Smart Cities and the Poor: Towards an Agenda for Inclusive Urbanization in India 9781032438870, 9781032589299, 9781003452171

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Smart Cities and the Poor

Developing countries worldwide have been embarking on ‘smart cities’ programmes using new technology solutions to improve public services. Faced with severe problems of digital divide, poverty, unemployment, inequality, and financial and social exclusion, these cities have to negotiate hard in order to reach their goals. This book examines urban governance, digital divide, poverty, unemployment, and financial and social exclusion and presents a theoretical perspective on inclusive cities, urbanization, migration, slums, and affordable housing. The book aims at formulating and implementing an agenda for inclusive, equitable, and sustainable urban development in tune with the UN-SDGs, the New Urban Agenda of Habitat III, and India’s new national urban missions. It probes into the scope of adopting inclusionary urban planning, zoning, and housing, financing inclusive city development, and poverty alleviation through municipal finance reforms using findings and lessons from detailed field studies of Indian cities. It also suggests an agenda for slum-free and poverty-free cities in an attempt to make these cities more people-focused, humane, and inclusionary. This book will be of interest to scholars and researchers of political science, policy studies, public administration, urban studies, urban planning and management, urban sociology, and geography, besides being of interest to policy researchers, community workers, grass roots researchers, policymakers, and sociologists. Alok Kumar Mishra is Professor of economics at the School of Economics, University of Hyderabad, an Institution of Eminence. He has been the director of the Land, Housing, Transport, and Urban Economics, HUDCO Chair, and several other programmes. He was awarded Baden-Württemberg Fellowship Award at South Asia Institute (SAI), Heidelberg University, Germany, in 2014, and Chancellor’s Award in 2016 for contributing to teaching and research at the University of Hyderabad. He has published more than 50 peer-reviewed research papers in both International and National journals of repute and authored four books. He has guided 17 MPhil scholars, 7 PhD, and 20 Master’s

dissertations to date. Dr. Mishra’s work experiences include the following: Research Officer, National Institute of Bank Management, Pune; Manager of Quant Finance, Financial Strategic Division, Shinsei Bank, Tokyo; Manager of Investment Research, Evalueserve.com Private Limited; and Assistant Vice President, Bank of New York, Mellon. He holds an MA degree in Economics, an MPhil in Monetary Economics, and a PhD in Financial Economics from the University of Hyderabad, India. His current research areas include developmental finance, financial stability, financial markets, financial inclusion, land, housing, urban and transport economics, macroeconomic policies, and applied econometrics.

Smart Cities and the Poor Towards an Agenda for Inclusive Urbanization in India

Alok Kumar Mishra

First published 2024 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2024 Alok Kumar Mishra The right of Alok Kumar Mishra to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Disclaimer: The views and opinions expressed in this book are those of the author and do not necessarily reflect the views and opinions of Routledge. Authors are responsible for all contents in their articles including accuracy of the facts, statements, and citations. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-032-43887-0 (hbk) ISBN: 978-1-032-58929-9 (pbk) ISBN: 978-1-003-45217-1 (ebk) DOI: 10.4324/9781003452171 Typeset in Times New Roman by SPi Technologies India Pvt Ltd (Straive)

To Mrs. Dinamani Mishra and Mr. Madhusudan Mishra, my parents and Mrs. Manorama Vyas and Professor Ravindra Nath Vyas, my mother-in-law and father-in-law Who value education

Contents

List of Figures viii List of Boxes ix List of Tables x Foreword xii Preface xiv List of Abbreviations xvii 1 India’s Urban Missions: Addressing the Challenges of Inclusive Urbanization 1 2 Economic Perspective on Inclusive Urbanization: Cities, Rural–Urban Migration, Slums, and Urban Poverty

42

3 Challenges of Affordable Housing: Reform Strategy to Make Urban Planning Inclusive

71

4 Financing Urban Poverty Alleviation through Inclusive City Reforms 109 5 Urban Participatory Governance: Including the Urban Poor in Public Service Delivery

135

6 Policy Issues in Inclusive Urbanization: An Empirical Study of Select Cities in Telangana State

166

7 An Agenda for Slum-Free and Poverty-Free Cities in India

207

Bibliography 233 Index 265

Figures

2.1 Over-migration in Harris–Todaro Model 63 2.2 A Model of Migration and Urbanization with Agglomeration Economies 65 2.3 A Case of Social Under-migration with Agglomeration Economies 66 5.1 Schematic Diagram: Citizens’ Report Cards 148 5.2 URC as a Change Agent, SAATH, Ahmedabad 149

Boxes



1.1 1.2 3.1 3.2 7.1

The Key Principles of the New Urban Agenda The New Urban Agenda: Defining Features Issues in the Development of Affordable Housing Factors Leading to the Emergence of Affordable Housing Developing an Agenda for Slum-Free, Poverty-Free Cities

7 8 87 88 226

Tables

1.1 World Urbanization Trends and Prospects: 1950–2050 10 1.2 India: Total, Rural, and Urban Population (in Million) and Level of Urbanization (Percentage) 1901–2011 10 1.3 India: Number of Metropolitan Cities and their Share in Urban Population 1901–2011 11 1.4 Service Level Benchmarks at a Glance 16 1.5 Distribution of Urban Housing Shortage in India 2012 23 1.6 State of Civic Services in India 2011 23 1.7 Access to Amenities: Distribution of Households (% of Households) 2011 24 1.8 Total Number of Registered Motor Vehicles in India (in Millions) 1951–2015 25 1.9 India: Rural and Urban Poverty Estimates 2009–2010 and 2011–2012 26 1.10 Formal and Informal Employment in Unorganized and Organized Sectors (1999–2000, 2004–2005 and 2009–2010) 27 1.11 India: Urban Initiatives – 1992–2014 29 1.12 India: Urban Initiatives – Post-2014 Period 30 2.1 Agglomeration Economies: An Empirical Assessment 48 2.2 Growth and Concentration of Employment in Rural and Urban India 50 2.3 State-wise Poverty Ratios in India 2009–2010: Rangarajan Committee 52 2.4 State of Health of the Urban Poor in India 2005–2006 54 2.5 State-wise details on Women’s Literacy Rate, Men Literacy Rate, and Infant Mortality Rate 2015 56 2.6 State-wise details on Underweight Children, Stunted Children, and Anaemic Children (%) 2015 57 3.1 Delhi Master Plan 2021: Planning Norms for Informal Shops/Units 101 4.1 Trends in Municipal Revenues in India by Source: 2007–2008 to 2017–2018 113

Tables  xi 4.2 Urban Expenditure Estimates for Core Sectors (Rs crore at 2009–2010 prices): 2012–2031 114 4.3 Process of Implementing Internal Earmarking of Funds Reform 117 4.4 Portfolio of Municipal Taxes: International Practice 118 4.5 Land-based Financing Instruments: International Practice 120 5.1 JNNURM Prescribed Reform Components 147 6.1 Bhongir, Siddipet, Warangal, and Hyderabad: Census 2011 168 6.2 Details of Sampling Information 171 6.3 Personal Information of Respondents 172 6.4 Details of Slum 174 6.5 Details of the Services in Slums 175 6.6 Other Services of Slum 178 6.7 Impact Assessment of the Government Programme 179 6.8 Programmes Undertaken during Last Five Years/One Year 180 6.9 Chi-Square Test between Income Group and Amenities 182 6.10 Chi-Square Test between Income Group and Type of House and Location of Slum 183 6.11 Chi-Square Test between Income Group and Services 185 6.12 Chi-Square Test between Income Group and Services 186 6.13 Chi-Square Test between Income Group and Services 188 6.14 Chi-Square Test between Land Tenure and Services 189 6.15 Chi-Square Test between Land Tenure and Services 190 6.16 Chi-Square Test between Slum Type and Services 191 6.17 Chi-Square Test between Land Tenure and Distance from Working Place 192 6.18 Chi-Square Test between Slum Type and Services 193 6.19 Chi-Square Test between Slum Type and Services 194 6.20 Summary Result of Robust OLS 196 6.21 Summary of Binary Logistic Regression for Higher-Income Group 198 6.22 Summary of Binary Logistic Regression for Middle-Income Group 199 6.23 Summary of Binary Logistic Regression for Lower-Income Group 201

Foreword

Smart cities offer opportunities for efficient public service delivery, digital inclusion, inclusive development, and participatory governance. The Government of India has launched the Smart Cities Mission to promote sustainable and inclusive urban development. The Mission is based on the premise that well-governed, economically efficient, socially inclusive, environmentally sustainable, financially viable, and disaster-resilient cities will drive the country to prosperity. Agglomeration and network externalities in these cities would present cost-effective ways to accelerate growth, generate resources and reduce poverty. However, Indian cities are under-planned, under-funded, undermanged, and over-regulated. They have neglected core infrastructure, especially public transport for long. They have not exploited the synergy between transport, land use, density, development, value creation, inclusion and financing strategies. The result has been the growth of haphazard settlements, sprawl, slums and poverty with multiple dimensions. Urban poverty issues are likely to assume significant proportions as much of urbanization is yet to occur. India is only 33 per cent urban. Given the experiences of developed nations, urban poverty issues need to receive significant attention from policymakers and planners in India to avoid the phenomenon of “urbanization of poverty”. In the above background, Smart Cities and the Poor: Towards an Agenda for Inclusive Urbanisation India is a timely effort. The book, comprising seven chapters, is founded on a key paradigm in urban economics that cities are not merely places; they are formed, altered, built, rebuilt, and transformed by people who collocate to benefit from agglomeration externalities. A “people-centric” approach to cities as against a “place-centric” approach is suggested to guide urban planning, policy, and governance reforms. I am delighted that the book draws from urban economics, new economic geography, and local public finance to address the vital issues of exclusionary urbanization in India. The book attempts to cover the broader aspects of inclusionary urban development, including a theoretical perspective to analyse the issues of urbanization, migration, slums and poverty with a holistic approach. It dwells on how affordable housing and basic public services to the poor are adversely impacted by the outdated “master planning” model, borrowed from the United Kingdom’s Town and Country Planning Act of 1947. The author makes a case

Foreword  xiii for inclusionary urban planning, zoning and housing practices in India, increasingly being adopted globally. He also advocates financing inclusive city development and poverty alleviation programmes through municipal finance reforms. The slum dwellers and the urban poor must have legitimate access to municipal budgets. Further, inclusive and participatory urban governance is considered a critical requirement for cities to become people-focused, humane, disaster-resilient and inclusionary. The book presents findings and lessons from field study of four cities of  different size groups in Telangana – Hyderabad, Warangal, Siddipet and Bhongir to draw lessons for inclusive city strategy/action plan and make suggestions for formulating and implementing Agenda for Slum-free and Poverty-free cities. The study calls for a “think globally, act locally” approach with focus on development/redevelopment/renewal of slums taking the local context into account. The book contributes to the literature on UN-SDG Goal No 11 and also the impacts of Covid-19 on Urban Slums in India. We (me and Alok) started a first-of-kind programme in the country: Land, Housing, Transport and Urban Economics in the School of Economics, University of Hyderabad in 2015. Since then, we have taught nine batches of MA students in Land Economics, Transport Economics, and Urban Economics and Policy. We have guided six PhD scholars and eight MPhil students, apart from contributing to national urban policy research under HUDCO Chair, ICSSR and Institution of Eminence programmes. I am happy that Alok has written this book to contribute substantially to the literature of inclusive urbanisation and development. The book will be a valuable addition to the existing body of knowledge on urban policy issues in India. It is primarily intended for masters students in urban economics, urban planning, geography, sociology, regional science, land economics, transport economics, and the like. It will also guide policymakers and administrators at the urban local body, state and central government levels in designing strategies and programmes to undertake urban sector reform agenda, including slum-free and poverty-free cities. Dr. Prasanna K. Mohanty Former Chief Secretary to the Government of Andhra Pradesh, Former Director, Central Board of RBI and Chairman of RBI Southern Local Board, Honorary Professor, Land, Housing, Transport and Urban Economics, University of Hyderabad

Preface

Planned urban development will be a vehicle for India’s transformation into a developed nation. Economically efficient, socially inclusive, environmentally sustainable, and financially viable cities will drive the country’s progress to prosperity. Agglomeration, networking, and knowledge externalities in cities will present cost-effective ways to accelerate economic growth and reduce poverty. India needs to invest in cities to speed up the structural and spatial transformation processes. The country must harness the opportunities unleashed by urbanization. Further, COVID-19 has reinforced the need for a concerted focus on comprehensive policies to promote slum-free and poverty-free cities as part of India’s urban reform agenda. COVID-19 has vividly exposed the vulnerabilities of the urban poor, especially slum dwellers, due to utterly overcrowded shelters, shared services, and precarious employment conditions. They were exposed to the heavy burden of out-of-pocket expenditure on health due to the pandemic. Prior co-morbid conditions, deficient nutrition, and exposure to environmental pollution, congestion, particulate matters, and communicable diseases made the urban poor most vulnerable to the pandemic. The Government of India has recently launched the Smart Cites Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Pradhan Mantri Awas Yojana: Housing for All. These schemes aim at catalyzing urban transformation. They intend to assist cities in discharging their role as engines of inclusive growth and spatio-structural transformation. They are instruments to attain the United Nations’ Sustainable Development Goals (UN-SDGs), to which India is fully committed. The United Nations has adopted 17 Sustainable Development Goals (SDGs) with 169 targets, including SDG 11 aimed at making “cities inclusive, safe, resilient, and sustainable”. SDG 11, in conjunction with the New Urban Agenda adopted by UN-Habitat III, has set goals and targets for inclusive and sustainable urbanization globally. This book is driven by the motivation to contribute to the effective implementation of UN-SDGs, New Urban Agenda of Habitat III, and India’s national urban missions, aimed at ushering in inclusive and sustainable urban development. It keeps in view the historic Constitution 74th Amendment Act 1992, which includes slum development, poverty alleviation, and delivery of

Preface  xv basic services to the poor as parts of the legitimate functions of municipalities under the Twelfth Schedule of the Constitution. The study is based on the realization that cities are not merely places. They are formed, altered, built, rebuilt, and transformed by people, collocating in cities to benefit in many ways, creating what the great urbanist Jane Jacobs referred to as “organized complexities of cities”. The study is focused on the challenges of India’s new urban mission to promote sustainable and inclusive urban development. It identifies economic perspective on inclusive urbanization, inclusionary spatial planning and development, challenges of affordable housing, financing urban poverty alleviation through inclusive city reforms, urban participatory governance, policy issues in inclusive urbanization, and an agenda for slum-free and poverty-free cities as among the key issues of inclusionary urbanization in India. This book draws lessons from both theory and practice. The book is meant to assist researchers and officials of urban local bodies, planning authorities, urban development entities, and state governments in India to analyze contemporary urban issues. It is also meant for policymakers at the state and central levels who can refer it to design policies and reform agenda. Our objective is not to present conclusions based on a limited analysis of data gathered from a few cities. We focus on known theories and successful practices implemented in India and internationally to draw lessons for addressing the issues of urban slums, urban poverty, and multiple vulnerabilities of the urban poor. I have cited the relevant references. If by any chance, any reference is missing, the responsibility is completely mine, and I would include the same, if pointed out. This book would not have been possible without the guidance and constructive suggestions of Dr. Prasanna Kumar Mohanty, Chair Professor of Land, Housing, Transport and Urban Economics at the School of Economics, University of Hyderabad, and Director of the Central Board of Reserve Bank of India and National Housing Bank, India. Dr. Mohanty teaches, along with me, Urban Economics and Policy, Land Economics and Transport Economics to post-graduate students and guides researchers. We thank the students of our three unique courses offered by the University and the MPhil and PhD scholars working with us on key national urban planning, finance, and inclusive urban development issues. I especially thank all my students, namely Dr. Subba Lakshmi Tirukoti, Dr. Bhanu Pratap Singh, Dr. Namrata Singh Panwar, Dr. Saloni Bhutani, Dr. Shibani Mishra, Prerna Panda, Abhishek Malhotra, Aswani Kumar Mallick, Pratik Kumar Singh, Anwesha Panigrahi, Niharika Bhagavatula, Oisikha Chakraborty, and Deepak Kumar for their hard work and dedication towards bringing this book to its current form in terms of content editing. I greatly acknowledge their timely support. I also sincerely thank Ravi Rohan Krishna, Potel Vinay Yadav, Sai Gowthami Dubagunta, and Kiran Bingi for their earnest effort in collecting and compiling the primary data by visiting the slums of Bhongir, Siddipet, Warangal, and Hyderabad in the state of Telangana.

xvi Preface I also place on record my gratitude to Mr. Madhusudan Mishra (my father), Mrs. Dinamani Mishra (my mother), Mr. Radhashyam Mohapatra (my Mausaji), Mrs. Bishnu Priya Mohapatra (my mausi), Prof. Ravindra Nath Vyas (my father-in-law), former dean of School of Social Sciences, Mohanlal Sukhadia University, Udaipur, Rajasthan, Mrs. Manorama Vyas (my motherin-law), Dr. Iti Vyas (my wife), Ayati (my daughter), and Aayan (my son) for their unconditional love, affection, continuous support, guidance, and confidence on me. I sincerely thank the Indian Council of Social Science Research (ICSSR), New Delhi, for funding support. The support of the HUDCO Chair programme, ICSSR, and the Institute of Eminence, UoH, has strengthened the “Land, Housing, Transport and Urban Economics Programme” at the School of Economics, the first of its kind in the country. It has enabled several scholars to pursue research on emerging issues of India’s urban transformation. Dr. Alok Kumar Mishra

Abbreviations

AMRUT IT TOD MoUD SLBs PMAY ULB FSI FAR TDR LIG EWS SDGs JNNURM UIG BSUP UIDSSMT IHSDP NUHHP MDGs URIF RAY NULM HRIDAY PMAY NEG TPS IZ IH TDR VAMBAY

Atal Mission for Rejuvenation and Urban Transformation Informational Technology Transit Oriented Development Ministry of Urban Development Service-Level Benchmarks Prime Minister’s Awas Yojana Urban Local Body Floor Space Index Floor Area Ratio Transferable Development Right Low Income Group Economically Weaker Sections Sustainable Development Goals Jawaharlal Nehru National Urban Renewal Mission Urban Infrastructure and Governance Basic Services to the Urban Poor Urban Infrastructure Development Scheme for Small and Medium Towns Integrated Housing and Slum Development Programme National Urban Housing and Habitat Policy Millennium Development Goals Urban Refund Incentive Fund Rajiv Awas Yojana National Urban Livelihoods Mission Heritage City Development and Augmentation Yojana Prime Minister’s Awas Yojana New Economic Geography Town Planning Scheme Inclusionary Zoning Inclusionary Housing Transferable Development Rights Valmiki Ambedkar Awas Yojana

xviii Abbreviations UDPFI GTPUDA OP SRS SRA CSP CPWD URIF LVT LVIT LGT VLT RPGT CEPAC TIF PPP PGA ICT PUA CAP CBOs NGOs CPL DPC MPC CRCs PAC URCs BOP RWAs MTAs CDS IDP CPFs NHPF TAC SANAC RPBC CRC COPB ISHUP BPL SCs

 rban and Regional Development Plans Formulation an U Implementation Gujarat Town Planning and Urban Development Act Original Plots Slum Rehabilitation Scheme Slum Rehabilitation Authority Community Service Personnel Central Public Works Department Urban Reform Incentive Fund Land Value Tax Land Value Increment Tax Land Gains Tax Vacant Land Tax Real Property Gains Tax Certificate for Additional Construction Potential Tax Increment Financing Public–Private Partnerships Participatory Governance Arrangements Information and Communication Technology Participatory Urban Appraisal Community Action Planning Community Based Organizations Non-Governmental Organizations Community Participation Law District Planning Committee Metropolitan Planning Committee Citizens’ Report Cards Public Affairs Centre Urban Resource Centres Bottom of the Pyramid Residence Welfare Associations Markets and Trader Associations City Development Strategy Integrated Development Plan Community Police Forums National Housing Policy Forum Treatment Action Campaign South African National AIDS Council Regional Participatory Budget Coordinators Coordinating body for Community Relations Council of Participatory Budgeting Interest Subsidy Scheme for Housing the Urban Poor Below Poverty Line Scheduled Castes

Abbreviations  xix STs OBC MMTS SHGs OLS MEPMA NUHM SJSRY VET CDP GDP

Scheduled Tribes Other Backward Class Multi-Modal Transport System Self-Help Groups Ordinary Least Square Mission for Eradication of Poverty in Municipal Areas National Urban Health Mission Swarna Jayanti Shahari Rozgar Yojana Vocational Education and Training City Development Plan Gross Domestic Product

