaller urban areas
have different issues, so reforms were to be handled differently (The EuroIndia
Letter, 2012).

High Powered Expert Committee stressed on the implementation of reforms that were
prescribed under JNNURM, and further suggested reforms for improving the
administrative system and service delivery. Some of the suggested reforms are shown in
Table 2 (HPEC, 2011).

Table 2: Suggested Reforms

Administrative Reforms
Autonomy in City Management
Empowered Mayors with effective devolution
One ministry for Urban Affairs and Housing
Reforms for Service Delivery
Corporatization of urban services
Coming together of different departments or
administrative and political nodes to deliver
Public private partnership

Convergence of institutional responsibilities Regulatory regime for urban services

Accountability and citizen participation

E-governance

To counter the issue of multiplicity of organization and provide a radical change, the
High Powered Expert Committee suggested institutional linkages that should be fostered
for better governance (Fig. 2) (HPEC, 2011).

Phase I was considered as a large pilot project. After review and some modifications,
Phase II was recommended for two more years.

Success Cases

The Mission had helped some ULBs to take up projects on a scale they had never
attempted earlier, and quite a few successful urban infrastructure projects have resulted
from such support. Some examples are given below (HPEC, 2011):
 Nagpur had launched a series of initiatives towards an integrated development of
its water sector including a continuous water supply project for 10 per cent of its
population. The plan to scale the project to city level was also approved under the
JNNURM.
 Navi Mumbai’s 100 per cent city-wide sanitation plan is being funded under the
JNNURM.
 The revamp of the solid waste management system in Rajkot was facilitated
through JNNURM funds, and it has transformed Rajkot into one of the cleanest
cities in the country.

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  India’s first full BRTS at Ahmedabad, which received many accolades both
nationally and internationally, was also funded through the JNNURM.

Fig. 2: Institutional Framework for Better Governance for Service Delivery

Source: Report on Urban Indian Infrastructure and Services. Final Report, The High
Powered Expert Committee (HPEC) for Estimating the Investment Requirements for
Urban Infrastructure Services, New Delhi.

Failure Case

Ranchi Municipal Corporation (RMC) had a mixed score card. For five years ending at
March 2013, it had a 150% revenue growth, but still poor execution of many multi –
crore JNNURM projects (The Telegraph, 2013).
 The JNNURM’s integrated drainage and sewerage project worth Rs 1,600 crore
(USD 0.26 billion), envisaged in 2006, got stuck in a series of hurdles, as there
was dispute over outsourcing the project to a Singapore-based firm. The matter
was sub-judice till 2012, many loopholes were found in the detailed project report
prepared by the Singapore firm, and at the end of it all, the first phase of
JNNURM had ended. The net result was the state could not collect the Centre’s

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 Rs 1,600 crore for the integrated drainage and sewerage project in a capital that
sorely needs basic sanitation.
 RMC managed to use only 50 per cent of Rs 200 crore meant for the JNNURM’s
drinking water pipelines laying project, being implemented by Hyderabad-based
IVRCL Ltd.
 Low-cost housing under JNNURM’s basic services for urban poor (BSUP) worth
Rs 200 crore was executed better, with the state collecting the central funds and
the RMC making fair progress.

Residents’ feedback was that civic body’s performance was affected by the volatile
situation of State Government.

Suggested new improved JNNURM (NIJNNURM)

High Powered Committee has suggested a New Improved JNNURM (NIJNNURM) for
the period of 20 years. Its focus is on capacity building at three levels of governance with
a strong but realistic and enforceable component of reform in governance.

The major differences between JNNURM and NIJNNURM are (HPEC, 2011):
 The JNNURM was largely directed at a selected few cities as is always the case
with a pilot. The NIJNNURM would be open to all.
 The JNNURM was a project-based Mission. The NIJNNURM would have a
program approach.
 The JNNURM linked a broad set of reforms to specific projects and was not able
to drive reforms through project lending. The NIJNNURM would give funding
linked to a set of reforms which would be differentiated across different types of
ULBs.
 The JNNURM had a separate funding window (UIDSSMT/IHSDP) for smaller
cities and towns. The NIJNNURM would differentiate between smaller cities and
towns, on the one hand, and larger cities and metros, on the other, by specifying
separate processes of capacity building, reform content and timelines as well.
 Recognising that ULBs needed to be made reform-ready, the NIJNNURM places
prime emphasis on capacity building.

Detailed guidelines for the scheme would need to be worked out by Ministries of Urban
Development, and Housing and Urban Poverty Alleviation, and other relevant
government agencies.

Conclusions

Study of JNNURM and urban infrastructure management scenario shows that the three
tiers of urban governance need to be empowered through administrative structure,
funding, revenue generation and capacity building for effective infrastructure creation
and management. Requirement is to have more decentralization, where local
governments are provided authority and finances to manage local projects. This would
bring more accountability into the system.

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Infrastructure management includes creation of new infrastructure and Operations and
Maintenance and redevelopment of existing infrastructure. Data shows that the second
component is a substantial investment. Both components of works require managing
projects with Project Management approach and with effective Stakeholder Management
or Community Participation at Planning as well as Implementation stage. For
redevelopment projects also Community Participation is very important as the existing
residents already have a set pattern for the usage of facilities and also the initial promise
to these residents needs to be honored.

Indian urban management system lacks substantially in providing quality services. This
issue can be dealt by defining an administrative structure for it. In 2008, Government of
India had established required service norms. But to implement those regulations, as a
capacity building endeavor, staff needs to be provided training not only for technical
aspects of Urban Governance, Project Management, Contract Management, Quality
Assurance, Stakeholder Management and other related issues, but also in Public Dealing.
Service levels would also improve if urban population has required representation in the
legislature through inclusion of ‘Laavaris’ urban areas into the group of urban structure
and restructuring of electoral constituencies at the required periodicity.

References

Ahluwalia, I.J. (2014). Transforming our cities: Postcards of change, HarperCollins

Publishers India, New Delhi.

HPEC. (2011). Report on Urban Indian Infrastructure and Services. Final Report, The
High Powered Expert Committee (HPEC) for Estimating the Investment Requirements
for Urban Infrastructure Services, New Delhi.

JNNURMa (2014). Jawaharlal Nehru National Urban Renewal Mission: Overview,

http://jnnurm.nic.in/wp-content/uploads/2011/01/UIGOverview.pdf. Accessed June 2014.

JNNURMb (2014). Implementation of the 74th Constitutional Amendment: State Level

Reform under JNNURM, http://jnnurm.nic.in/wp-
content/uploads/2011/01/Optional_Primer_Primer-CAA.pdf. Accessed June 2014.

McKinsey Global Institute (2010), India’s Urban Awakening: Building Inclusive Cities,
Sustaining Economic Growth, McKinsey and Company.

The EuroIndia Letter (2012). JNNURM is a great Success, http://www.the-euroindia-

centre.org/newsletter/vol26/vantage.htm. Accessed June 2014.

The Telegraph (2013). Few success stories, many failures ‘RMC put on firm footing’,
http://www.telegraphindia.com/1130313/jsp/jharkhand/story_16658932.jsp#.U5VG9k2K
BMs, Accessed June 2014.

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