1 India’s Urban Missions Addressing the Challenges of Inclusive Urbanization

1.1 COVID-19 and Cities Cities worldwide are the focal points for the constellation of firms, households, and institutions. In the words of celebrated Harvard economist Edward Glaeser, cities facilitate ‘collaborative brilliance‘ (Glaeser 2011). They lead to learning, innovation, and growth. Population concentration in cities is a distinguishing feature of the developing, urbanizing world. Cities attract the poor, including rural-­to-­urban migrants. These migrants come to urban areas to benefit from external economies, for formal and informal sector job opportunities, and to raise income levels. These people become integral partners in the wealth creation process of the nation as they help cities to contribute to growth and prosperity. Thus, dominant theoretical constructs in development economics, such as the Harris–Todaro model, are myopic and not helpful for realistic policymaking in developing countries. They present a negative view of rural–urban migration and urbanization. They also undermine the role of public policies in augmenting the benefits of agglomeration and networking externalities in cities while addressing negative consequences. Policies must be formulated based on a holistic approach under which migration and urbanization are seen as positive phenomena that drive a country’s fundamental spatial and structural transformation processes. Inclusive urban planning and strategy are necessary to make urban economic growth inclusionary, humane, and sustainable. While Indian cities are not poor in themselves, they fail to include the poor in city building due to a ‘rich city-­poor city governance’ syndrome – eloquently revealed by the recent COVID-­19 pandemic. Ironically, these cities are the future of the nation. They are the hopes of millions in rural and urban areas trying to escape poverty and exclusion. By the end of 2019, cities across the globe faced an unprecedented pandemic – COVID-­19. This crisis’s worst effects were observed in large urban areas. Globalization and the transportation revolution made travel more accessible and quicker. As a result, the disease spread worldwide in a short time. People travel between cities, so domestic contagions quickly spread epidemics that later became pandemics. Long, Olsen, and Christensen (2020) observed that affluent travellers first carried the coronavirus and affected wealthy city DOI: 10.4324/9781003452171-1

2  India’s Urban Missions neighbourhoods before spreading the disease to lower-­ income groups (LIGs). This made cities a platform for the pandemic, being open economies with high density and connectivity to regional, national, and global economies. They contain multiple networks which are not bounded by geography. This makes them vulnerable to threats that arise even outside their limits. While the literature has cited high population density and interconnectivity as primary reasons for the speedy transmission of COVID-­19 to cities, empirical evidence suggests no causal nexus between density-­networking variables and death rate due to the pandemic. Ironically, most studies ignore the role of governments in preventing and mitigating disasters that disproportionately impact the poor. They hardly refer to long-­term policy failure to address the health, nutrition, and livelihood issues of the ‘below-­poverty line’ population. When compared cross-­sectionally or over time, though cities were on the frontline of pandemics, the contagions affected their diverse populations unequally. Historically, cities all over the world have witnessed outbreaks of diseases ranging from the Black Death of the 14th century to the influenza pandemic of the 1580s, from the Asiatic cholera of 1830s, the London cholera of 1854, the ‘Spanish Flu‘ of 1918, and the smallpox outbreak of 1972 to the most recent occurrences in the 21st century such as SARS 1, swine flu (2009 to 2010), Ebola (2014 to 2016), and Zika (2015 to 2016) (Huremović 2019). Cities that have endured pandemics for ages recovered quickly and emerged as resilient entities and catalysts for innovation. Cities like Philadelphia, New York, Pittsburgh, Chicago, and Mumbai were the early victims of COVID-­19. Even after losing many lives, these cities, yet again, triumphed. Most cities could handle disasters of varying proportions due to their powerful economic forces, such as agglomeration externalities, scale, density, and networking and robust government policies to manage public health and disease. As Alfred Marshal observed, forces that help cities grow and prosper are face-­to-­face contact among creative people, sharing of information, knowledge transfer, trust, social capital, and skilled labour (Martínez and Short 2021). According to the World Health Organization (WHO), by 26 October 2022 COVID-­19 had taken the lives of over 6.25 million people. This disease required people to distance themselves socially, avoid enclosed spaces, and limit their contact with other citizens. Therefore, the governments of various countries resorted to nationwide lockdowns. People were stopped from gathering at public spaces like parks, stadia, restaurants, bars, gyms, multiplexes, etc. Many were asked to work from home. Students were not allowed to go to schools and colleges. The disruptions in social gatherings, restricted movements, curfews, and shutdowns significantly impacted the cosmopolitan cities. For instance, in a developing country like India, most intra-­state studies find that an overwhelming number of cases were reported in the large cities of urbanized states like Maharashtra, Tamil Nadu, and Gujarat (Praharaj and Vaidya 2020). Cities of developed countries like New York, Houston, and Seattle were disrupted economically due to the virus (Brinkley 2020). The World Bank estimated that

India’s Urban Missions  3 COVID-­19 could potentially push an additional 75–95 million people into extreme poverty by 2022 compared to the pre-­pandemic level. The trends and prospects of urbanization in countries suggest that almost the world’s population growth by 2050 will be in cities, encouraging land use conversion from rural to urban uses and increasing global connectivity. The UN forecasts that by 2050, 6.8 billion of the total population will live in urban areas – more than the rural population. The concentration of population in cities will aid the spread of pandemics, which is closely related to ecological and socio-­economic factors. COVID-­19 has led to the widening of the gap between haves and have-­nots in cities. This deep-­rooted inequality in society intensified the degree of the pandemic impact on the vulnerable sections. The lack of healthcare facilities, sanitation, clean drinking water, and affordable housing is apparent in low-­income neighbourhoods of cities, especially slum areas. Moreover, the nationwide lockdown measures to curb the contagion’s spread have adversely affected the livelihoods of millions of migrant workers in cities. Alongside lockdowns, the lack of provision for food, medicine, shelter, isolation centres, and transportation facilities forced the migrants to travel back to their rural homes. Unemployment, layoffs, and price rise due to panic buying by the rich added to the miseries of the urban poor, including migrants. The long marginalization of communities escalated their misery to unthinkable proportions. The core areas of urban settlements tend to be densely populated. Such denser locations have geographical and locational advantages that nurture markets. City density occurs because productive activities require physical proximity and interconnectivity to reap economies of learning, sharing, and matching (Duranton and Puga 2004, Mohanty 2014, 2016, 2019). Cities are highly connected, which makes public transport, schools, markets, and recreational facilities accessible to inhabitants. Urban economists view that densities have the potential to lead to better usage of scarce resources as they get distributed to a large group in a short period. They lead to external economies of scale. Urban planners have often explained how denser cities lead to lower carbon footprints and lower per capita emissions of greenhouse gases. A thicker area will induce people to use fewer private vehicles and more public transportation. In denser localities, people also prefer walking, contributing significantly to lower pollution. Additionally, clustering permits agglomeration and knowledge externalities (Desai 2020). Many scholars have linked denser cities to higher economic productivity (Hamidi and Zandiatashbar et al. 2019). They find that compact urban development facilitates innovation, knowledge spillover, and economic productivity because of face-­to-­face contact and collaboration among people. An empirical study conducted in the United States and France showed that higher city density could increase productivity by 3 to 4 percent. Therefore, it can be said that density not only encourages productivity but is also responsible for enhancing matching between firms and workers, learning from knowledge accumulation,

4  India’s Urban Missions and sharing of public goods. However, higher net density can positively and negatively impact growth and economic sustainability. Greater density means high vulnerability during pandemic outbreaks. Some studies have shown that denser cities might be life-­threatening due to biological disasters like COVID-­19. Various scholars consider dense areas as the feeding grounds for the virus. Many believe disease and poverty stem from crowded and unhygienic conditions in denser localities. Also, density makes social distancing difficult because of the compactness and overcrowding of footpaths/sidewalks, buildings, and public spaces. At the same time, there is literature that is against the idea of blaming density for the diffusion of the contagion. Studies point out that the view is erroneous and misleading. For instance, a study finds no association between density and the rate of COVID-­19 transmission. This study took a sample of 36 countries and found that dense cities like Tokyo, Seoul, and Hong Kong had effectively managed and controlled the outbreak. The countries could combine social distancing, compulsory wearing of masks, early isolation with swift public health checks, timely diagnosis, and mandatory quarantine (Adlakha and Sallis 2020). Empirical studies suggest that despite high density, the risk of virus diffusion per 1,000 population was primarily controlled by most cities, including Mumbai in India, by addressing governance, healthcare administration, and advocacy issues. Many researchers agree that the concentration of people in cities does not necessarily lead to the spreading infections or death due to disease. Government policies and past actions regarding urbanization, human capital development, poverty alleviation, and promotion of public health and medical care, especially for the poor, are critical, apart from civil society action to promote self-­quarantine and preventive measures mattered significantly. The urban poor faced a disproportionate burden of ‘Out-­of-­Pocket Expenditure’ due to COVID-­19. Many city governments focused on the poor, given their commitment to UN Sustainable Development Goals (SDGs) and the New Urban Agenda adopted by countries globally. 1.2 Cities and Sustainable Development Cities are at the core of the global agenda for sustainable development. The United Nations (UN) has adopted 17 SDGs 2030 with 169 targets. These prominently include SDG 11, which aims to make ‘cities inclusive, safe, resilient, and sustainable‘. SDG 11, in conjunction with the New Urban Agenda adopted by UN Habitat III, has set goals and targets for inclusive and sustainable urbanization globally. The global targets for sustainable and inclusive urban development are as follows: • By 2030, ensure access for all to adequate, safe, and affordable housing and essential services and upgrade slums. • By 2030, provide access to safe, affordable, accessible, and sustainable transport systems for all, improving road safety, notably by expanding public

India’s Urban Missions  5

• • •

• • • •

transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities, and older (elderly) persons. By 2030, enhance inclusive and sustainable urbanization and capacity for participatory, integrated, and sustainable human settlement planning and management in all countries. Strengthen efforts to protect and safeguard the world’s cultural and natural heritage. By 2030, it will significantly reduce the number of deaths and the number of people affected, and substantially decrease the direct economic losses relative to the global gross domestic product (GDP) caused by disasters, including water-­related disasters, focusing on protecting the poor and people in vulnerable situations. By 2030, reduce cities’ adverse per capita environmental impact by paying special attention to air quality and municipal and other waste management. By 2030, provide universal access to safe, inclusive, and accessible green and public spaces, particularly for women and children, elderly persons, and persons with disabilities. Support positive economic, social, and environmental links between urban, peri-­urban, and rural areas by strengthening national and regional development planning. By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans toward inclusion, resource efficiency, mitigation and adaptation to climate change, resilience to disasters, and development and implementation, in line with the Sendai Framework for Disaster Risk Reduction 2015–2030, holistic disaster risk management at all levels.

SDG 11 is a critical SDG that has ramifications for many other SDGs. The SDG casts a significant responsibility on national, provincial, and local governments to think globally and act locally, with due understanding of how cities function and must be enabled to share the proceeds of growth with the poor and marginalized who constitute their majority. India must invest in cities to make them not only economically efficient, environmentally sustainable, socially equitable, and financially viable but also pandemic proof. 1.3 The New Urban Agenda At the Habitat III cities summit in Quito, Ecuador, in October 2016, member nations of the UN endorsed the New Urban Agenda, which includes fundamental principles for shaping the urban destiny of nations. It sets new global standards for inclusive and sustainable urban development and presents directions for rethinking how we plan, finance, manage, and govern our cities. The New Urban Agenda is inextricably linked with the 2030 Agenda for Sustainable Development, is expressed in the SDGs 2030, and builds on the unattained Millennium Development Goals (MDGs) and the Habitat Agenda of

6  India’s Urban Missions 1996 It strives to reaffirm the international commitment to sustainable urbanization, which is more important than ever given the growing urbanization of populations, economic activity, social relationships, environmental repercussions, and public health hazards. While the New Urban Agenda is the first to address climate change, Habitat III (2015) builds heavily on the promises and commitments of Habitat I (1976) and Habitat II (1996). Some of these recurring focal points include commitment to the universal right to water enshrined in Habitat I and the description of the ‘green’ and ‘brown’ perspectives of urbanization, environment, and development in the Habitat II agenda. The New Urban Agenda of Habitat III provides the stakeholders with a chance to examine and understand why the previous commitments and pledges under Habitats I and II were only partially fulfilled and then use this information to take prompt action. Agendas may fail to deliver success for a host of reasons. They may be overly comprehensive, contain too many objectives that conflict with one another or fail to match commitments with efficient implementation pathways. While the current edition of the New Urban Agenda is comprehensive, it cannot be denied that if a plan tries to cover too much ground, it risks turning into a list rather than a viable roadmap for facilitating transformative change and empowering individuals to hold governments responsible. Nevertheless, Habitat III should be an opportunity to draw lessons to create a just and sustainable urban future. The New Urban Agenda’s basic tenets offer normative guidelines for transforming cities while advancing the UN-­SDGs. These guidelines were developed to direct development programmes at the national and local levels in light of the paradigm shifts endorsed by the 2030 Agenda. They are influenced by a number of large-­ scale international accords and declarations rather than standing alone as independent principles (Schreiber et al. 2016). The agenda and its fundamental principles are crucial to understanding the issues pertaining to the direction of the urban transformation, its degree and pace, and, more importantly, the way in which it bridges the gap between what is and what ought to be. The New Urban Agenda is the first step for operationalizing sustainable development in an integrated and coordinated way at global, regional, national, sub-­national, and local levels. The five fundamental principles and the defining features of the New Urban Agenda are given in Boxes 1.1 and 1.2, respectively. This book is driven by the motivation to contribute to implementing UN-­SDGs and the New Urban Agenda, focusing on the poor and considering the lessons from the COVID-­19 pandemic. It is based on the understanding that cities are not just physical locations. People shape, change, build, rebuild, and transform cities as they collaborate in urban hubs for various benefits, resulting in what Jane Jacobs called ‘organised complexities of cities’. The critique presented by Urban Economics, strengthened by New Economic Geography, pits the ‘people-­ centric’ approach to cities against the ‘place-­ centric’ approach. This study adopts the urban economic perspective to address critical issues of exclusion in Urban India. It is organized into seven chapters.

India’s Urban Missions  7 Chapter 2 deals with the theoretical perspectives on inclusive cities that address the issues of urbanization, migration, slums, and poverty holistically. Chapter 3 deals with affordable housing for the poor, adversely impacted by the inappropriate ‘master planning’ model we borrowed from the United Kingdom. It suggests adopting those inclusionary urban planning, zoning, and housing

Box 1.1 The Key Principles of the New Urban Agenda The New Urban Agenda is based on five guiding principles stated as follows: • • • • •

Ensuring that the new urbanization model includes mechanisms and procedures that protect and promote human rights and the rule of law. Ensuring equitable urban development and inclusive growth. Empowering civil society, expanding democratic participation and reinforcing collaboration. Promoting environmental sustainability. Promoting innovations that facilitate learning and the sharing of knowledge.

In addition to the guiding principles, the vision of the New Urban Agenda can be broadened and deepened to induce transformative change by considering other elements as follows: • Promote a new urbanization model that is universal and adaptable to diverse national circumstances and that is based on the key urbanization challenges and opportunities shared by all countries. • Promote the integrated implementation of a new urbanization model to address the environmental, social, and economic objectives of sustainability, which have many interlinkages, as well as the concerns of various tiers of government. • Promote smart, greener cities with good use of technology, which involves establishing critical connections between science, the environment, economic growth, urban planning, and governance. • Promote a principle of subsidiarity that entails a process of rearrangement of state institutions, involving transfers of responsibilities and resources to the lowest reasonable level. • Promote a global data revolution for effective implementation and monitoring of the New Urban Agenda at the local, national, and international levels (Schreiber et al. 2016). Source: World Cities Report 2016.

8  India’s Urban Missions Box 1.2 The New Urban Agenda: Defining Features The New Urban Agenda: • Is perceived as universally applicable. • Is flexible, i.e., acknowledging differences among regions, countries, and cities, demonstrating how those differences can be addressed by a similar set of objectives and strategies. • Conveys a sense of urgency and, at the same time, proposes medium-­ term structural changes. • Links normative objectives to concrete commitments and actions that can act as positive change catalysts. • Engages governments and public opinion, together with civil society and non-­government organizations, for the sake of a broad-­based, shared agenda with global advocacy. • Passes the common-­sense test and uses globally understood images and narratives. • Combines the objectives of building prosperity for everyone while focusing on the neediest. In this sense, the Agenda must combine poverty-­fighting, productivity, equity, and environmental sustainability and stop well short of suggesting that there can be trade-­offs between them. • Is a global monitoring mechanism adapted to national and local conditions and provides a general framework for periodic assessments of the various dimensions of urbanization and their impacts. • Is linked to Goal 11 and other SDG indicators and targets, including an urban component. Source: World Cities Report 2016.

practices that other countries increasingly embrace. Chapter 4 discusses the issues of financing inclusive city development and poverty alleviation that allow the marginalized sections of urban areas, including the slum dwellers and the poor, to gain legitimate access to the city’s prosperity and finances. India’s historic 74th Constitution Amendment Act (1992) includes slum development, poverty alleviation, and delivery of essential services to the poor as part of the legitimate functions of municipalities. Chapter 5 dwells on inclusive and participatory urban governance, a requirement for cities to become people-­focused and humane. Chapter 6 provides the details and findings from case studies of the four cities in Telangana State – Hyderabad, Warangal, Siddipet, and Bhongir. These studies were carried out to gather first-­hand knowledge of the

India’s Urban Missions  9 numerous facets of urban poverty, particularly in slum regions, and the effects of government programmes on the living situations of slum and poor urban residents. Chapter 7 combines the findings from the research. The remainder of this chapter is organized as follows: Section 1.4 presents India’s urbanization scenario to set the national and urban contexts. Section 1.5 discusses India’s current urban missions and lessons from Jawaharlal Nehru Urban Renewal Mission, India’s first major national initiative for inclusive urban development. It highlights the need to adopt a holistic approach towards urbanization, migration, slums, poverty, health, and livelihoods by taking them as a ‘whole’ rather than considering them in a disjointed fashion. Section 1.6 is focused on key issues of inclusionary and sustainable urbanization in India in light of the UN-­SDGs, the New Urban Agenda and the country’s urbanization imperatives. Section 1.7 covers strategies to address the issue of inclusive urbanization in India, referring to research findings from a field study in Telangana State. We keep in view the Smart Cities Mission, which is expected to present ‘smart’ models for wider replication in the country. We believe that ‘smart’ cities must first build the basic systems of inclusive planning, financing, and governance, including pandemic/disaster management. 1.4 India’s Urban Trends and Challenges Urbanization globally has gained momentum since the 1950s. The world urban population increased from 29.6 percent in 1950 to 39.3 percent in 1980, 46.7 percent in 2000, and 55.3 percent in 2018, per the World Urbanization Prospects 2018 Report. The population in the urban areas increased from 750.9 million in 1950 to 4.21 billion in 2018. The urban population is further expected to increase to 68.4 percent by 2050, corresponding to an increase in urban population to the tune of 6.67 billion. This increase in urban population can be attributed to an overall increase in population and a rise in the proportion of people living in cities. Between 2018 and 2050, the world’s urban population is predicted to rise by 35 percent, with only three countries – India, China, and Nigeria – accounting for the majority of this growth (see Table 1.1). Urban areas are referred to as ‘statutory towns’ and ‘census towns’ in the Census of India. The definition of a statutory town includes places with a municipality, corporation, cantonment board, notified town area committee, etc. Census towns are localities that simultaneously meet the following three requirements: (i) Have a minimum population of 5,000; (ii) have at least 75 percent of working males engaged in non-­agricultural professions; and (iii) have a density of population of at least 400 people per square kilometre. India’s urban population increased from 26 million in 1901 to 62 million in 1951, 286 million in 2001, and 377 million in 2011, including residents of both statutory and census towns. The population living in urban areas rose from 10.8 percent in 1901 to 17.5 percent in 1951, 28.5 percent in 2001, and 31.5 percent in 2011. The trends and patterns of urbanization in India from 1901 to 2011 are shown

10  India’s Urban Missions in Table 1.2. Table 1.3 depicts the trends in metropolitanization. Population concentration in metropolitan cities, including megacities, is a characteristic feature of Indian urbanization, as in the case of several developing countries. These cities and their suburban peripheries are the drivers of innovation and growth. Disasters and pandemics, including COVID-­19, have not led to an exodus from these cities. The migrants who left cities due to lockdowns following the pandemic are back in their city jobs. Between 1991 and 2011, India’s urban population surged 13 times, while the country’s cities and towns doubled. This is a reflection of India’s concentrated pattern of urbanization, suggesting the existence of agglomeration economies Table 1.1  World Urbanization Trends and Prospects: 1950–2050 Population (in Crores) World Total Urban Rural Urbanization (%) World High-­income countries Middle-­income countries Low-­income countries India

1950

1990

2018

2050

253.6 75.9 178.5

533.09 229.02 304.07

763.3 421.9 341.3

977.1 667.9 309.2

29.6 58.5

43.0 74.4

55.3 81.5

68.4 88.4

19.9

36.7

52.6

68.3

9.3

22.8

32.2

50.2

17.0

25.5

34.0

52.8

Source: United Nations: World Urbanization Prospects 2018 Revision.

Table 1.2  India: Total, Rural, and Urban Population (in Million) and Level of Urbanization (Percentage) 1901–2011 Year

Total Population

Rural Population

Percentage No. Cities/ Rural Towns

Urban Population

Percentage Urban

1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

238.4 252.1 251.3 279.0 318.7 361.1 439.2 548.2 683.3 846.3 1028.7 1210.7

212.5 226.2 223.2 245.5 274.5 298.6 360.3 439.0 523.9 628.7 742.5 833.5

89.2 89.7 88.8 88.0 86.1 82.7 82.0 80.1 76.7 74.3 72.2 68.8

25.9 25.9 28.1 33.5 44.2 62.4 78.9 109.1 159.5 217.6 286.1 377.1

10.8 10.3 11.2 12.0 13.9 17.3 18.0 19.9 23.3 25.7 27.8 31.2

Source: Census of India data for different years.

1,916 1,908 2,048 2,220 2,427 3,060 2,700 3,126 4,029 4,689 5,161 7,935

India’s Urban Missions  11 Table 1.3  India: Number of Metropolitan Cities and their Share in Urban Population 1901–2011 Census Year

Number

Population

Population per City

Percentage of Urban Population

1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

1 2 2 2 2 5 7 9 12 23 35 53

1.51 2.76 3.13 3.41 5.31 11.75 18.10 27.83 42.12 70.66 108.29 160.70

1.51 1.38 1.56 1.70 2.65 2.35 2.58 3.09 3.51 3.07 3.09 3.03

5.84 10.65 11.14 10.18 12.23 18.81 22.93 25.51 26.41 32.54 37.85 42.61

Source: Census of India for different years.

in more dense metropolitan centres concurrently with the occurrence of increasing returns to scale. India had 7,935 urban agglomerations (UAs)/towns in 2011 compared to 5,161 in 2001. Between 2001 and 2011, the number of statutory towns increased from 3,799 to 4,041, while the number of census towns rose dramatically from 1,362 to 3,894. Around 30 percent of the increase in urban population during the past ten years can be attributed to census towns. These patterns imply that significant urbanization is taking place outside municipalities’ legal boundaries. The census towns are located in rural areas, which are growing haphazardly due to a lack of spatial planning capacity. Without planned urban and regional development initiatives, such as connectivity infrastructure, these settlements will develop further to end up as slums. The main factors driving urban growth in India have been a natural increase and reclassification (population of new towns – population of declassified towns + increase in urban population owing to absorption of villages to cities and towns). Net migration only accounted for roughly 20 percent of India’s urban population growth from 1961–1971, 1971–1981, 1981–1991, 1991–2001, and 2001–2011. According to Census 2011 data, net migration contributed to 21 percent of urban population growth between 2001 and 2011, and reclassification accounted for 36 percent, and natural increase – 44 percent (Census 2011, Bhagat 2015). Cities and towns in India have struggled to provide rural– urban commuters and migrants with adequate work possibilities. Urban production is capital-­intensive, and the informal economy, which employs most of the urban poor, has been grossly neglected. Furthermore, when it comes to addressing the expanding requirements of cities, urban policymakers frequently see migration as a problem rather than a solution.

12  India’s Urban Missions Whatever the opinion on migration, it will likely become more significant as India advances towards a higher growth trajectory. Reclassification of rural areas to towns and annexation of rural areas to adjoining urban jurisdictions are also expected to play a vital role in the increase in urban population. Cities need to plan and invest in infrastructure to embrace these phenomena spatially. Providing land, housing, workplaces, infrastructure, and civic services, especially to the vast numbers of poor in cities and towns, existing and added, is a daunting task for policymakers and planners. In particular, the affordable housing, basic civic service, public health, medical care, and employment needs of the urban poor, including slum dwellers, numbering more than a quarter of the urban residents, pose significant challenges. The issues are of pivotal importance as cities are the engines of economic growth, potential providers of employment opportunities to millions in formal and informal sectors and generators of public finance for socio-­ economic development, including poverty reduction. The number at the bottom of the urban pyramid is so large that even a slight improvement in their productivity due to public policy interventions can make a big difference to India’s GDP. India would face the dual problems of urban and rural development for decades. The rural population of India, estimated at 860 million in 2014, is predicted to go down only by a small figure, reaching 810 million in 2050 (United Nations 2015). Productivity of agriculture, unemployment in rural areas, shortage of affordable housing, infrastructure, basic services, and employment opportunities in cities will be key issues in India for many decades. Ironically, the solution to the problems of rural development and poverty reduction requires the cities to mobilize resources. All governmental tiers’ tax bases originate in cities. Urban economic research – theoretical and empirical – intensely argues that cities form and grow to gain from the external economies of agglomeration and networking. According to studies by Henderson (1974), Fujita (1989), Fujita and Thisse (2002), Duranton and Puga (2004), Rosenthal and Strange (2004), Brueckner (2011), Cheshire, Nathan, and Overman (2014), and Duranton, Henderson, and Strange (2015), the cities facilitate the benefits of learning, matching, and sharing. These economies are usually found to be stronger in developing countries where the concentration of population in cities occurs to address the paucity of physical capital and knowledge resources, much needed for growth in the knowledge economy (Williamson 1965). Urban areas in India contributed 62–63 percent of GDP in 2007. This contribution is projected to rise to 75 percent by 2030 (Smart Cities Mission 2015). Cities will create 70 percent of all new jobs in India over the next two decades. A staggering 80–85 percent of India’s tax revenues will originate from cities. However, India would need to spend Rs 9.74 million crores on affordable housing and infrastructure over 20 years to meet the demands of urban development (McKinsey 2010). Cities will not be able to effectively discharge their fundamental role as drivers of structural transformation and inclusive growth

India’s Urban Missions  13 unless they are firmly in a position to meet the ‘backlog’, ‘current’, and ‘growth’ needs of urbanization, with special attention to the poor and weaker sections of society. Inclusive spatial planning, land management, affordable housing, public health, and infrastructure are among the contemporary challenges of cities in India. These are particularly crucial for the success of the initiatives of the Government of India in the urban sector: (i) Smart Cities Mission, (ii) Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and (iii) Pradhan Mantri Awas Yojana: Housing for All by 2022. These schemes aim at catalysing urban transformation in the country. They are instruments to attain the United Nations Sustainable Development Goals (UN-­SDGs), to which India is fully committed. 1.5 India’s Urban Missions India has embarked on major urban missions: Smart City Mission, AMRUT, and Housing for All. They emphasize that all cities and towns provide the following: adequate water supply; assured electricity; sanitation, including sewerage, drainage, and solid waste management; efficient urban mobility and public transport; affordable housing, especially for the poor; healthcare and education; information technology connectivity and digitalization; sustainable environment; safety and security of citizens, particularly women, children, and the elderly; and good governance. The National Urban Livelihoods Mission and Skill India focus on addressing the employment and employability concerns of the urban residents, especially the poor – for wage and self-­ employment both. The mandates and features of key national programmes are presented below. 1.5.1 Smart Cities Mission

This Mission, applicable to 100 cities selected through a competition, recognizes the cities as the engines of economic growth and their capacity to contribute to 75 percent of India’s GDP by 2030 with increasing urbanization. This, however, requires comprehensive physical, institutional, social, and economic development and the provision of essential public services needed by the increasing number of firms and households in cities and towns. In this context, the Smart Cities Mission intends to apply ‘smart’ solutions to promote cities that attract creative people and provide their citizens with core infrastructure facilities, a clean environment, and a decent quality of life, thereby setting a virtuous growth cycle and development in motion. With its focus on sustainable and inclusive development, the mission’s idea is to replicate the models of compact areas or other pan-­city projects that might be the guiding light for other aspiring and up-­and-­coming cities. The core infrastructure elements in a Smart City, as envisioned by the Mission, would include the following: (i) Adequate water supply, (ii) assured electricity, (iii) sanitation, including sewerage, drainage, and solid waste

14  India’s Urban Missions management, (iv) efficient urban mobility and public transport, (v) affordable housing, especially for the poor, (vi) healthcare and education, (vii) robust informational technology (IT) connectivity and digitalization, (viii) sustainable environment, (ix) safety and security of citizens, particularly women, children, and the elderly, and (x) good governance, including electronic (e)-governance and mobile (m)-governance with a focus on civic participation and participatory democracy. By facilitating local area development and utilizing technology, mainly information and communication technology (ICT), as well as management tools and solutions that produce ‘smart’ outcomes, the Smart Cities Mission seeks to promote economic growth and enhance people’s quality of life. Area-­ based development (retrofitting and redevelopment) to transform the existing localities, including slums, into better-­planned places, thereby improving the livability of the whole city, and the development of new areas (Greenfields) around cities to accommodate the expanding population in urban areas are also a part of the Mission. Thanks to smart solutions, cities can employ big data, technology, and information to enhance public services and infrastructure. Comprehensive development would raise earnings for all, especially the underprivileged and the poor, strengthen employment possibilities, and improve urban quality of life, resulting in inclusive cities. The following are the key features of development in Smart Cities as projected by this Mission: • Promotion of mixed use of the land in area-­based projects – by planning for the ‘unplanned areas’ to consider various complementary activities and land use in a given region to maximize the use of available space; to accommodate all these changes, the state governments must also allow more flexibility in land usage and the creation of by-­laws and regulations. • Advancement of housing and inclusiveness – by expanding housing opportunities and ensuring affordability for all, inclusive development is to be ensured. • Creation of walkable localities – by reducing congestion, air pollution, and resource depletion while boosting the local economy, promoting interactions, and ensuring security. • Preservation and development of open spaces – like parks, playgrounds, and recreational spaces for enhancing the quality of life of citizens and reducing the urban heat effects in the region by generally promoting ecological balance. • Promotion of a variety of transport options – by improving transit-­oriented development (TOD), public transport, and last-­ mile para-­ transport connectivity. • Improvement of governance into a citizen-­friendly and cost-­effective one – by increasing reliance on online services to promote accountability and transparency, including using mobile devices to lower the cost of public facilities and provide services without requiring a visit to the municipal offices; creating e-­groups to listen to people and gather feedback; and

India’s Urban Missions  15 employing online monitoring of programs and projects with the help of a cyber tour of the worksite. • Development of the city’s distinct character – based on its primary economic activities, such as tourism, regional cuisine, healthcare, education, handicraft, culture, sports products, furniture, hosiery, textile, dairy, and so forth. • Application of ‘Smart’ solutions to improve the infrastructure and other public services in area-­based and pan-­city development. 1.5.2 AMRUT

The key objectives of AMRUT, applicable to 500 cities, are to (i) ensure that each household has assured access to a tap connection, with drinking water supply along with a sewage connection; (ii) raising the amenity value of cities by the creation of more and more green and open spaces; and (iii) reducing pollution by encouraging the use of public transport and non-­motorized transport like walking and cycling by the citizens by creating facilities for the same. Apart from these three, the mission has capacity building as a key component. These objectives and their outcomes, which are essential for a better and dignified life, are valuable to the citizens – especially women, and the indicators of and benchmark standards for the same have been prescribed by the Ministry of Urban Development (MoUD) in Service Level Benchmarks (SLBs) – see Table 1.4. However, under the scheme, the pursuit of better and improved outcomes is not stopped at providing universal coverage/access to water taps and sewerage connections. After meeting the standard of universal coverage, AMRUT cities and states are obliged to aim for other benchmarks in a step-­ by-­step approach. AMRUT mandates 11 reforms to be implemented by the states and the 500 AMRUT cities within four years from its launch. These include promoting e-­Governance, constituting and professionalizing municipal cadres, augmenting double-­entry accounting, improving urban planning and City Development Plans, ensuring devolution of funds and functions to urban local bodies (ULBs), reviewing building by-­laws, augmenting municipal resource mobilization, improving levy and collection of taxes, user charges, and undertaking energy and water audits. 1.5.3 Housing for All

The Prime Minister’s Awas Yojana – PMAY – also called the ‘Housing for All’ Mission in the urban areas – was scheduled for over seven years, from 2015 to 2022. To offer homes to all eligible families identified under the scheme by 2022, the scheme gives central assistance to the implementing agencies through the governments of the states and the union territories (UTs). A family is eligible for this programme if none of its members is the owner of a pucca house anywhere in India. At their discretion, states/UTs may choose a cut-­off date by which the

16  India’s Urban Missions Table 1.4  Service Level Benchmarks at a Glance S. No

Indicator

1. Water Supply Services 1.1 Coverage of water supply connections 1.2 Per capita supply of water 1.3 Extent of metering of water connections 1.4 Extent of non-­revenue water (NRW) 1.5 Continuity of water supply 1.6 Quality of water supplied 1.7 Efficiency in the redressal of customer complaints 1.8 Cost recovery in water supply services 1.9 Efficiency in the collection of water supply-­related charges 2. Sewage Management (Sewerage and Sanitation) 2.1 Coverage of toilets 2.2 Coverage of sewage network services 2.3 Collection efficiency of the sewage network 2.4 Adequacy of sewage treatment capacity 2.5 Quality of sewage treatment 2.6 Extent of reuse and recycling of sewage 2.7 Efficiency in the redressal of customer complaints 2.8 Extent of cost recovery in sewage management 2.9 Efficiency in the collection of sewage charges 3. Solid Waste Management 3.1 Household level coverage of solid waste management services 3.2 Efficiency of collection of municipal solid waste 3.3 Extent of segregation of municipal solid waste 3.4 Extent of municipal solid waste recovered 3.5 Extent of scientific disposal of municipal solid waste 3.6 Efficiency in the redressal of customer complaints 3.7 Extent of cost recovery in SWM services 3.8 Efficiency in the collection of SWM charges 4. Storm Water Drainage 4.1 Coverage of storm water drainage network 4.2 Incidence of water logging/flooding

Benchmark 100% 135 lpcd 100% 20% 24 hours 100% 80% 100% 90% 100% 100% 100% 100% 100% 20% 80% 100% 90% 100% 100% 100% 80% 100% 80% 100% 90% 100% 0

Source: Ministry of Housing & Urban Development, GoI: Handbook on Service Level Benchmarks.

beneficiary must be a resident of the urban area to be eligible to receive benefits from the programme. According to its requirements, the Mission promotes the construction of homes with a basic civic infrastructure and which have up to 30 square metres of carpet area. The house size and other amenities to be provided are subject to state/UT discretion. It is also necessary for affordable housing and slum redevelopment projects to collaborate on fundamental civic infrastructure utilities like water, sewage, roads, power, etc. The ULB guarantees that any dwelling constructed with beneficiary-­led construction or credit-­linked interest subsidies has access to these fundamental public services.

India’s Urban Missions  17 The Housing for All Mission implementation occurs through four verticals while providing options to beneficiaries, ULBs, and state governments: • ‘In situ’ slum redevelopment: This emphasizes the role of land as a resource. It aims to provide the selected slum households with housing facilities by utilizing the hitherto unused potential of land under slum settlements, thereby allowing the slum dwellers to move out of their existing payments and into a formal urban settlement. Private participation is important, with the partners being selected through a bidding procedure. Extra Floor Space Index (FSI)/Floor Area Ratio (FAR)/Transferable Development Rights (TDR) can be given, if required, by the states/UTs, to make the projects financially viable. Central assistance of Rs 1 lakh per slum household is given in all sanctioned projects, along with the flexibility to the state/UT governments to redirect the funds to other slum development projects. However, the central grant amount cannot be used to redevelop slums on private land. All the slums redeveloped under this vertical are required to be denotified. • Affordable housing through credit-­linked subsidy: This component allows for the provision of an interest subvention subsidy facility for the LIGs and economically Mer sections (EWS) who are in the process of acquiring a new house or developing the existing one through incremental housing. • Affordable housing in partnership: It emphasizes the role of partnership between the public and private sector units, along with the parastatal agencies, in the provision of housing facilities at affordable prices to the urban poor. • Subsidy for beneficiary-­led individual house construction: It focuses on the provision of individual housing facilities to the individuals of the EWS category. Under this, the state/UT governments are required to formulate and implement a separate project for the identified beneficiaries. Isolated and splintered beneficiaries are, however, excluded from the purview of this sub-­ scheme/component of the scheme. All these programmes intend to make urbanization equitable, inclusive, and sustainable. AMRUT focuses on (i) water supply, sewerage, and seepage management, stormwater drainage, urban transport, and development of green spaces and parks, (ii) capacity building, and (iii) urban sector reforms. ‘Housing for All’ Mission (PMAY) – slated for implementation during 2015–2022 – aims to provide central assistance to implementing agencies through states and UTs for providing affordable houses to all eligible families/beneficiaries in urban areas by 2022. It includes four schemes: ‘In situ’ slum redevelopment; affordable housing through credit-­linked subsidy; affordable housing in partnership; and subsidy for beneficiary-­led individual house construction. These mission-­mode programmes seek to accelerate urban transformation in India, helping the cities fulfil their function as catalysts for inclusive growth and structural change.

18  India’s Urban Missions 1.5.4 Lessons from JNNURM and Issues

The Jawaharlal Nehru National Urban Renewal Mission (JNNURM), implemented during a seven-­year mission term from 2005 to 2012, was the first mission-­style programme in the urban sector. However, the progress of JNNURM was not as expected – due to deficient design and inappropriate implementation. JNNURM was designed as a demand-­led and reform-­driven programme aimed at transforming cities through central support for developing infrastructure and essential services to the poor. Central grants were provided for the implementation of the scheme through four components: Urban Infrastructure and Governance (UIG) and Basic Services to the Urban Poor (BSUP), Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), and Integrated Housing and Slum Development Programme (IHSDP). The first two components – BSUP and IHSDP – applied to 65 cities selected based on national importance and aimed at developing inclusive cities. Within the mission period, they targeted providing affordable housing by completing 15 lakh houses for the urban poor, fully equipped with basic amenities like water, sanitation, education, health, and social security. The latter two programmes, UIG and UIDSSMT, targeted other cities and towns, apart from developing citywide infrastructure and public service delivery systems, and were expected to cater to the needs of infrastructure connectivity to slums and low-­income settlements. JNNURM prescribed 23 key reforms addressing the broader and longer-­ term issues of urban governance to be implemented by states and ULBs to qualify for central grants. These aimed at, among other things, enhancing the efficiency of the urban land and property markets, mobilizing local funds through enhancements in property tax and additional user charges with GIS mapping, streamlining the city planning and governance systems, ensuring inclusive urbanization with land and housing set aside for the urban poor through the urban planning system, etc. The physical and financial performances of JNNURM have been mixed. Together, the four components of the Mission (UIG, BSUP, UIDSSMT, and IHSDP) envisaged an investment of more than Rs100,000 crore in cities and towns, with a committed central grant of Rs 66,084 crore of the total amount. This investment was expected to leverage local resource mobilization and market borrowing. As against the promised central grant, a budgetary allocation of Rs 45,066 crore were made, of which only Rs 40,584.21 crore were released between 2005–2006 and 2011–2012. Regarding BSUP and IHSDP, only 10 lakh homes were finished, and 7.9 lakh homes were occupied by the end of March 2016. This compares to the 12.5 million housing units sanctioned, spanning 943 cities and towns. The remaining spaces were either not assigned or left vacant. These two components adopted a target achievement strategy and concentrated on giving new housing to the poor, regardless of where it was located, rather than addressing the root causes of urban poverty, the needs of despicable urban

India’s Urban Missions  19 residents, or the many facets of urban poverty that go beyond the realms of housing, employment, and social interaction. The performance of other policies that aim to promote inclusive cities, including reserving land in housing projects for the urban poor and the National Urban Housing and Habitat Policy (2007), which required housing projects in the public and private domain to be inclusive, is/was likewise not up to par. The under-­performance of JNNURM, in particular, in achieving the goals of inclusive urbanization is linked to the issues of programme design and implementation, including the neglect of the economics of cities and the economics of migration, urbanization, and urban poverty. Cities need migrants and urban LIGs to be functional, and these groups need spaces for living, working, and vending to contribute their might to city building. Expert studies and evaluation reports on JNNURM have revealed that the above reforms were not implemented satisfactorily (see Sivaramakrishnan 2011). This is partly due to the existing knowledge gap concerning the measures needed for successful implementation of inclusionary urbanization based on a clear understanding of the importance of cities in achieving economic growth, taken together with the role the urban poor and other marginalized sections play in working towards the said growth; the key elements of an inclusive and sustainable urbanization strategy; and the measures to address the issues of urban poverty and slums holistically. The limited success of JNNURM also owes to the lack of capacity at various levels and the problems associated with the lack of political will to adopt reforms to alter the status quo. The first national-­level urban initiative in India, JNNURM, has taught us two important lessons in this regard: (i) There is a severe lack of capacity at the city and state levels to design, implement, and monitor projects and reforms while delivering essential civic services and infrastructure facilities; and (ii)  unless the broader issues of urban planning, finance, management, and inclusion are addressed, no sustainable solution to the urban problems can be achieved. Without addressing the more significant problems with urban governance, it would be impossible to position cities as engines of inclusive economic growth and development. In the background of the lessons from JNNURM and the structure of the ongoing Missions such as Smart Cities, AMRUT, and Housing for All, this book aims to develop a framework for inclusive urban development and design reforms to address the issues of poverty, slums, and exclusion in Indian cities. It is based on the realization that the Indian urbanization process has been rather exclusionary. The study takes into account the recent research on urban issues in India by McKinsey (2010), Ahluwalia, Kanbur, and Mohanty (2014), and Mohanty (2014, 2016, 2019, 2022), and the ongoing global debate on inclusive and sustainable urbanization following the UN-­SDGs and the New Urban Agenda. The book is meant to guide the Government of India, state governments and ULBs in designing and implementing reforms to make the urbanization process inclusive. It also

20  India’s Urban Missions aims to guide researchers and the academic community to explore critical theoretical and empirical issues of inclusive urbanization. We address both theory and practice with the view that theory accords coherence to policy and practice guides the design of robust policy that is likely to succeed. 1.6 India: Challenges of Inclusive Urbanization Rural poverty has long been the familiar face of deprivation in developing countries. But it is increasingly being recognized that urban poverty, with increased urbanization, could be just as intense and dehumanizing. There are three reasons why the problem of urban poverty in India is likely to get out of hand. Firstly, the population of cities is growing and will double over the next three to four decades. Many people moving into cities will probably be poor because they were raised in slums, live in villages annexed to towns, or are poor migrants fleeing extreme poverty in the countryside. Secondly, there is a split between urban and urban areas due to the slower rate of urban poverty reduction than rural poverty reduction. Finally, the urban poor, particularly those living in slums, experience severe poverty, with social burdens and health outcomes ramifications, and are in a more precarious position than their rural counterparts. Considering the affairs of many nations, policymakers and planners in India need to pay close attention to urban poverty issues in order to prevent the ‘urbanisation of poverty’ phenomenon. Prolonged urban poverty has been regarded as a spillover of rural poverty. Researchers had assumed urban poverty to be a transient phenomenon that would disappear as cities develop in response to the forces promoting employment in the secondary and tertiary sectors and economic growth. This view was reflected in national poverty reduction strategies throughout developing countries, including India. Among other theoretical constructions, the Harris–Todaro model gave a gloomy picture of rural-­to-­urban migration and urbanization. Policymakers have treated the programmes and projects aimed at rural and urban development differently, keeping them in distinct, watertight, separate boxes. They hardly recognized the complementarities between the two and cities’ positive role in rural poverty reduction. Further, income-­based approaches adopted to define rural and urban poverty on a similar footing ignored the dimensions of sub-­human living (linked to non-­economic factors) by the poor in cities. Globally, the views on urban poverty are changing. There is an increasing realization that the multipronged exclusion faced by the urban poor transcends ‘income poverty’. Also, city poverty reduction programmes cannot succeed without addressing the broader issues of the policy covering city economic growth, urban planning, infrastructure development, service delivery, urban planning, finance, and governance. The understanding of key policy issues in inclusive urbanization in India calls for studying the state of slums, urban housing, civic services, urban transport, dimensions of the urban–urban divide, various facets of urban poverty, the nature of the urban informal economy

India’s Urban Missions  21 that employs the urban poor, etc. Unfortunately, adequate attention has not been devoted to estimating urban poverty by combining economic and non-­ economic criteria. 1.6.1 State of Slums

According to the 2011 Census, slum dwellers in India numbered 65.5 million. Slums have been a phenomenon in large cities, indicating the power of these cities to attract migrants for jobs, especially in the informal sector. Around 38 percent of the nation’s households lived in slums in 46 cities with a population of more than one million in 2011. Out of this number, nine such cities had more than 30 percent of their residents living in slums. With 44.1 percent, Visakhapatnam came in first, followed by Jabalpur (43.1 percent) and Greater Mumbai (41.3 percent). In 2001, Greater Mumbai’s slum population was 54 percent of the city’s total population. Metropolitan cities, other than Greater Mumbai, Kolkata, and Chennai, had more than 25 percent of households living in slums, according to the 2011 Census. However, the 2011 Census estimates of the slum dwellers are underestimated. It is apparent from the results of a study conducted by an expert panel under the chairmanship of Dr. Pranob Sen (appointed by MoHUA, GoI in 2010), which suggested that 93.06 million people, or 26.3 percent of the urban population, were living in slums at the time (as against the census estimates, which were relatively low in 2011). The reason for this discrepancy lies in the difference in the identifying criteria of slums adopted by the Census and the expert panel. While the latter came to these numbers by considering a settlement of 20 to 25 households living in abject conditions, the Census estimate does not include the slums that are not ‘notified’, ‘recognised’, or ‘identified’ or have fewer than 60 residents in its estimates. The NSSO 76th Round Survey data estimated that there were around 35.7 crore slum dwellers in the country in 2018–2019, of which 4.53 percent lived in notified slum areas and 2.3 percent in non-­notified slums. As per the data, 0.02 percent (3,809 households) and 0.23 percent (37,944 households) in the notified slums were residing in dwelling units with a katcha or semi-­permanent roof and wall, respectively. The exact numbers were 0.27 percent (22,334 households) and 0.68 percent (55,920 homes) for non-­notified slums. Several slum residents were living in conditions of abject poverty and facing extreme vulnerabilities even in 2018–2019 (the period of data collection for the 76th Round of NSS), as is evident from the fact that only 33.79 percent of households in notified slums and 20.91 percent of households in non-­notified slums had access to piped drinking water in their dwelling unit. Furthermore, only 55 percent and 59.3 percent of households had an attached bathroom and latrine facility in their house in notified and non-­notified slums, respectively. And 8.83 percent of notified slum households and 14.4 percent of non-­ notified slum households had no access to latrine facilities (exclusive use or not).

22  India’s Urban Missions Even in terms of the sanitation around the slum dwelling and the micro environment of the slum area, the picture painted by the NSS 76th Round data was disappointing. While 12.11 percent of notified slum households and 24.5 percent of non-­notified slum households had no drainage arrangement, among the households with a drainage facility, only 38.9 percent and 26.9 percent in notified and non-­notified areas had an underground one. The rest either had a covered pucca drainage facility passing across the streets or, worse, open pucca and katcha ones acting as breeding grounds for diseases and mosquitoes. In terms of garbage disposal and garbage clearance, the situation is deplorable yet again. The survey data point out that only 82.8 percent of notified slum households had their garbage cleared out by a municipal authority. In the case of non-­notified slum areas, the condition was worse, with only 56.3 percent of households having access to this facility. The remaining households either took up measures to clear the garbage from the surroundings or left it to rot. The data from Census and various NSS Rounds show that the urban–urban divide is conspicuously manifested in shelter conditions and basic amenities in slums. Due to the lack of tenure security, residents of slums are highly vulnerable to being evicted by local authorities under the pretence of implementing a master plan. 1.6.2 State of Urban Housing

The situation of urban housing in India in 2011 as per the Census is, contrasting urban regions with slums. In 2011, 27.5 percent of urban households were rented-­housing dwellers. The percentage of homes in urban areas is categorized by the number of rooms in their dwelling unit. As opposed to 3.1 percent in urban regions, about 4.4 percent of households in slums lacked separate rooms. Single-­room tenements comprised as much as 44.8 percent of slum homes and 32.1 percent of urban households’ dwellings. The distribution of households by the type of roof, wall, and floor suggests that over four million urban households resided in homes with grass, patchwork, bamboo, wood, mud, plastic, or polythene roofing as per the Census 2011. The housing shortage in urban areas was officially estimated in 2012 by an expert committee set up by the Ministry of Housing and Urban Poverty Alleviation, Government of India, at 18.78 million. Furthermore, 17.96 million or 96 percent of this pertains to the EWS and LIG categories (MoHUPA 2012). Table 1.5 presents the distribution of urban housing shortage in India in 2012. Ironically, despite many people facing a housing shortage, the Census data reveal that 9 percent of the total number of houses in urban India remained vacant in 2001, rising to 10.1 percent in 2011. Around 77 percent (in 2001) and 76 percent (in 2011) of the census houses are used for residential purposes alone, while the remaining ones have been put to other uses as well. High-­and middle-­income citizens presumably owned the vacant ones. A redundant rent control system, in particular states, that makes eviction difficult and hence

India’s Urban Missions  23 Table 1.5  Distribution of Urban Housing Shortage in India 2012 Category

Economically weaker sections (EWS) Low-­income group (LIG) Middle-­income group (MIG) and above

Distribution of Housing Shortage Number (in Millions)

Percentage (%)

10.55 7.41 0.82

56.18 39.44 4.37

Source: The State of Housing in India: A Statistical Compendium 2013, Report by Ministry of Housing & Urban Affairs, Government of India, National Buildings Organisation.

discourages the owners from leasing out their homes is one of the main reasons behind the large number of vacant houses, even in the face of a housing shortage. Urban poverty is closely linked to the type of residence of a household, its location, and its legal status. The residential vulnerability manifests in homelessness, temporary housing without proper roofs or walls, lack of security of tenure, and limited or no access to essential civic services. Slums present the most vivid manifestation of residential vulnerability. 1.6.3 State of Civic Services

The level of public services in India is shown in Table 1.6, comparing metropolitan areas to slums. In addition to a lack of appropriate housing, the country’s slum dwellers also lack access to clean water, sanitary facilities, public transportation, healthcare, and social security. Data from the National Family Health Survey III (2005–2006) show that they perform significantly worse than the rural poor in a number of health parameters. Table 1.7 shows the distribution of households according to access to electricity, drainage, restroom, telephone, computer, internet, etc. Table 1.6  State of Civic Services in India 2011 Civic Service

Access to tap water Drinking water within the premises Electricity as a source of lighting Bathroom facility Access to closed drainage Open drainage No drainage Latrine within premise With water closet Source: Census of India 2011.

% of Households Urban

Slum

70.6 71.2 92.7 87.0 44.5 37.3 18.2 81.4 72.6

74.0 56.7 90.5 81.0 36.9 44.3 18.8 66.0 57.7

24  India’s Urban Missions Table 1.7  Access to Amenities: Distribution of Households (% of Households) 2011 Source Electricity as the primary source of lighting Drinking water source within premises Tap water Bathing facility within premises Drainage connectivity: Closed drainage Open drainage No drainage Latrine facility within premises Latrine close Fuel used for cooks Kitchen facility Kitchen within the premises Firewood/crop residue/cow dung cake/Coal, lignite, charcoal/kerosene LPG/PNG/electricity/biogas Banking services Television Computer/laptop Internet Telephone landline Mobile Landline/mobile Four wheelers (car/jeep/van) Two wheelers (scooter/motorcycle/moped) No asset

Urban

Rural

Total

92.7 71.2 70.6 87.0

55.3 35.0 30.8 45.0

67.3 46.6 43.5 58.4

44.5 37.3 18.2 81.4 73.0 20.1 79.0 78.0 26.0

5.8 31.0 63.3 30.7 19.0 62.5 53.0 45.0 87.0

18.1 33.0 48.9 46.9 36.0 49.0 61.0 56.0 67.0

66.0 67.77 77.0 19.0 8.0 82.0 76.0 82.0 10.0 35.0 7.0

12.0 54.44 33.0 5.0 1.0 54.0 51.0 54.4 2.0 14.0 22.9

29.0 58.7 47.0 9.0 3.0 63.0 59.0 63.2 5.0 21.0 17.8

Source: Census 2011.

1.6.4 State of Urban Mobility

The state of urban transportation is yet another challenge for the urban populace in the country. Table 1.8 reflects the trends and patterns of registered vehicles in India between 1951 and 2015. It can be observed from the table that while the total number of registered vehicles in India went up from a mere 0.3 million in 1951 to a swooping 210 million in 2015, the composition of these vehicles is slightly off the mark. While the share of two wheelers (private transport) increased from 8.8 percent to 73.5 percent over time, that of buses (public transport) has declined from 11 percent to 1 percent. With only 20 out of the then 85 cities in India having access to bus services back in 2009, only 27 percent of urban transportation in India was by public means, compared to 49 percent in the Philippines, 49 percent in Venezuela, 49 percent in Egypt, 40 percent in South Africa, South Korea, and Brazil and 62 percent in Bogota. Less than 30 percent of trips are made in cars and two wheelers, which use up 80 percent of the road space. The key takeaway from

India’s Urban Missions  25 Table 1.8  Total Number of Registered Motor Vehicles in India (in Millions) 1951–2015 Year

1951 1961 1971 1981 1991 2001 2006 2011 2012 2013 2014 2015

Number in Composition (% of Total Vehicle Population) Million Two Cars, Buses Goods Wheelers Jeeps, and Vehicles Taxis 0.3 0.7 1.9 5.4 21.4 55.0 89.6 141.8 159.5 176.0 190.7 210.0

8.8 13.2 30.9 48.6 66.4 70.1 72.2 71.8 72.4 72.7 73.1 73.5

52.0 46.6 36.6 21.5 13.8 12.8 12.9 13.6 13.5 13.6 13.6 13.6

11.0 8.6 5.0 3.0 1.5 1.2 1.1 1.1 1.0 1.0 1.0 1.0

26.8 25.3 18.4 10.3 6.3 5.4 4.9 5.0 4.8 4.7 4.6 4.4

Other Vehicles 1.3 6.3 9.1 16.6 11.9 10.5 8.8 8.5 8.3 8.0 7.7 7.5

Source: Government of India, Ministry of Road Transport & Highways, New Delhi: Road Transport Year Book (2013–14 and 2014–15).

these transportation patterns in urban areas is that public transportation has been neglected in India and is on the decline. This, coupled with increased dependence on own vehicles, has been the cause of traffic congestion in the cities, making them dysfunctional. Increased congestion on the road’s forces people in major metropolitans to waste three to four hours of their commute, which could have otherwise been spent on productive purposes. The lack of proper transport is a critical factor that prevents the poor from accessing employment opportunities. 1.6.5 State of Urban Poverty

Poverty estimates and the threshold income for distinguishing the poor from the non-­poor have been revised repeatedly. Different committees define these aspects in their way, primarily based on monetary criteria. This is evident from the differing estimates of the percentage of the population below poverty given by the Rangarajan Committee and the Tendulkar Committee for 2009–2010 and 2011–2012 (see Table 1.9). While the former has adopted a per capita threshold for spending less than Rs 1,407 per month (Rs 47 per day) to classify a person as poor in urban areas, the latter considers a person spending less than Rs 1000 per month (Rs 33 per day) as poor. Despite differences in raw numbers, both estimates show a similar relative disparity between rural and urban poverty. These result from the various impacts of non-­financial vulnerabilities, including residence, employment, and other social factors. Slum

26  India’s Urban Missions Table 1.9  India: Rural and Urban Poverty Estimates 2009–2010 and 2011–2012 Year

Poverty Ratio (%) Rural

Urban

Expert group (Rangarajan Committee) 1. 2009–2010 39.6 35.1 2. 2011–2012v 30.9 26.4 3. Reduction 8.7 8.7 Expert group (Tendulkar Committee) 1. 2009–2010 33.8 20.9 2. 2011–2012 25.7 13.7 3. Reduction 8.1 7.2

No. of Poor (Million) Total

Rural

Urban

Total

38.2 29.5 8.7

325.9 260.5 65.4

128.7 102.5 26.2

454.6 363.0 91.6

29.8 21.9 7.9

278.2 216.7 61.5

76.5 53.1 23.4

354.7 269.8 84.9

Source: Planning Commission (2014): Report of the Expert Group to Review the Methodology for Measurement of Poverty.

dwellers in urban areas are disproportionately affected by these deprivations compared to other urban poor. They are threatened with eviction as a consequence of some or other municipality project for redevelopment or the illegal status of the housing unit, in addition to being deprived of fundamental civic rights. As a result, they suffer from the worst kind of poverty. There are many slums in risky and ecologically sensitive places vulnerable to natural and human-­made calamities. In other words, residential exclusion is the root of urban poverty. The urban poor face residential, social, and occupation vulnerabilities. These vulnerabilities are related to gender, caste, religion, age, education, health, etc. Large numbers of urban poor, especially slum dwellers, are exposed to diseases due to an unhygienic environment and unhealthy working conditions. Limited access to safe drinking water, overcrowding, lack of sanitation, and environmental pollution due to the use of kerosene, firewood, etc., for cooking purposes in the slums expose the urban poor to diseases. Prevalence rates of waterborne diseases like diarrhoea and dysentery and respiratory diseases like asthma and tuberculosis are higher amongst the marginalized sections of urban areas (especially the slum residents) than the non-­poor and overall urban residents. Slums have an increased incidence of vector-­borne diseases. This state of affairs is further aggravated by the fact that many slums are non-­notified. The local authorities refrain from providing civic services in these so-­called illegal settlements. 1.6.6 Urban Informal Sector

Cities create opportunities for unorganized or informal employment. The unorganized sector includes all unincorporated private businesses held by people or households operating on a proprietary or partnership basis, producing

India’s Urban Missions  27 goods and services, and having fewer than ten employees overall. In contrast to regular employees who receive social security benefits and employees in the formal sector who are unemployed or do not receive such benefits, informal workers are individuals who work in the unorganized sector or families. Total employment in the Indian economy increased from 396.8 million in 1999–2000 to 457.5 million in 2004–2005 and 460.2 million in 2009–2010. The share of the organized sector in total employment went up from 14 percent in 1999–2000 and 2004–2005 to 16 percent in 2009–2010. However, this increase was primarily due to informal employment growth. The share of informal employment in the organized sector increased from 38 percent in 1999–2000 to 47 percent in 2004–2005 and 58 percent in 2009–2010. As regards the unorganized sector, the share of informal employment has remained unchanged at about 99.5 percent throughout the decade. Between 1999–2000 and 2009–2010, informal employment increased by nearly 65.5 million, while formal employment decreased by 2 million. Informal employment in the organized sector rose by 21.6 million, while that in the unorganized sector went up by 43.9 million during the same period – see Table 1.10. These trends suggest that both the unorganized and the informal sectors have important economic bearing due to their employment generation capacity. There has been a formalization of the formal sector and the Indian economy in recent years, which also points to the importance of cities in creating avenues for both formal and informal employment, addressing the issues of occupational vulnerability. Occupation vulnerability is conspicuous in irregular, informal, or

Table 1.10  Formal and Informal Employment in Unorganized and Organized Sectors (1999–2000, 2004–2005, and 2009–2010) In a Million (%) Sector

Employment Informal

1999–2000 (NSS 55th round) Unorganized 341.3 (99.6) Organized 20.5 (37.8) Total 361.7 (91.2) 2004–2005 (NSS 61st round) Unorganized 393.5 (99.6) Organized 29.1 (46.6) Total 422.6 (92.4) 2009–2010 (NSS 66th round) Unorganized 385.08 (99.4) Organized 42.14 (57.8) Total 427.22 (92.8)

Formal

Total

1.4 (0.4) 33.7 (62.2) 35.0 (8.8)

342.6 (100) 54.1 (100) 396.8 (100)

1.4 (0.4) 33.4 (53.4) 34.9 (7.6)

394.9 (100) 62.6 (100) 457.5 (100)

2.26 (0.6) 30.74 (42.2) 33.00 (7.2)

387.34 (100) 72.88 (100) 460.22 (100)

Figures in parentheses are in percentage. Source: National Sample Survey (NSS) Data for Various Rounds.

28  India’s Urban Missions casual employment avenues characterized by the low-­ended nature of occupations, uncertain earnings, and a lack of employment and social security. In the urban areas, the workers employed in such insecure employment are usually vulnerable groups like domestic helpers, street vendors, rag pickers, etc. and the urban poor. Often it is reflected in unhealthy, undignified, hazardous, and oppressive work conditions. The occupationally vulnerable are also subject to instability in wage amount and periodicity. There is a need for recognizing, facilitating, developing, and nurturing the urban informal sector. India must realize that the urban informal economy is here to stay and is a part of the solution, not the problem. The knowledge that the informal sector in India contributes significantly to employment numbers, coupled with the NSSO data pertaining to the 61st and 66th rounds, suggests that the reduction of urban poverty in the short and the medium term in India will crucially depend on the performance of the urban informal sector. By employing the LIGs and downtrodden sections of the urban areas, the sector acts as a breeding ground for enterprise and innovation. It protects and sustains local cultures and traditions. Self-­employed and home-­ based workers constitute a sizable segment of the urban informal sector. They are amongst the most vulnerable sections in cities and towns. These workers require workspaces in mixed land use settings, legal protection, entrepreneurial training, and support for project development, credit mobilization, and marketing. They also require access to basic infrastructure and services. Street vendors need legal recognition, space at vantage locations or natural markets, simple registration, fair licensing, and protection from harassment by municipal and police authorities. With a supportive policy environment in place, they can play a crucial role in the retail chain system of the city, adding to the convenience of citizens. Waste pickers need to be incorporated into the city’s waste management systems by facilitating the categorization of waste at the source and enabling them to obtain municipal contracts for collecting and disposing of the trash that can be recycled. While creating new employment is essential, desisting from destroying existing employment is equally important. Large factories in key cities have been decommissioned throughout time, aiding in the casualization of employment. High land values and city rents have added impetus to relocating industries. The restructuring of enterprises has pushed regular employees in the organized sector into informal activities. However, as the master plans did not provide space for these activities, most small, unorganized industrial activities are carried out in homes in residential zones. A large number of the urban poor use public places like sidewalks, parks, and streets for vending. The local authorities regard the activities pursued by home-­ based workers and street vendors as ‘illegal’ and evict them because they lack municipal sanctions. The absence of a robust urban rehabilitation policy at the national and state levels has also contributed to the misery of the displaced in cities.

India’s Urban Missions  29 1.7 Strategy for Inclusive Urbanization Urban policy in developing nations like India addresses the difficulties of inclusive and sustainable urbanization and utilizing new urban opportunities. These factors have guided the most recent initiatives in India’s urban sector. In the years following 1990, the beneficial effects of urbanization and cities on India’s socio-­economic development and progress towards developed nation status have been openly acknowledged. Throughout the five-­ year plans, attempts have been made to increase the contribution of urbanization to socio-­ economic development. Several initiatives were formally launched in this regard between 1992 and 2014, and Table 1.11 lists their stated rationale and targets. The urban sector in India has received a significant boost over the past few years through the launch of new initiatives aimed at incentivizing the urban sector, starting in 2015 (Table 1.12): Smart Cities Mission, AMRUT, Housing for All, Swachh Bharat (Clean India) Mission, Heritage City Development and Augmentation Yojana (HRIDAY), and RURBAN Mission. These initiatives aim to improve living conditions, develop a clean environment, build infrastructure, solve housing needs for low-­income and slum dwellers, promote India’s culture, raise awareness of sanitation issues, and increase interdependencies between rural and urban areas. The country has more than a 34 percent level of urbanization and is in an important phase of its urban transformation process, from where the population growth will begin to accelerate as mandated by the demographic transition Table 1.11  India: Urban Initiatives – 1992–2014 Year

Initiatives

Rationale or Goals

1992

The 74th Constitutional Amendment Act Urban Refund Incentive Fund (URIF)

Empowering municipalities functionally, financially, and politically. Eliminate systemic weaknesses to strengthen municipal finance and functioning. Eliminate structural and systemic weaknesses to create an investment climate and improve local governance and finance. Affordable housing for all with emphasis on vulnerable sections of society. Working towards slum-­free cities via property titling and tenure security. Reduce poverty and vulnerability of urban poor households by providing them with essential services and employment.

2002 2005

Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

2007

National Urban Housing and Habitat Policy (NUHHP) Rajiv Awas Yojana (RAY)

2011 2013

National Urban Livelihoods Mission (NULM)

Source: India Habitat III National Report, 2016.

Initiative

Goals

Strategies

Development of 100 smart cities – Smart Cities Mission

Enhance the quality of urban life and provide a clean and suitable environment. Create infrastructure that has a direct link to the provision of better services to the people. Address the housing requirements of the urban poor, including slum dwellers.

Employ smart solutions for efficiently using available resources and the available infrastructure.

Rejuvenation and transformation of 500 cities (>100,000 population) – Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Housing for All Mission – Prime Minister’s Awas Yojana (PMAY)

Swachh Bharat (Clean India) Mission • Access to sanitation.

Heritage City Development and Augmentation Yojana (HRIDAY) RURBAN Mission

• Scientific management of solid waste.

Use reform to improve service delivery, mobilize resources and make municipal functioning transparent and accountable. Use vertical comprising:

• Slum rehabilitation with the participation of private developers using land as a resource. • Promotion of affordable housing by credit-­linked subsidies. • Affordable housing in partnership with the public and private sectors. • Subsidy for beneficiary-­ led housing construction or enhancement. Creating awareness about sanitation, behaviour change, and capacity augmentation.

Support core infrastructure Focus on water supply, sanitation, landscaping, and tourist aimed at the revitalization conveniences. of areas close to heritage sites. Accelerate rural development Focus on essential services. with urban services.

Source: India Habitat III National Report, 2016.

30  India’s Urban Missions

Table 1.12  India: Urban Initiatives – Post-2014 Period

India’s Urban Missions  31 theory. The country plans to reinforce the urbanization process in line with its commitment to the SDGs and the New Urban Agenda to allow the cities to enhance their productivity levels, strive towards achieving sustainability and inclusivity, and strengthen the linkages between the rural and urban areas. The following performance strategies are called for: • Implementation of comprehensive urban policies that adhere to the tenets of cooperative federalism and decentralization. • Realization of the importance of migrants in maintaining the viability of the urban economy and the role of cities as growth engines. • Promotion of urban development in a compact and clustered manner within a regional, rural–urban framework by bringing into balance the agglomeration economies. • Optimal utilization of the rural–urban continuum. • Promotion of inclusive urban development, which includes measures to combat working poverty and the universalization of essential services. • Recognition of the importance and promotion of including the concept of sustainability while formulating urban policy. • Facilitation the empowerment of local governments and other local-­level institutions. • Improvement of housing finance systems and fostering housing affordability. • Improvement of accessibility to gender equity and social justice. • Development of comprehensive methods of urban planning, budgeting, and governance. India is at a crucial point where questions about how urbanization might change the nation’s economics have been resolved. The foundations are in place for a more aggressive effort to exploit urbanization for the nation’s socio-­ economic development. In order to commit nations to sustainable urbanization, which is ‘now more critical than ever as populations, social interactions, economic activities, and environmental impacts are increasingly concentrated in cities’, UN Habitat is working to build global consensus on an urban agenda. In this backdrop, India has put into place its new urban agenda and recognizes the role of inclusive cities and towns in transforming the nation, even from an economic perspective 1.8 Economic Perspective on Inclusive Cities For a long time, a negative view of urbanization and cities has pervaded developing countries, including India, presumably due to the neglect of urban economics in the development economics literature, led by ill-­ conceived formulations such as the Harris–Todaro model. However, research in urban economics and new economic geography (NEG) suggests that cities are the engines of economic growth due to their agglomeration, networking, and knowledge externalities. They are reservoirs of skill and capital. They have the

32  India’s Urban Missions potential to create numerous employment opportunities in both formal and informal sectors. They are the hopes of millions in urban and rural areas trying to escape abject poverty. Cities act as nurseries of ideas and breeding grounds for innovation. They generate, transmit, and diffuse knowledge. They act as platforms for the application of new technology. Cities create the wealth of nations. Due to these and many other reasons, cities in India must be assisted with appropriate national, state, and local policies to discharge their crucial role of enhancing productivity and growth. Cities not only pose challenges, but they also offer many opportunities, especially for the poor and marginalized, to escape poverty and exclusion (Ahluwalia, Kanbur and Mohanty (2014); Mohanty (2014)). The economic significance of cities derives from their externalities, leading to increasing returns – at firm, industry, local, urban, and regional scales. Cities form and grow to reap the economies of agglomeration. These are returns to density and spatial contiguity due to the co-­location of firms, households, and institutions. They manifest in scale, scope, localization, and urbanization economies, facilitating production, transaction, and distribution activities. Cities promote specialization, diversity, and competition. They offer benefits of market size, backward and forward linkages, learning, matching, sharing, and networking. They lead to the formation of productivity-­enhancing economic, social, political, technological, knowledge, and infrastructure networks. Metcalfe’s law suggests that the value of a network increases with the square of the number of connected members in the system. A strong positive relationship exists between urbanization and per capita income across countries. A correlation coefficient of 0.85 is observed between GDP per capita and the level of urbanization in a cross-­section of developing countries. Urban-­based economic activities account for up to 55 percent of GDP in low-­income countries, 73 percent in middle-­ income countries and 85 percent in high-­income countries (Mohanty 2014). Large cities act as locomotives of growth. Some even outpace large nations in economic output. If the five largest cities in the United States – New York, Los Angeles, Chicago, Boston, and Philadelphia – were treated as a single territory, it would rank as the fourth largest economy in the world. New York, with a gross metropolitan product of $950 billion in 2005, would rank 17th globally if it were a country. Mexico’s ten most significant metropolitan areas, accounting for one-­third of its population, generated 62 percent of its national value added. São Paulo accounted for just over 10 percent of the total population of Brazil but more than 40 percent of its GDP; a similar picture holds for Bangkok in Thailand. In Vietnam, with urbanization at about 30 percent, the share of cities in national output stood at 70 percent. In China, only 120 cities account for three-­quarters of the country’s GDP. In India, the contribution of urban areas to GDP increased from 29 percent in 1950–1951 to 47 percent in 1981, 55 percent in 1991 and 60 percent in 2001. In 2007, cities and towns, with an estimated 3 percent of the geographical area and 30 percent of the population, contributed about 62–63 percent of the country’s GDP. This contribution

India’s Urban Missions  33 is expected to increase to about 75 percent by 2021 (see Ahluwalia, Kanbur and Mohanty (2014); Mohanty (2014); Mohanty and Mishra (2015) for detailed discussions on external economies of agglomeration). Agglomeration economies differ between habitations of different sizes. Market towns generate scale economies in the marketing and distribution of agricultural inputs and outputs. Medium-­ sized cities present localization economies linked to specialization. Larger cities create urbanization economies due to diversity, leading to innovation. Metropolitan city regions offer benefits of localization, urbanization, and networking. They represent a mass of interconnected economic activities, typically characterized by high productivity due to ‘jointly generated’ and ‘mutually-­ reinforcing’ agglomeration economies. These regions act as innovators of products, processes, and techniques. They drive regional and national economic growth. As gateways to national and international economies, they are subject to powerful forces of globalization, including transportation, communication, and information technology revolutions. Metropolitan city regions around the globe engage in economic activities increasingly structured on national and international planes. Population densities in these regions are incredibly high. The population density in the 50-­kilometre vicinity of India’s seven largest metropolitan agglomerations (with populations above four million in 2001) was 2,450 in 2011. A third of India’s new towns were ‘born’ within a 50-­kilometre radius of existing metros. Agglomeration economies are dynamic. Their nature changes as economic development progresses. When a country shifts away from agriculture to industry and services, it enters a new arena of agglomeration. Production moves away from diminishing or constant returns to increasing returns. Entrepreneurs and workers resort to non-­farm activities wherein both scale and location matter. Production of manufacturing and services involves increasing returns. It is also more efficient in a denser constellation of firms and households. These activities use modest land and more skills as inputs in production. Manufacturing requires relatively more land compared to services. Most services need built-­up space, which is efficiently provided by cities. Manufacturing and services clusters gain from lower transport costs, intra-­and inter-­industry linkages, larger markets, shared inputs and facilities, specialized labour pooling, and networking. Agglomeration economies are, however, not without limits. When the concentration of economic activity exceeds a threshold, diseconomies of agglomeration arise in the form of overcrowding, housing shortages, deterioration in civic services, traffic congestion, pollution, slums, poverty, crime, social unrest, and the like. This threshold may differ for different cities depending on their spatio-­economic contexts, determined by geography, history, and economics. Unless effective measures are taken to augment agglomeration economies and mitigate congestion diseconomies, their negative effects may offset the positive benefits of clustering in cities.

34  India’s Urban Missions Besides agglomeration externalities, cities are home to knowledge and human capital externalities. In a city setting, one firm’s new knowledge produces a positive externality for other firms as knowledge spills over and cannot be kept secret. The acquisition of skills by a worker increases the productivity of other workers by enhancing the economy’s pool of human capital. The effects of ‘external human capital’ are founded on how people interact, exchange, and learn in cities. Shaped by market forces and public policies to promote economic growth, agglomeration and knowledge externalities reinforce each other through ‘circular and cumulative causation’. Growth leads to agglomeration, which fosters growth by facilitating the transmission and diffusion of knowledge and promoting specialization, diversity, and innovation. Agglomeration and knowledge externalities act as powerful drivers of growth. They establish the unique importance of cities in the structural transformation of nations. A strong positive correlation is observed between growth and agglomeration. The industrial revolution in Europe and the United States led to spectacular city regions that have thrived. Kuznets referred to the spatial concentration of economic activity as an ingredient of modern economic growth. A study based on panel data set covering up to 70 countries from 1960 to 1990 shows that urban importance, measured by the share in the population of a country’s largest city, is advantageous to growth in low-­income countries. Urbanization per se, however, has no significant growth-­promoting effect. Another study examining the impact of spatial concentration of economic activity within European regions over 1980–2000 lends evidence to the growth-­inducing effects of agglomeration. Recent research covering cross-­ country data sets for 105 countries from 1960–2000 finds ‘consistent evidence’ in favour of the hypothesis that agglomeration boosts GDP growth to a level of economic development. The critical threshold is some US$10,000 per capita in 2006 PPP prices, corresponding roughly to Brazil’s current level of development. India is way behind on this level. The study also finds that in terms of growth foregone, the cost of policies inhibiting economic agglomeration is the highest in the poorest nations. Policies that prevent the spatial concentration of economic activity are most damaging in these countries. The lesson from the research is that at the current stage of development transition, India has a unique opportunity to enhance economic growth and reduce poverty through well-­planned urbanization. This book is the driving force behind the recognition that cities offer the best hope for India’s socio-­economic transformation and inclusive growth agenda. Given the crucial role of cities in economic growth around the globe, and their importance as agents of structural change, this research starts with the following question: Why is it that cities in India, being locomotives of economic growth with vibrant agglomeration externalities, are subject to exclusionary urbanization with urban poor and slum dweller being left out of the mainstream urban development process? Given the theoretical and empirical relationships between agglomeration and economic growth, it also recognizes that at the current stage of India’s evolution, the country has a historic

India’s Urban Missions  35 opportunity to accelerate economic growth and reduce poverty by developing cities and harnessing the power of its external economies. However, this requires a concerted effort in city development planning, urban planning, governance, and anti-­poverty efforts. This book realizes that researchers, policymakers, and planners in India in the past hardly recognized the role of the externalities of cities in economic growth. They did not address how economic development, including rural development, can be financed without vibrant and agglomerating cities. By not relating to the economics of cities, they bypassed the issue of how urban public infrastructure and services needed by planned urbanization, including urban poverty alleviation, slum development and upgradation, skills training and livelihood development, etc. can be supported. Planners also did not link the paradigm of spatial planning being followed in India, i.e., master planning, to the economics of cities, especially agglomeration economies. In doing so, they neglected the role of transport and the needs of the poor and their role in creating vibrant cities that act as locomotives of economic growth. While recognizing that the housing, civic amenities, and employment requirements in Urban India are colossal, this research acknowledges that both urban and rural areas cannot be subsidized simultaneously. As the conditions of rural areas are more appalling, solutions to urban issues, especially the provision of essential services, poverty alleviation, slum development and upgradation, etc., need to be found from within cities. This realization must be integral to socio-­economic development and inclusionary urbanization policies. It calls for the following: • Understanding the nature of urbanization in India, especially the geography of population growth and the role of natural increase, net migration, and reclassification (in situ and annexation) to urban growth. • Understanding the geography of economic growth – linkages between urbanization and growth and the phenomena of the external economies of ‘agglomeration’ leading to co-­location and networking benefits through learning, sharing, and matching. • Recognizing the role of civic services and infrastructure in catalysing external economies of agglomeration and networking and creating conditions for productivity enhancement of urban households, including rural–urban migrants and economic growth. • Addressing shortages in the land, affordable housing, and infrastructure, especially public transportation, through integrated spatial planning and sustained investments in public transport with TOD approach. • Making urbanization inclusive – addressing slums and poverty through various measures such as providing essential services and affordable housing, skills training and livelihood development for the urban poor, etc. • Mitigating impacts of density and resource use on the environment and poverty: agriculture, congestion, pollution, exclusion, etc.

36  India’s Urban Missions • Reforming urban finance and governance to make urbanization inclusive so that the urban poor have access to the city resources and are enabled to exercise the right to the city. This research emphasizes the importance of investigating the links between cities, external economies, economic growth, and urban poverty, with a focus on (i) addressing the exclusion of the urban poor from the formal land and housing markets to make the urbanization process inclusive; (ii) making municipalities inclusive by reforming the municipal finance system so that the ULBs can provide basic amenities, affordable housing, and livelihoods, including skills training to the poor; and (iii) ensuring participation of the poor in civic affairs by adopting a participatory and inclusive governance paradigm. We adopt a two-­pronged methodology: a desk study focusing on urban economics and development economics literature and a field study covering four cities/towns of Telangana State. 1.9 Field Study of Telangana State The main aim of the field study covering four cities (Hyderabad, Warangal, Siddipet, and Bhongir) was to understand and analyse the magnitude of the problems of urban poverty, especially in slum settlements and the effect of government initiatives on the living conditions in the slums. The methodology of the study included data gathering and interviews of respondents covering parameters such as land and housing status, ownership details, number of dwelling rooms, type of structure, indicators of accessibility to drinking water, electricity, road within the slum, latrine facility, access to drainage, garbage disposal, approach roads, availability of banking service in proximity, etc. The exercise also included gathering data on assets possessed by slum dwellers, such as radio/transistor, computer/laptop, telephone, other investments, amenities available, etc. The study further examined the impacts of the government’s housing, infrastructure, and poverty alleviation programmes to encourage inclusion. The data were subjected to rigorous empirical analysis using Ordinary Least Squares Techniques and Multivariable Binary Logistic Regression Model to compute the magnitudes of the potential determinants of the slum dwellers’ monthly income under three categories: lower, middle, and higher income. The model also considered other qualitative factors such as gender, type of labour (whether they are a government employee or not), level of education (whether their qualification is above graduation or not), and location (whether they are living in the core city or not) in influencing multidimensional poverty. The study’s significant findings align with the main lessons from extant literature highlighted in this study that urban poverty has multiple dimensions: residential, occupational, and social, including access to housing near places of remunerative employment and public amenities. The empirical study finds that ‘one size does not fit all’ and inclusionary urbanization policies must be

India’s Urban Missions  37 context-­specific and based on a multipronged approach that goes beyond the standard income criteria applied to rural poverty. Taking into account desktop research and field study, we identify the following key areas to be addressed for developing and implementing a strategy of inclusionary urbanization in India: (i) Policy Framework for Inclusive Urbanization – Urban Economic Perspective. (ii) Inclusionary Urban Planning and Affordable Housing. (iii) Financing Urban Poverty Alleviation through Municipal Finance Reforms. (iv) Participatory Urban Governance to Include and Empower the Urban Poor. 1.10 Policy Framework for Inclusive Urbanization The Lakdawala, Tendulkar, and Rangarajan Committees are confined to consumption poverty. Thus, they did not address the multiple non-­income vulnerabilities of the urban poor encompassing residential, social, and occupational dimensions. These vulnerabilities affect certain disadvantageous sections such as the elderly, the differently abled, the poor, women and children, and self-­employed and casual workers more severely than others. The residential vulnerability manifests itself in the lack of access to quality housing and basic amenities such as roads, streetlights, solid waste management facilities, drainage systems and water supplies. Social vulnerability is reflected in poverty due to social factors: Caste-­related (e.g., scheduled castes and scheduled tribes), gender-­based (e.g., female-­headed households), age-­based (e.g., households headed by the very old or the very young), educational (e.g., people with no or inadequate education), health related (e.g., people with chronic illness), etc. Stratification in society also fosters exclusion, especially regarding land and shelter access. The occupational vulnerability manifests in the urban poor’s lack of opportunity to secure decent and remunerative employment. Any policy framework for inclusive urbanization must address these vulnerabilities. The policy framework for inclusive urbanization in India needs to recognize the positive role of cities in structural and spatial transformation processes. Further, cities are the products of many actors, including the rich and the poor, the big and the small. Cities are rich in skill and capital. The urban poor and migrants provide the much-­needed unskilled and semi-­skilled labour for city growth. Cities also need workers for complex blue-­collar jobs to be functional. They require drivers, security guards, washers, load carriers, gardeners, plumbers, fitters, electricians, mechanics, medical attendants, domestic helpers, etc. Thus, in comparative advantage, the urban poor deserve to be assisted. Urban poverty alleviation and slum development could also be considered a public good. This research suggests a framework for inclusive urbanization in India

38  India’s Urban Missions considering various aspects – based on theory and international practice. It develops a theoretical framework and offers practical ways to reverse exclusionary urbanization in India. 1.11 Inclusionary Urban Planning and Affordable Housing Ironically, the genesis of slums and squatter settlements in cities can be traced to an exclusionary ‘master planning’ model that does not recognize the existence of the low-­income and underprivileged communities into account when allocating land and development rights for urban uses, creating a severe shortage of affordable housing and jobs for the underprivileged. Slums essentially reflect the failure of the formal urban planning system. The master planning paradigm has a glaring flaw in that it ignores the socio-­economic make-­up of the city, particularly the population’s composition and income distribution structure. If a city has 80 percent of its inhabitants belonging to the poor and LIGs, a spatial planning paradigm based on the norms of housing and employment for the middle and higher classes is bound to be unrealistic, iniquitous, and distortionary. The land allocation criteria and model of segregation of land uses adopted by master plans of Indian cities do not represent the needs of the majority in cities. Large segments of urban society have been excluded from the opportunities unleashed by city agglomeration externalities due to poor urban design. The spatial inclusion of the urban poor is the most basic form of inclusion in cities. The model of inclusionary zoning adopted by several developed countries presents a way to make urbanization inclusive. Gujarat’s Town Planning Scheme also demonstrates an unusual way of crafting inclusion into planned urban development and expansion. The provisions of the Master Plan of Delhi (2021) require group housing projects to ensure a minimum of 15 percent of FAR, or to set aside 35 percent of the dwelling units, whichever is higher for community service personnel/economically disadvantaged sections/underprivileged groups; earmarking adequate land for service markets and street vending are other good examples. While inclusionary zoning needs to be pursued, there is also a need to accommodate the underprivileged in high-­density developments around emerging nodes on mass rapid and bus rapid transit system networks. This will enable them to commute to work without being physically close to congested central locations. The density required to make fast transit systems viable can be created. 1.12 Financing Strategy for Inclusive Urbanization Inclusive urbanization calls for supporting job creation for the urban poor and providing them with access to essential services and affordable housing. Investments in labour-­ intensive growth, vocational training, and skill-­ building for regular salaried and self-­employment are required to provide income and work for most urban poor people. Without increasing labour

India’s Urban Missions  39 intensity in organized employment, more than half of the urban workforce would remain precariously employed – with no job or social security. Sectors like construction, trade and transport, and manufacturing have a demonstrated potential for job creation as urbanization proceeds. With multiple backward and forward linkages, housing and infrastructure act as economic growth and employment drivers during structural transformation. The focus of public policy on these sectors will impact economic growth not only directly but also through the generation of agglomeration economies due to scale and network effects. In addition to employment creation in the urban formal and informal sectors, Indian cities need to provide essential services and affordable housing to the poor while enabling them to improve their skills for wage and self-­employment. The reform agenda under JNNURM envisaged reservation of 25 percent of the municipal budget for the urban poor – the P-­budget. This was meant to support slum development/redevelopment, poverty alleviation, employment generation, and skill development programmes. However, this reform did not make headway due to the gross deficiencies in the municipal finance system in India. Regarding resource access, ability to generate revenue, and financial autonomy, Indian municipalities rank among the worst in the world. Between their obligations and available resources, they experience a severe mismatch. McKinsey (2010) opines that India must invest Rs 9.74 million crores in its cities by 2030, including Rs 5.31 million crores in capital expenditures. Affordable housing (33.4 percent), mass transportation (33.2 percent), and urban roadways are the three areas with the highest capital funding demand (16.8 percent). The necessary capital expenditure through 2030 will be Rs 3.54 million crores, affordable housing excluded. According to HPEC (2011), India’s primary urban infrastructure sectors will require Rs 3.92 million crores in investment between 2012 and 2013. Costs associated with operation and maintenance (O&M) will bring the total to Rs 5.92 million crores. According to the O&M standards HPEC implemented, Indian municipalities only spend roughly 20 percent of this required amount. Compared to the global average, India’s municipal sector is incredibly small. Municipal revenue to GDP at factor cost was predicted to be 1 percent for 2007–2008 and 2012–2013, which was lower than South Africa (6.0 percent) and Brazil (7.4 percent). This is perplexing because cities are the source of public finance but have a narrow revenue basket. The ULBs also do not exploit existing resources such as land and property taxes. To address exclusionary urban planning, measures to tackle speculation in the urban land market that drives the urban poor out of the formal economy are as necessary as the spatial inclusion of the urban poor. As in Brazil, a graduated vacant land tax on urban land kept idle can be an effective instrument to control speculation. Value capture financing is another important tool to promote the development of unused land. Urban renewal programmes, comprising re-­planning and redevelopment, could be required to provide for inclusive development through a value creation process. Urban planning, development, and renewal processes

40  India’s Urban Missions result in unwarranted increments in land values for landowners who could be made to contribute towards correcting inequities in cities due to exclusionary planning. 1.13 Participatory Urban Governance A fundamental question of urban development is: For whom are we planning the city? The Constitution 74th Amendment Act 1992 envisages urban poverty alleviation and slum development as legitimate municipal functions under the 12th Schedule. The Constitutional Amendment also prescribed reserving seats for weaker sections and the constitution of Ward Committees for taking power to the people and fostering inclusion. However, cities’ and towns’ planning and governance processes remain non-­participatory. In particular, master planning creates a ‘virtual’ city unrelated to ‘actual’ conditions; it ignores that most urban people have meagre income and no ability to engage in a competitive built-­space market. Zoning regulations prescribe criteria for land distribution in urban areas according to the middle-­and high-­income brackets. At the same time, master planning practically ignores the existence of LIGs, leading to ‘self-­created’ forms of settlements in the ‘left-­over’ spaces. The master plan exhibits a statist and technocratic understanding of urban planning; it treats the city as a mechanical entity, ignoring human elements. The illegalities and informalities of slums make them vulnerable. The master plan calls for large-­ scale investments, ignoring the implementation aspects altogether. Recognizing the exclusionary nature of urban planning, the Government of Brazil enacted the City Statute in accordance with Articles 182 and 183 of the Constitution of 1988, prescribing instruments to ensure the ‘right to the city’ and defend ‘the social functions of city and property’. For cities with more than 20,000 residents, Article 182 mandates the creation of a master plan, which the City Council then approves. It stipulates that the municipal government may require the owner of undeveloped, underutilized or underused urban land to make fair use of it, subject successively to mandatory parcelling and time-­varying land tax rates. This can be done by utilizing a specific ordinance for a region designated in the master plan. Article 183 recognizes the right of the urban poor to the city. The City Statute declares: someone who has possession of an urban area or building of up to two hundred and fifty square meters, for five years, uninterruptedly and without contestation, who uses it for their residence or that of their family, can establish their dominion, as long as they are not the owners of any other urban or real estate. (The City Statute: Section V, Article 9) Brazil’s City Statute has been the product of a massive movement from below led by the civic society for participatory governance. India must make good urban governance an instrument to enable the poor to have the right to the city.

India’s Urban Missions  41 1.14 Summing Up Developing countries, including India, will witness an urban revolution in the 21st century. This revolution will be more significant than the agricultural and industrial revolutions in terms of its impact on the masses, especially the weaker sections and marginalized segments. It will offer unprecedented opportunities for leap-­frogged socio-­economic development and transformation of the lives of rural and urban citizens trying to transcend extreme poverty and exclusion. History suggests that cities will present the clearest path to prosperity, if managed well. But urbanization will intensify economic, social, environmental, and cultural issues while catalysing growth and prospects for poverty reduction. India needs to invest in good urban governance. Policymakers and planners must focus on a comprehensive strategy for inclusive urbanization adopting an urban economic perspective, inclusionary regional and urban planning, affordable housing for all, sustained financing of urban poverty alleviation through municipal finance reforms, participatory urban governance, and empowerment of the poor. The remaining chapters of the book will deal with these and related issues.

2

Economic Perspective on Inclusive Urbanization Cities, Rural–Urban Migration, Slums, and Urban Poverty

2.1 Introduction An assessment of development over the last two decades indicates a global transformation with cities at the centre of the economic development agenda. Urbanization has provided and sustained worldwide change, becoming a significant 20th-­and 21st-­century trend. The transition towards a more urbanized world would unleash such transformative forces that can be channelized towards sustainable development. Cities have been leading the process of addressing several global challenges like underdevelopment, unemployment, poverty, inequality, climate change, and environmental degradation. Cities are a positive and powerful tool for meeting sustainable and inclusive development objectives. They are instrumental in enhancing development by deepening prosperity, driving innovation, broadening consumption, and intensifying investment in developed as well as developing nations. Cities have positioned themselves as the engines of economic growth by catalysing agglomeration and network externalities. These externalities have enabled cities to be the agents of socio-­economic transformation. A strong positive relationship exists between urbanization and GDP per capita income across countries. A correlation coefficient of 0.85 is observed between GDP per capita and the level of urbanization in a cross-­section of developing countries (Henderson 2000). Urban-­based economic activities account for up to 55 percent of GDP in low-­income countries, 73 percent in middle-­income countries, and 85 percent in high-­income countries (UN-­HABITAT 2006, 48). The importance of cities in India can be gauged from the fact that the contribution of urban areas to GDP is projected to rise to about 75 percent by 2021 (Planning Commission 2008). Moreover, 70 percent of new employment and 85 percent of public finance are also estimated to be generated by cities (McKinsey 2010). The 12th five-­year plan noted that urbanization would be central to India’s strategy of achieving faster and more inclusive growth because city externalities fuel economic efficiencies and generate higher livelihood and employment prospects, thereby assuring quicker inclusion of a larger population in the economic growth process. However, in India, despite being drivers of economic DOI: 10.4324/9781003452171-2

Economic Perspective on Inclusive Urbanisation  43 growth due to vibrant agglomeration and network externalities, cities have been facing exclusionary urbanization as the urban poor, including slum dwellers, have been excluded from mainstream urban development. The key challenges of urban transition in India are lack of proper regional and urban planning, poor infrastructure, absence of energy security, environmental degradation, inequality, and poor affordable housing. The other important challenges in cities include land procurement for planned urban development implementation, land use and transport integration, floor space creation to match growing demands, local revenue mobilization, leveraging funds from centre and state, borrowing from market for infrastructure financing, etc., especially transportation. Further, making the urban development process sustainable and equitable remains a significant challenge. Ironically, the cities have to bear the responsibility of addressing these pertinent challenges by raising resources to address the country’s urban and rural development concerns. While urbanization poses a huge opportunity to speed up economic growth, there is a negative side to increasing urbanization. Basic services and infrastructure in Indian cities are crumbling under the excessive pressure of population concentration in cities. Census of India, adopting a strict definition of slums, reported that 17 percent of the urban population lived in slums in 2011; an official committee estimated the figure at more than 25 percent (MoHUPA 2010). Even the Census of India 2011 reported that in many large cities, more than 25 percent of the population resided in slums and squatter settlements. An expert committee has estimated the proportion of urban residents below the poverty line at 26 percent (Planning Commission 2012). One of the biggest challenges in Indian cities is the provision of affordable housing to the economically weaker sections (EWS) and low-­income groups (LIGs). There is a lack of suitable, litigation-­free, adequately serviced urban land located at a reasonable commuting distance from their workplaces. The urban housing shortage is estimated at 18.78 million; 96 percent of the shortage pertains to EWS and LIG categories (MoHUPA 2012). The state of slums, poverty, and affordable housing in India reveals that the impressive economic growth generated by cities in India in the past has not percolated to all sections of the urban society. This is intricately connected to the fact that the poor and marginalized groups in cities in India are weeded out of formal urban land markets in the process of urban planning, implemented based on the concept of a ‘master plan’. It is said that the master plans of cities in India have ‘mastered’ the poor and led to a regime of ‘exclusionary’ urbanization in the past. This chapter is an attempt to understand the nexus between cities, economic growth, and poverty. The objective is to examine the linkages between urbanization, economic growth migration, and poverty and address urban poverty by providing affordable housing and basic services along with skill training for improving the livelihood of the poor in urban areas in order to propose a policy framework for inclusive urbanization. Section 2.2 explores the relation

44  Economic Perspective on Inclusive Urbanisation between cities and economic growth. It draws up on theories that focus on cities as the catalysts of economic growth due to their agglomeration externalities. Section 2.3 is dedicated to the issues of migration, slums, and poverty in Indian cities. It discusses slums as an epitome of deprivation and their proliferation due to the failure of urban planning. Migration in itself is not bad. Section 2.4 highlights the issue of rural–urban migration. It discusses the importance of migrants in cities and advocates that migration is not a social evil in itself. Section 2.5 deals with inclusive urbanization in India and criticizes the Harris–Todaro model for articulating a negative view of migration and urbanization. It also points to the elements which are important to be considered in order to develop an inclusive urban development agenda for India. Section 2.6 concludes by highlighting the need for effective urban management to deal with the issues of migration and poverty. 2.2 Cities, Externalities, and Economic Growth A rich literature in growth and development economics has identified the potential drivers of economic growth. To name a few theories: Schumpeter – entrepreneurial innovation and creative destruction; Rosenstein-­Rodan – basic, productive industries and public utilities; Lewis – transfer of surplus labour from ‘low productivity’ agriculture to high-­productivity industry; Nurkse – lumpy infrastructure investment, called social overhead capital; Joan Robinson – capital accumulation; Solow-­Swan – growth in capital and technical progress; Myrdal – ‘spread’ and ‘backwash’ effects leading to circular causation processes; Hirschman – strategic investment in productive industries with ‘backward’ and ‘forward’ linkages; Romer – production and transfer of knowledge; Lucas – human capital accumulation; Krugman – increasing returns to scale due to interactions between scale externalities and transportation costs. To summarize, all these theories suggest the potential factors responsible for growth are an expansion of markets, determining demand and supply, increase in labour productivity, increasing return to scale through production in modern factories, increase in savings rate for investment, efficiency in investment, increase in capital stock, education, training, research and development, knowledge externalities, and human capital externalities, etc. Paradoxically, cities contain and nurture most of the key drivers of growth, combining them in unexpected ways, moulding them into new dimensions, and leading to dynamic processes. Cities have been established as the engines of economic growth due to their agglomeration and knowledge externalities. They are reservoirs of skill and capital. They create numerous employment opportunities in both formal and informal sectors. McKinsey (2010) estimates that ‘Urban India will create 70 percent of the 170 million new jobs in India over the next 20 years and these urban jobs will be twice as productive as equivalent jobs in the rural sector’. UN-­Habitat (2012) stated that cities are one of the highest pyramids of human creation. Cities have the power to innovate, generate wealth, enhance the quality

Economic Perspective on Inclusive Urbanisation  45 of life, and accommodate more people within a smaller carbon footprint. Cities are vital for developing a country in this era of globalized knowledge. Cities act as nurseries of ideas and breeding grounds for innovation. They generate, transmit, and diffuse knowledge. Cities create the wealth of nations. Due to these and many other reasons, cities in India need to be assisted with appropriate national, state, and local policies to enable them to discharge their key role of enhancing productivity and growth. Cities pose many challenges and numerous opportunities, especially for the poor and marginalized, to escape from poverty (Mohanty 2014). The economic significance of cities derives from their agglomeration externalities, leading to increasing returns – at firm, industry, local, urban, and regional scales. Cities form and grow to reap the economies of agglomeration. These are returns to density and spatial contiguity due to the co-­location of firms, households, and institutions. They manifest in scale, scope, localization, and urbanization economies, facilitating production, transaction, and distribution activities. Cities promote specialization, diversity, and competition. They offer benefits of market size, backward and forward linkages, learning, matching, sharing, and networking. They lead to the formation of productivity-­ enhancing economic, social, political, technological, knowledge, and infrastructure networks. They manifest in returns to density and spatial contiguity due to the co-­location of firms, households, and institutions, leading to scale, scope, localization, and urbanization economies and facilitating production, transaction, distribution, and accumulation (Marshall 1890; Jacobs 1969; Henderson 1974; Fujita 1989; Porter 1990; Fujita and Thisse 2002; Duranton and Puga 2004; Rosenthal and Strange 2004; Puga 2010; Brueckner 2011; Glaeser 2011; Combes, Duranton, Gobillon, Puga and Roux 2012; Cheshire, Nathan and Overman 2014; Duranton, Henderson and Strange 2015). The Ministry of Urban Development (MoUD), Government of India, has recognized the potential of cities to generate growth and proclaimed that the ‘growth story of India shall be written on the canvas of planned urban development’. McKinsey (2010) estimates that cities will produce more than 70 percent of India’s GDP and drive a fourfold increase in per capita incomes across the nation by 2030. According to Lucas (1988), cities are the engines of long-­run economic growth. Under the influence of Marshall, urban economists have long maintained that the spatial proximity of market agents in cities fosters cost savings in consumption, production, search, matching and learning, knowledge spillovers, and human capital accumulation. Cities combine physical, economic, and social infrastructure and create conducive conditions for growth. Urban economists highlight the role of cities as the potential driver of economic growth driven by their agglomeration and network externalities. It refers to interactions between land and housing markets, externalities, and public policies in shaping cities’ spatial economy and growth. Structural and spatial transformations go hand in hand. As the country moves from agriculture to manufacturing and services, it enters a new regime

46  Economic Perspective on Inclusive Urbanisation where scale and location matter. The agglomeration of economic activities in cities assists firms and households in gaining from co-­location, density, and external economies. Agglomeration and knowledge externalities enable firms in secondary and tertiary sectors to benefit from scale, increased productivity and reduced costs of moving people, goods, ideas, information, and knowledge. Agglomeration economies are the benefits that accrue to the firms and people when they locate nearby together in industrial clusters and cities. These benefits come from transport cost savings, exchange of raw materials, ideas, and innovations. Collocation decreases the difficulties in exchanging goods, people, and ideas. The source of agglomeration in cities can be attributed on the production side to three significant hypotheses. ‘Specialization externalities’ – called ‘Marshallian externalities’ – are related to technological spillovers among economic activities, sharing a common pool of skilled labour and other intermediate inputs (Marshall 1890). ‘Diversification externalities’ – called ‘Jacobs externalities’ – result from a large number of activities being undertaken in different ways, which lead to the cross-­fertilization of skills, ideas, technology, and innovation (Jacobs 1969). ‘Competition externalities’ – called ‘Porter externalities’ – cities toughen competition and induce firms to innovate and adopt technological progress in order to survive and prosper (Porter 1990). Agglomeration economies differ between habitations of different sizes. Market towns generate scale economies accruing to the marketing and distribution of agricultural inputs and outputs. Medium-­sized cities present localization economies linked to specialization. Larger cities create urbanization economies due to diversity, leading to innovation. Metropolitan city regions offer benefits of localization, urbanization, and networking. They represent a mass of interconnected economic activities, typically characterized by high productivity due to ‘jointly generated’ and ‘mutually-­reinforcing’ agglomeration economies. These regions act as innovators of products, processes, and techniques. They drive regional and national economic growth. As gateways to national and international economies, they face powerful forces of globalization, including transportation, communication, and information technology revolutions. Metropolitan city regions around the globe engage in economic activities that are increasingly structured on national and international planes. Agglomeration also enables cities to home knowledge and human capital externalities. In a city setting, the production of new knowledge by one firm generates a positive externality to other firms as knowledge spills over and cannot be kept secret. The acquisition of skills by a worker increases the productivity of other workers by enhancing the economy’s pool of human capital. The effects of ‘external human capital’ are founded on the ways people interact, exchange, and learn in cities. Shaped by market forces and public policies to promote economic growth, agglomeration, and knowledge externalities reinforce each other through ‘circular and cumulative causation’. Growth leads to agglomeration, which fosters growth by facilitating the transmission and diffusion of knowledge and promoting specialization, diversity, and

Economic Perspective on Inclusive Urbanisation  47 innovation. Agglomeration and knowledge externalities act as powerful drivers of growth. They establish the unique importance of cities in the structural transformation of nations. Generating and sustaining agglomeration economies in cities needs continued and steady provision of a variety of public services and infrastructure. These are mandatory for supporting private sector activities as well as ensuring the well-­being of urbanites. Such services include water supply, sewage management, proper collection, and disposal of garbage and other solid wastes, drainage, fire services, police, and public transit. Competition is related to ‘dynamic urban centres’ in today’s world. Cities attempting to attract the ‘knowledge workers’ must also design policies to accommodate diverse cultures and be more ‘liveable’ in providing a better quality of life through good educational institutions, healthcare services, recreation, social and cultural activities, safety, and strong neighbourhood systems. Some studies demonstrate a spatial decay of productivity with movement away from the city centre. Cross-­sectional and time series studies find a positive correlation between measures of density and productivity, indicating increasing returns to the spatial concentration of economic activity. The estimated elasticity of productivity with respect to city size ranges between 0.02 and 0.10 (Rosenthal and Strange 2004; Graham and Noland 2009). Table 2.1 presents a summary of key findings on agglomeration economies from empirical studies. The empirical literature in urban economics presents overwhelming evidence in support of agglomeration economies in cities, though inconclusive regarding the source of these externalities. However, the observed economies might be over-­or underestimates, depending on model specification, level of aggregation of data, and extent of bias in estimation. They tend to be strong in developing countries. Agglomeration economies are, however, not without limits. When the concentration of economic activity exceeds a threshold, diseconomies of agglomeration arise in the form of overcrowding, housing shortage, deterioration in civic services, traffic congestion, pollution, slums, poverty, crime, social unrest, and the like. This threshold may be different for different cities depending on their spatio-­economic contexts, determined by geography, history, and economics. Unless effective measures are taken to augment agglomeration economies and mitigate congestion diseconomies, the positive benefits of clustering in cities may be offset by its negative effects. To accelerate economic growth and poverty reduction, public policy in India must facilitate, nurture, and harness agglomeration economies in cities and their regions while mitigating congestion diseconomies. Agglomeration economies are vital for a developing country like India since such externalities augment productivity gains and are particularly important when the economy is ‘resource-­scarce’ and ‘information-­deficient’. In the presence of strong agglomeration externalities, circular and cumulative forces will act and react upon each other to enhance growth, even with modest attempts on the part of governments. However, empirical research regarding Williamson’s

48  Economic Perspective on Inclusive Urbanisation Table 2.1  Agglomeration Economies: An Empirical Assessment Study Shefer (1973) Sveikauskas (1975) Kawashima (1975) Segal (1976) Fogarty and Garofalo (1978) Moomaw (1985) Nakamura (1985) Tabuchi (1986) Henderson (1986) Henderson, Kuncoro and Turner (1995) Ciccone and Hall (1996) Tabuchi and Yoshida (2000) Henderson, Shalizi and Venables (2001) Glaeser and Maré (2001) Henderson, Lee and Lee (2001a)

Ciccone (2002) Rosenthal and Strange (2003) Mare and Graham (2009)

Findings Developed Countries Doubling city size increases productivity by 14 to 27 percent in a group of 20 industries across US metropolitan areas. Doubling city size leads to about 6 to 7 percent higher labour productivity in the average manufacturing industry in the United States. The elasticity of output with respect to city size in US metropolitan areas measures 0.20. Labour productivity in US metro areas with a population above 2 million is 8 percent higher than in remaining metros. A doubling of city size increases productivity by 10 percent in the United States. The productivity effect of city size averages 7 percent among US manufacturing industries. The unweighted average elasticity of productivity of 20 manufacturing industries in Japan, indicating localization economies, is 0.05. Effect of city size on manufacturing productivity in Japanese cities ranges from 3 to 4 percent. Elasticities indicating localization economies range from 0.09 to 0.45 with a mean of 0.19 in industries in US metropolitan areas. A one-­standard-­deviation increase in the share of own-­industry local employment in the first period raises that industry’s level of employment by 16–31 percent in a later period in the United States – based on data pertaining to five traditional manufacturing industries in 224 metropolitan areas between 1970 and 1987. Doubling of employment density in a US county raises average labour productivity by 6 percent; locally increasing returns explain more than half of the variation in labour productivity across the United States. Doubling of city size is associated with 10 percent higher nominal wages in Japan. A plant with 1,000 workers in a Korean city could increase output by 20 to 25 percent, without altering the input mix, by relocating to a city with 15,000 workers in the same industry. Earnings in US metropolitan cities are up to 28 percent higher than those in non-­urban areas. Localization economies exist in 23 Korean industries located in metropolitan cities – most prominently in heavy industry, transportation, and high-­tech sectors. A 10 percent increase in local own-­industry employment results in 0.6–0.8 percent increase in plant output, for the same level of inputs. Doubling of employment density increases city productivity by 4.5 to 5 percent in the NTUS regions in the European Union. Effects of own-­industry employment on new plant openings – based on data of 12 million US establishments – rapidly attenuate within the first five one-­mile concentric rings. Doubling city size in New Zealand increases output by almost 7 percent.

(continued)

Economic Perspective on Inclusive Urbanisation  49 Table 2.1  (Continued) Study

Findings

Combes, Duranton, Gobillon, Puga and Roux (2009) Morikawa (2011)

Firms in large cities in France are on average 9 percent more productive than in small cities. Agglomeration effects mostly explain urban productivity differences in France.

Shukla (1984)

Sveikaukas et al. (1985) Henderson (1986) Henderson (1988) Hansen (1990) Henderson (1994) Henderson and Kuncoro (1996) Mitra (2000) Lall et al. (2003)

Au and Henderson (2006)

World Bank (2006) Da Mata et al. (2007) Diechmann et al. (2007) Source: Mohanty 2014.

Significant economies of scale and economies of density exist in service industries in Japan; productivity increases by 7 to 15 percent when municipal population density doubles. Developing Countries Resources in an Indian city with a population of 100,000 can be, on average, 23 percent more efficient than in one of 10,000. They can be as much as 51 percent more efficient in a city of one million than in a city of 10,000. Doubling travel time to a city centre reduces productivity by 15 percent in Brazil – based on data for eight industries. Elasticities indicating localization economies range from 0.03 to 0.20, with a mean over 10 industries being 0.11, in Brazilian cities. Clear evidence of localization economies for two-­digit industries in Brazil – based on detailed industrial census data. Increasing distance from the city centre by 1 percent leads to a 0.13 percent decline in productivity in Brazil – based on 1980 data for 356 new manufacturing firms. Doubling of distance to a regional market centre lowers profits by 6 percent – based on firm data in auto components and agricultural machinery in Brazil and the United States. Substantial evidence for localization economies for many industries in Indonesia. Positive urbanization economies exist in 11 out of 17 two-­digit level industries in India – based on panel data for 15 major states. Urbanization economies are strong in manufacturing – based on estimation of separate cost elasticities with respect to four measures of agglomeration for eight industrial groupings and three size classes of plants, using micro data from the Indian Survey of Industries 1998. Relationship between output per worker and city size in China – based on aggregative data for 285 Chinese cities – follows an inverse U pattern. Most Chinese cities are undersized; migration restrictions led to insufficient agglomeration and first-­order losses in GDP. Loss in net output per worker is estimated at about 17 percent. These losses may range between 25 and 70 percent for at least a quarter of the cities. Firms in more-­populated cities of China tend to be more productive – based on survey of 12,400 firms in 120 cities. Increases in the size of local markets and access to domestic markets strongly impact on growth rates of Brazilian cities – based on aggregate data for 123 cities for three decades from 1970. Strong influences of existing firms in cities and localization economies are evident in plant location choices in Indonesia.

50  Economic Perspective on Inclusive Urbanisation hypothesis suggests the existence of an inverse U relationship between economic growth and agglomeration. Agglomeration economies appear stronger and more significant only up to a certain degree of development. Such economies are of specific relevance when an economy moves towards being a ‘knowledge-­based’ economy from a manufacturing one. India is undergoing a similar transition. Thus, India is in a position to harness such economies and has ample opportunity to explore the agglomeration-­led city route to economic growth. However, if India forgoes this opportunity due to the inability to tap city externalities, we will miss out on the opportunities to accelerate economic development along with poverty reduction. Urbanization and migration offer unique opportunities for India to accelerate growth and development during structural transformation. 2.3 Migration, Slums, and Poverty Cities attract people in search of jobs and better standards of living. Indian cities are no exception. According to the Census 2011, 26 percent of the total workforce resided in urban areas; 83 percent of the urban workforce fell in the category of main workers and the balance in the category of marginal workers. Urban India witnessed an increasing concentration of employment during the seven years of 2004–2005 to 2011–2012. As per the National Sample Survey Organization (NSSO) data, in India as a whole, jobs rose in these seven years by only 1.5 percent, while in urban India jobs grew by 17.5 percent, from 116.1 million in 2004–2005 to 136.4 million in 2011–2012 (Table 2.2). The unemployment rate in urban India has gone down from 4.5 percent in 2004–2005 to 3.4 percent in 2011–2012. However, despite providing job opportunities to the migrants, Indian cities have failed to give them a decent place and lifeline amenities to live in. The proliferation of slums bears testimony to this fact. As long as cities add new jobs, it is necessary to accommodate the ones who fill these jobs. Thus, migration, an effort to increase productivity and income, does not mean a bad thing. The view that rural–urban migration leads to slums and

Table 2.2  Growth and Concentration of Employment in Rural and Urban India 2004–2005

Rural India Urban India India

2011–2012

Self-­employed and Casual Labourers

Regular Salaried

Total Employment

Self-­employed and Casual Labourers

Regular Salaried

Total Employment

322.7

24.5

347.2

305.6

29.1

334.7

70.2

45.9

116.1

77.4

59.0

136.4

399.3

66.4

465.6

388.1

84.3

472.4

Source: India Habitat III National Report 2016.

Economic Perspective on Inclusive Urbanisation  51 poverty and is a negative phenomenon, as articulated by the Harris–Todaro model of development economics, is not justified. According to the 2011 Census, slum dwellers in India numbered 65.5 million. Slums in the country have been a phenomenon of large cities, indicating the power of these cities to attract migrants for jobs, especially in the informal sector. In 2011, 46 million-­plus cities accounted for about 38 percent of slum households in the country. Nine million-­plus cities had more than 30 percent of households in slums. Visakhapatnam topped the list with 44.1 percent, followed by Jabalpur Cantonment Board (43.1 percent) and Greater Mumbai Municipal Corporation (41.3 percent). In 2001, Greater Mumbai’s slum population was 54 percent of the city’s total population. Among the metropolitan municipal corporations, apart from Greater Mumbai, Kolkata, and Chennai, corporations reported more than 25 percent of urban households residing in slums in 2011. The figure for the slum population in India reported by Census 2011 is an underestimate as ‘slums that are not “notified”, not “recognized”, or not “identified”, and those with less than 60 households are not enumerated under the definition of slum adopted by the Census’. Ironically, the report of an expert committee set up by the Ministry of Housing and Urban Poverty Alleviation in 2010, the Government of India under Dr. Pranob Sen estimated the slum population of India at 93.06 million, representing 26.3 percent of the urban population of the country. It adopted 20–25 households as one of the criteria to identify a slum. But the Census defined an identified slum as ‘a compact area of about 60–70 households living in poorly-­built, congested tenements and in an unhygienic environment, usually with inadequate infrastructure and lacking proper sanitary and drinking water facilities’ (MoHUPA 2010, Census 2011). The NSSO report of the 69th round states that 44 percent of the slums were situated on private land, 37 percent on the land of ULBs, 6 percent of slums existed on railway land, and 12 percent on other lands. According to the Expert Committee set up by the Planning Commission under Dr. C. Rangarajan, ‘a person spending less than Rs.1407 per month or Rs.47 a day was considered poor in cities, compared to Rs.1000 per month or Rs.33 a day adopted by Tendulkar Committee’ (Planning Commission 2009, 2014). The Committee estimated the percentage of people below the poverty line in urban areas in 2011–2012 at 26.4 percent, with the number of urban poor estimated at 102.5 million. Table 2.3 shows the state-­wise poverty ratios in India for 2009–2010 based on the Rangarajan Committee report. Out of 35 states and UTs, in 16 states/ UTs, the percentage of the urban poor is more than the national average. Manipur, Daman and Diu, Bihar, Uttar Pradesh, and Madhya Pradesh top the list and have a higher percentage of urban poor. Goa and Sikkim show a low percentage of urban poor. Many of the slum dwellers are poor – in terms of non-­economic dimensions such as access to health, education, and infrastructural amenities. The number

52  Economic Perspective on Inclusive Urbanisation Table 2.3  State-wise Poverty Ratios in India 2009–2010: Rangarajan Committee India/States / UTs

% of persons in Rural Areas

% of persons in Urban % of persons Areas Combined

J&K Himachal Pradesh Punjab Chandigarh Uttarakhand Haryana NCT of Delhi Rajasthan Uttar Pradesh Bihar Sikkim Arunachal Pradesh Nagaland Manipur Mizoram Tripura Meghalaya Assam West Bengal Jharkhand Odisha Chhattisgarh Madhya Pradesh Gujarat Daman and Diu Dadra and Nagar Haveli Maharashtra Andhra Pradesh Karnataka Goa Lakshadweep Kerala Tamil Nadu Puducherry Andaman and Nicobar Islands India

14.4 11.2 14.8 10.3 22.5 19.2 4.9 31.9 46.3 65.1 25.0 31.3 11.1 44.4 29.9 16.2 25.8 42.9 37.8 55.3 50.0 58.9 51.3 37.0 24.6 65.4

32.4 22.5 28.6 12.3 36.4 24.8 24.7 38.5 49.6 55.0 16.7 34.1 37.2 76.7 24.8 31.7 36.8 40.2 36.6 42.1 41.2 36.5 45.0 35.6 55.8 37.3

19.2 12.3 20.0 12.3 27.7 21.1 24.1 33.5 47.0 63.9 23.1 30.9 18.3 54.1 27.3 20.1 28.0 42.5 37.4 52.1 48.5 53.8 49.6 36.4 47.1 53.0

27.6 27.0 24.3 7.2 4.2 9.7 25.9 3.2 4.0

30.3 30.5 26.7 13.1 10.8 23.7 29.7 4.6 5.3

28.8 28.1 25.2 10.8 9.2 16.0 27.7 4.2 4.4

39.6

35.1

38.1

Source: Planning Commission (2014): Report of the Expert Group to Review the Methodology for Measurement of Poverty.

of persons living below the poverty line in urban areas has slightly decreased in recent years. Census of India 2011 reveals that 4.4 percent of slum households lack exclusive rooms, while the figure stands at 3.1 percent for total urban areas. A whopping 44.8 percent slum households reside in a single-­room tenement. An expert committee set up by the Government of India’s Ministry of

Economic Perspective on Inclusive Urbanisation  53 Housing and Urban Poverty Alleviation under Prof. Amitabh Kundu estimated the housing shortage pertaining to urban areas at 18.78 million in 2012. Of this, 96 percent, or 17.96 million, pertain to the EWS and LIG categories (MoHUPA 2012). Data on the state of civic services in India as per census 2011 draws a sorry picture for slums. While 74 percent of slum households in 2011 had access to tapped water supply, only percent had a drinking source within premises and 19 percent had no access to a bathroom. Some 18.8 percent had no drainage facility, and 44.3 percent were subject to open drainage; 34 percent of slum households did not have latrines within premises. The census data reveals that India has to go a long way to provide affordable housing and basic services to the citizens, including the poor. Several expert committees set up by the Government of India associate poverty solely with monetary criteria. However, the nonmonetary parameters spanning a multitude of vulnerabilities concerning social, occupational, and residential dimensions separate urban poverty and rural poverty. Slums are epitomes of these vulnerabilities and exhibit the worst scenarios of poverty and exclusion. The absence of security of tenure renders slums ‘illegal’ and subject to eviction by municipal authorities for implementing master plans, city modernization attempts, organizing national and international events, etc. Additionally, slums are prone to natural and human-­made disasters, especially in hazardous and eco-­fragile regions. Residential exclusion lies at the heart of urban poverty. This is rooted in the failure of land and housing markets and the inability of the planning system to correct market failure. The roots of spatial exclusion in cities and towns in India can be traced to the master planning paradigm in practice. The model ignores the informal or unorganized sector that engages the bulk of the urban poor. A large proportion of urban residents including the poor get excluded from the ‘formal’ property markets. The poor need homes close to places where they can earn remunerative livelihoods. But inappropriate urban planning and zoning regulations have acted against their interests. Ironically, slums are manifestations of self-­created maladies originating from an exclusionary spatial planning paradigm. The master planning model in India is not in sync with the income distribution structure of cities. It is rigid and needs to be reformed. The massive challenges of affordable housing in India must be addressed jointly by the government and market mechanism to achieve socially desirable objectives, including inclusion. The government may target the poorest of the poor, and the market may adopt inclusionary zoning and inclusionary housing practices to address a part of the issue. The urban poor, especially slum dwellers, are subjected to many problems such as lack of decent and affordable housing, clean water, sanitation, public transport, education, healthcare, and social security. The lack of secure tenure, constant fear of eviction, and houses at hazardous and eco-­fragile sites prone to natural and human-­made disasters subject the slum dwellers to precarious living. According to National Family Health Survey III data (2005–2006), the slum dwellers fare worse than the rural poor in several health indicators (see Table 2.4).

Indicator

Urban Poor

Urban Non-­poor

Overall Urban

Rural

All India

Delivery in a health facility (%) Anaemia among women 15–49 years (%) Children immunized before completing 1 year (%) Children stunted (%) Children less than 3 years underweight (%) Children with anaemia (%) Neonatal mortality (per 1,000) Infant mortality (per 1,000) Under-­five mortality (per 1,000) Prevalence of medically treated tuberculosis (per 100,000) Prevalence of HIV among the adult population (15–49 years) Children with diarrhoea in the last two weeks (%) Children with acute respiratory infection in last two weeks (%) Women with at least one contact with health worker in three months Households using a sanitary facility for excreta disposal (%)

44.0 58.8 39.9 54.2 47.1 71.4 34.9 54.6 72.7 461 0.47 8.9 6.1

78.5 48.5 65.4 33.2 26.2 59.0 25.5 35.5 41.8 258 0.31 8.9 4.4

67.4 50.9 57.6 39.6 32.7 63.0 28.7 41.7 51.9 307 0.35 8.9 5.1

28.9 57.4 38.6 50.7 45.6 71.5 42.5 62.1 81.9 469 0.25 9.0 6.0

38.6 55.3 43.5 48.0 42.5 69.5 39.0 57.0 74.3 418 0.28 9.0 5.8

Source: National Family Health Survey (NFHS) III.

10.1

5.8

6.8

14.2

11.8

47.2

95.9

83.2

26.0

44.7

54  Economic Perspective on Inclusive Urbanisation

Table 2.4  State of Health of the Urban Poor in India 2005–2006

Economic Perspective on Inclusive Urbanisation  55 Not much difference is found in the health conditions of the urban poor and rural populations. Even in respect of some indicators like anaemia among women of ages 15–49 years, stunted children, the prevalence of HIV in the adult population, and children with acute respiratory disease, the conditions of the urban poor are much worse compared to the rural population. NFHS IV provides the latest data about the conditions of the urban sector for the year 2015 for 17 states. Pan-­India data is not available in the case of NFHS IV. Table 2.5 shows the state-­wise detail on women’s and men’s literacy rates and the infant mortality rates revealed by NFHS IV. The male literacy rate is much higher than the female literacy rate. Out of 17 states, the highest urban women literacy rate is observed in Meghalaya and the lowest in Andhra Pradesh. The reason can be found in the huge cultural differences in the two regions of the country. Similarly, the highest urban male literacy rate in found in Manipur and the lowest in West Bengal. Due to better facilities in urban areas, the infant mortality rate in each state is less than in rural areas except Uttarakhand. This could be due to the backwardness of the state. Table 2.6 presents data on the nutritional status of children in terms of three parameters – underweight children below five years, stunted children below five years, and anaemic children. In both rural and urban areas, Bihar has the highest percentage of underweight and stunted children, whereas the highest numbers of anaemic children in both rural and urban areas are found in Haryana. The Census and NFHS data highlight the precarious state of the urban poor, including slum dwellers. They do not suggest that urban poverty is a product of excessive urbanization or migration. It is rather a result of poor urban policy and management that do not recognize the contribution of migrants to city development and the wealth creation process, leading to their deprivation of access to lifeline amenities. There is a need to develop an inclusive urban development agenda in India so that every city dweller, including rural–urban migrant, can get their rightful place in the city. It is important to support the urban poor in terms of social and economic inclusiveness to enable them to escape abject poverty and have a decent quality of life. Urban poverty is multidimensional, transcending ‘consumption poverty’. It includes residential, social, and occupational vulnerabilities of the urban poor. These vulnerabilities are intricately connected to the urban informal economy and master planning model being followed in India. The multiple vulnerabilities of the urban poor suggest that the strategy of inclusive urbanization must address all the vulnerabilities holistically. A two-­pronged approach to deal with urban poverty and slums is thus needed. First, properly sorting out the concerns with respect to income, employment, and social security and, second, integrating slums and the informal sector into the city system. Blaming migration defies economic logic and the urban economic perspective on rural– urban migration.

State

Andhra Pradesh Assam Bihar Goa Haryana Karnataka Madhya Pradesh Maharashtra Manipur Meghalaya Puducherry Sikkim Tamil Nadu Telangana Tripura Uttarakhand West Bengal Source: NHFS IV.

Women Literacy Rate

Men Literacy Rate

Infant Mortality Rate

Urban

Rural

Total

Urban

Rural

Total

Urban

Rural

Total

75 87 71 88 80 89 78 86 90 93 85 90 86 79 88 82 79

57 69 46 91 72 64 51 75 81 80 85 85 73 52 77 75 70

63 72 50 89 75 71 60 80 85 83 85 87 80 65 80 77 71

90 93 89 94 93 90 89 94 97 96 90 93 92 91 95 92 84

74 81 75 97 89 81 79 91 95 81 96 90 86 77 87 90 80

80 83 78 95 91 85 82 92 96 84 92 92 89 83 90 91 81

20 28 34 – 31 19 44 23 16 15 10 13 18 20 12 44 16

40 50 49 – 33 34 54 24 25 32 30 38 23 35 31 39 32

35 48 48 13 33 28 51 24 22 30 16 29 21 28 27 40 27

56  Economic Perspective on Inclusive Urbanisation

Table 2.5  State-wise Details on Women’s Literacy Rate, Men Literacy Rate, and Infant Mortality Rate 2015

Table 2.6  State-wise details on Underweight Children, Stunted Children, and Anaemic Children (%) 2015 State

Source: NFHS IV.

Stunted Children below 5 years

Anaemic Children 5–59 months

Urban

Rural

Total

Urban

Rural

Total

Urban

Rural

Total

28 21 38 25 29 32 37 31 13 23 23 12 22 22 22 26 26

33 31 45 21 30 38 45 40 14 30 19 15 26 33 25 27 34

31 30 44 24 29 35 43 36 14 29 22 14 24 29 24 27 32

28 22 40 18 33 33 38 29 24 37 25 23 26 21 17 33 29

33 38 50 23 34 39 44 38 31 45 21 33 29 33 25 34 34

31 36 48 20 34 36 42 34 29 44 24 30 27 28 24 34 33

52 28 59 52 70 57 66 54 25 43 43 60 49 52 46 61 56

61 37 64 41 73 63 70 54 23 50 49 53 53 68 49 59 4

59 36 64 48 72 61 69 54 24 48 45 55 51 61 48 60 54

Economic Perspective on Inclusive Urbanisation  57

Andhra Pradesh Assam Bihar Goa Haryana Karnataka Madhya Pradesh Maharashtra Manipur Meghalaya Puducherry Sikkim Tamil Nadu Telangana Tripura Uttarakhand West Bengal

Underweight Children below 5 years

58  Economic Perspective on Inclusive Urbanisation 2.4 Perspective on Rural–Urban Migration The impact of migration on cities has two dimensions. First, it helps augment economic activities and growth by providing a pool of unskilled and semi-­ skilled labour force. They are of particular importance in the construction, retail, and transport sectors. They also extend support to high-­end workers and augment capital in cities. Second, migration puts pressure on the existing infrastructure and civic amenities. This acts as a hindrance in service delivery in cities. Thus, it is not migration per se but the failure of public authorities to manage migration which leads to problems in urban areas. Policies aimed at curbing migration have consistently failed. The need of the hour is to manage and accommodate migration. The major issues of poor urban migrants are associated with the challenges of identity and documentation. Proper identification confers them with the status of secured citizenship and makes them eligible to draw benefits from several schemes designed by the state for the poor. Identity proofs are a prerequisite for availing public services, including education, health, skill development, and formal employment. Further, identity proofs are mandatory for services like telephone connections, banking, etc., which are linked to such proofs. However, without proper and legal identity proof, migrants are deprived of the opportunity to lead a decent and secure life in urban areas. This not only deprives migrants of their legal rights but also leaves them entangled in the nets of poverty and exclusion. Several poverty alleviation programmes and urban development programmes, including the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), did not delve into the major issues and challenges faced by urban migrants. They did not explore the needs of urban migrants and the requisite policy support. Inclusive governance by ULBs and other competent authorities, including the urban poor in urban planning strategy, and developing and maintaining data pertaining to urban migrants can address the issues associated with exclusion of migrants in the city’s development process. Housing is the most important requirement for low-­income groups and migrants in urban areas. In the absence of proper housing opportunities, they settle in slums. Sadly enough, they are also tagged as the ‘pioneers of illegal settlements’. However, it is not the migrants but the faulty urban planning and development strategy that ought to be blamed for the proliferation of slums. Poor is an indispensable part of cities and render several services without which living in cities would be difficult. However, they are denied their rightful place in the master plans. Basic Services to the Urban Poor (BSUP) and Integrated Housing and Slum Development Programme (IHSDP), the sub-­ missions under the JNNURM, attempted to address affordable housing issues for the urban poor and migrants. But the results were far behind expectations as these missions did not realize the consensus between housing and workplaces. The housing projects were far from the city centres and useless for the targeted population. The type and nature of construction lacked enough space

Economic Perspective on Inclusive Urbanisation  59 and denied the opportunity to work from home or sell on the streets. Though research advocates the importance of networking between migrants and poorer city dwellers, such networking aspects were not recognized by JNNURM in several cities. Cities are rich in skill and capital. The urban poor and migrants provide the much-­needed unskilled and semi-­skilled labour for city growth. Cities also need workers for hard blue-­collar jobs to be functional. They require drivers, security guards, washers, load carriers, gardeners, plumbers, fitters, electricians, mechanics, medical attendants, domestic helpers, etc. Thus, on the principle of comparative advantage, the urban poor and migrants deserve to be assisted. Urban poverty alleviation and slum development could also be considered a public good. The role played by migrants in cities must be recognized by every policy designed for inclusive urban development. It is important to address the needs of the migrants. The role of migrants has been aptly understood and illustrated by Williamson in the following words: Who gains and who loses from city immigration of unskilled labour seems clear enough. Unskilled labour that stays behind in the country-­ side should gain, to the extent that increased labour scarcity tends to raise their earnings. Agricultural land rents should fall, as the amount of farm labour available to work with the same acres declines (and in the absence of offsetting terms of trade effects). The recent city immigrants gain, having moved to higher paying jobs. However, unskilled city-­born labourers and previous immigrants lose as the urban labour market becomes glutted with more unskilled labour. The urban skilled labour gains as the now-­swollen unskilled labour supply augments city output and drives up the demand for skills. Certainly capitalists gain for identical cheap labour reasons. And, finally, to the extent that the middle class and the rich tend to consume heavily the personal services offered by the urban unskilled, they get an additional cost-­of-­living gain. Thus, while urban planners may push for restrictions on immigration, making their job of coping with city growth easier, one can hardly imagine any other class of city residents pushing for restrictions in the contemporary Third World, especially given that older immigrants have very little political power. It is hardly surprising, therefore, that immigration restrictions have been hardly tried, and have often failed when tried. (Williamson 1990. pp 229–30) The above observations point to the need for strategizing the framework for inclusive urbanization in India based on a positive view of rural–urban migration. Urban economic theory also presents theoretical and practical arguments to better understand the role of migrants in the process of urban economic

60  Economic Perspective on Inclusive Urbanisation growth, highlighting the need for reversing the exclusionary urbanization in developing countries, possibly influenced by the Harris–Todaro model. 2.5 Migration Theory and Inclusive Urbanization Income and employment generation for the vast sections of the urban poor necessitates investments pertaining to labour-­intensive growth, skill development schemes and vocational education for enhanced wages and prospects of self-­employment in cities. Without increasing labour intensity in organized employment, more than half of the urban workforce would remain precariously unemployed – without a job or social security. Sectors like construction, trade, transport, and manufacturing have a demonstrated potential for job creation as urbanization proceeds. With multiple backward and forward linkages, housing and infrastructure drive economic growth and employment during structural transformation. The focus of public policy on these sectors will impact economic growth not only directly but also through the generation of agglomeration economies due to scale and network effects. The informal sector accommodates the most significant number of employees. The urban informal economy is large and will continue to be so in the foreseeable future. Data from NSS 61st and 66th round surveys suggest that the reduction of urban poverty in the short and medium run in India will crucially depend on the performance of the urban informal sector. This sector provides employment to the poor and low-­income groups and acts as a breeding ground for enterprise and innovation. It protects and sustains local cultures and traditions. There is a need for recognizing, facilitating, developing, and nurturing the urban informal sector. India must realize that the urban informal economy is here to stay and is a part of the solution, not the problem. Self-­employed and home-­based workers constitute a sizable segment of the urban informal sector. They are amongst the most vulnerable sections in cities and towns. These workers require workspaces in mixed land use settings, legal protection, entrepreneurial training, and support for project development, credit mobilization, and marketing. They also require access to basic infrastructure and services. Street vendors need legal recognition, space at vantage locations or natural markets, simple registration, fair licensing, and protection from harassment by municipal and police authorities. With a supportive policy environment, they can play a pivotal role in the retail chain system of the city, adding to the convenience of citizens. Waste pickers need to be integrated into the city’s solid waste management system by facilitating the segregation of waste at the source and enabling them to obtain municipal contracts for collecting and disposing of the waste that can be recycled. While the creation of new employment is important, desisting from the destruction of existing employment is also equally important. Over the years, dismantling large factories in central areas of cities has contributed to the casualization of work. High land values and city rents have added impetus to the relocation of industries. The restructuring of industries has pushed regular

Economic Perspective on Inclusive Urbanisation  61 employees in the organized sector into informal activities. However, as the master plans did not provide space for these activities, most of the small unorganized industrial activities are carried out in homes in residential zones. A large number of the urban poor use public places like sidewalks, parks, and streets for vending. The local authorities regard the activities pursued by home-­ based workers and street vendors ‘as illegal’ and evict them on the ground of lack of municipal sanction. The absence of a robust urban rehabilitation policy has also contributed to the misery of the displaced in cities. A practical implementation of the Street Vendors Act 2014 in all states uniformly can also help improve the condition of the urban poor. The spatial inclusion of the urban poor is the most fundamental form of inclusion in cities. The model of inclusionary zoning adopted by several developed countries presents a way to make urbanization inclusive. The Town Planning Scheme (TPS) of Gujarat also provides an excellent example of crafting inclusion into planned urban development and expansion. The provisions in the Master Plan of Delhi 2021 require group housing projects to ensure a minimum of 15 percent of Floor Area Ratio (FAR) or 35 percent of dwelling units, whichever is higher for community service personnel/economically weaker sections/low-­income groups and earmarking adequate land for service markets and street vending are other good examples. While inclusionary zoning needs to be pursued, there is also a need to accommodate the poor and low-­income groups in high-­density developments around emerging nodes on mass rapid and bus rapid transit system networks. This will enable the poor to commute to work without being physically close to congested central locations. The density required to make rapid transit systems viable can be created in the process. To address exclusionary urban planning, measures to tackle speculation in the urban land market that drives the urban poor out of the formal economy are as important as spatial inclusion of the urban poor. A graded vacant land tax on urban land kept idle as in Brazil can be an effective instrument to control speculation. Value capture financing is another important tool to promote the development of unused land. Urban renewal programmes, comprising re-­planning and/or redevelopment, could be required to provide for inclusive development through a value creation process. The Supreme Court of India has ruled in a Mumbai case involving lands locked under defunct textile mills that such lands be productively used on a sharing formula: One-­third to public authorities for affordable housing of the workers, one-­ third for creation of green space, and one-­third for commercial use. This judgment provides a rule for inclusive urban renewal in cities. Urban planning, development, and renewal processes lead to huge unearned increments in land values to landowners who could be made to contribute towards correcting the historical inequities in cities due to exclusionary planning. These considerations call for a different approach to dealing with migration and urbanization rather than considering them problematic. They call for revisiting the negative view on migration propagated by the Harris–Todaro model.

62  Economic Perspective on Inclusive Urbanisation 2.5.1 A Model of Migration and Urbanization

Harris and Todaro (1970) presented a two-­sector model in the context of developing countries to highlight the inconsistency associated with ever-­increasing rural–urban migration despite the prevalence of high levels of unemployment in cities. According to the model, rural–urban migration occurs due to the differences in expected wages between rural and urban regions and not actual wage differences. Rural migrants react to the expected urban wage as ‘equal to the product of the probability of securing a formal urban job and urban wage’. It is assumed that, due to institutional rigidities involving minimum wage policies of the government, bargains by trade unions etc., urban wages are ‘pegged’ at a higher degree than rural wages. So, despite being sensitive to rural–urban wage differential, migration does not equal urban and rural wages. Migration continues till the expected urban wage becomes equal to the rural wage. The major assumptions of the Harris–Todaro model are as follows: (1) Both rural and urban marginal products of labour are negative functions of the respective employment levels. The rural production function is assumed to include fixed land, and capital and the urban production function includes fixed capital leading to diminishing marginal returns to employed labour. (2) Producers in both the rural and urban sectors act competitively, equating marginal product and a real wage. However, the nominal urban wage is constrained to be greater than or equal to an institutionally fixed minimum wage. (3) Rural–urban migration continues as long as the expected urban real wage at the margin exceeds the real rural wage; the prospective migrants behave as maximizer’s of expected utility. (4) Rural migrants gamble or ‘queue’ for formal urban jobs and accept unemployment or underemployment in the informal sector hoping to be absorbed in formal jobs. The Harris–Todaro model is presented in Figure 2.1. As the Figure shows, the urban marginal product of labour, MPLu, the rural marginal product of labour, MPLr, and the expected urban wage, Ewu are shown as functions of urban population Nu. ONT represents the total population in the economy, ON1 is the urban formal employment, N2NT shows the rural employment, and N1N2 is the queuing. ONC would be the urban population under competitive market-­ clearing conditions. NCN2 is the magnitude of ‘over-­migration’, i.e., migration in excess of what would have been warranted under competition. As the figure shows, the unique over-­migration result is crucially dependent on the assumption that the Ewu curve intersects MPLr curve at a point higher, and the MPLr curve at a point lower than the market-­ clearing wage. Clearly, at N2, MPLu 0, u2 < 0, > = < 0, >0 ∂N u ∂N u ∂N u ∂S

Where g represents the agglomeration function entering into production as an externality associated with urban population Nu and local public good S. We borrow the standard formulation from urban economics (see Mills 1967, 1972; Dixit 1973; Henderson 1974) and assume that the external economies associated with Nu increase up to a point and get swamped by congestion diseconomies as city population goes beyond a threshold. The local public good

64  Economic Perspective on Inclusive Urbanisation S is assumed to be a parameter in the g function for the sake of simplicity. Given a particular level of S, the first-­order derivative of g with respect to Nu can be positive, zero, or negative. The rural production function is represented as follows:



Xr = fr ( Nr )



(2.2)

∂f r ∂ 2f > 0, 2r < 0 ∂N r ∂N r

Assuming that there are two regions with fixed total population NT, the population endowment is shown by the following equation:

N u + N r = N T or, N r = N T − N u

(2.3)

The urban producers are assumed to set urban real wage equal to marginal productivity of labour oblivious of the presence of agglomeration externalities. Thus, the competitive rural–urban migration equilibrium condition can be stated as follows: ∂f ∂f r g ( N u ;S) u or, w u ( N u ;S) w r ( N u ) {using ( 3)} = = N Nr ∂ ∂ u

(2.4)

Figure 2.2 depicts equation (2.4). As can be seen, there are two competitive equilibria N1 and N2, the low and high competitive rural–urban migration scenarios. N1 is the unstable low city population equilibrium, with urban wage higher than rural wage to the right. Urban–rural wage differential drives a movement to N2, which is stable high urban population equilibrium. Movement from N1 to N2 occurs due to the fact that wu > wr. As the figure also shows, a higher level of local public good, S’, will cause the wu function shift upward, making the level of equilibrium urban population go up to N’. This logic highlights the importance of managing urbanization with investment in urban infrastructure We have assumed that producers take the agglomeration externalities as given while optimizing their profit by equalizing marginal product of labour with real wage. However, this assumption is inappropriate for a social planner or national policymaker. Thus, (2.4) can be restated as follows:



g ( N u ;S)

∂f u ∂g ∂g ∂S ∂f r + fu + fu = ∂N u ∂N u ∂S ∂N u ∂N r

(2.5)

As can be inferred from the above equation, if the net impact of migration on agglomeration economies and changes in supply of local public goods

Economic Perspective on Inclusive Urbanisation  65

wu, wr

wr(Nu) N'

wu(Nu;S´)

N2

wu(Nu;S)

N1

O

Nu

Figure 2.2 A Model of Migration and Urbanization with Agglomeration Economies.

following migration result in an upward shift in the urban production function, then the conditions of socially optimal rural–urban migration equilibrium will call for a higher level of migration or urban population than that is warranted under a competitive rural–urban migration equilibrium. Again, for simplicity let us now assume that the level of the local public good does not change when rural–urban migration occurs and agglomeration is only related to urban population growth. Then the equation (2.5) can be altered as follows:



g ( N u ;S)

∂f u ∂g ∂f r + = fu or, w u + g′ ( N u ;S) f u ( N= wr u) ∂N u ∂N u ∂N r

(2.6)

Equation (2.6) is presented in Figures 2.3 to illustrate the possibility of social under-­migration, contrary to the over-­migration equilibrium in the Harris–Todaro model. Figure 2.3 depicts the theoretical case of social under-­migration (free market migration N2 lower than socially optimal migration N*). It may be noted that the extent of divergence between competitive and socially optimal outcomes depends on the placement of the wu, wr, and g’ (Nu;S)fu(Nu) curves. In other words, it depends on the urban production function, rural production function, and the agglomeration function. When agglomeration economies associated with urbanization and consequent provision of local public goods are strong, there is a strong possibility that rural–urban migration obtained

66  Economic Perspective on Inclusive Urbanisation

wr

wu, wr N* N2

wu

N1

wu+g´(Nu;S)fu(Nu)

O

Nu

Figure 2.3 A Case of Social Under-migration with Agglomeration Economies.

under market-­clearing conditions is lower than that what is optimal from the social point of view. It is also clear that both competitive and socially optimal migration levels will go up if the provision of local public goods shifts the wu and g’ (Nu;S)fu(Nu) curves upwards. When agglomeration economies are positive, over-­migration or over-­urbanization is one of coping with urbanization through effective planning and provision of local public goods. How large is ‘too large a number of rural–urban migrants’ cannot be determined without reference to the state of rural production, urban production, and determinants of rural–urban migration. These are simple results, but they have profound policy implications for the development of cities as well as rural areas in developing countries. The simple model presented suggests that agglomeration-­augmenting and congestion-­minimizing policies for cities through the provision of local public goods offer socially more desirable solutions to the problem of economic development in developing countries than blanket prescriptions such as urban wage subsidy, migration restriction, containing rural population in villages, and slowing down urbanization based on mechanistic models. Policies for the provision of local public goods that assist cities in optimizing agglomeration benefits, while accommodating migrants from rural areas, could offer a win-­ win partnership between rural areas and cities. The model also suggests that drawing lessons for developing countries based on city growth experiences of developed countries in their era of rapid urbanization without studying the structures of urban and rural economies would be misleading.

Economic Perspective on Inclusive Urbanisation  67 Inclusive urban development has become a major concern of policymakers and an essential element in the development planning agenda. Inclusiveness is multifaceted covering elements of employment, health, education, housing, basic services (water, sanitation, electricity, roads, etc.), social acceptance, reduction in inequality, and so on. Along with lower poverty incidence, inclusive development must provide a decent quality of life in urban areas. Better opportunities should form an integral part of such an agenda through higher wage avenues, self-­employment opportunities, and skill upgradation training. Special programmes targeting minorities, women, SCs, STs, and OBCs must be introduced. Urban poor including migrants must be ensured occupational, residential, and social inclusiveness. An inclusive urbanization agenda for India could include the following elements: i

ii

iii

Potentials of urban agglomeration economies and location must be harnessed It is high time that rural versus urban development should make way for a rural and urban development agenda. According to eminent urbanist Jane Jacobs, villages cannot be developed without developing vibrant cities. Cities generate employment for rural–urban commuters and migrants, facilitate remittances, and rejuvenate and mobilize public financial resources for rural development and poverty alleviation. Further, cities act as engines of growth and markets for agricultural products. They help farmers by providing technical know-­how and specialized inputs. Public policy must give due attention to the potential of agglomeration economies to be effective, realistic, and inclusive. Certain locations within cities where economic activities cluster and a good transportation network exists, unleash agglomeration economies, and such externalities must be tapped and harnessed. Rural–urban migrants should not be seen as urban problems Rural–urban migrants are an important part of the agglomeration process and form an integral part of the cities. They must be given their rightful place in cities. However, migration has always been seen as an urban problem and has been discouraged. Urban planning policies have also neglected the migrants, forcing them to live in slums and suffer from underemployment and unemployment issues. Affordable housing units including rental housing with proper access to basic services including water, sanitation, and electricity must be built for the migrants. Proper transit facilities to their places of work must also be ensured. Poor including migrants always prefer to live close to the places where employment opportunities exist, and this factor must be kept in view. Importance of the urban informal sector must be recognized The majority of the urban poor and migrants engage in the urban informal sector. Any policy aiming at inclusive development must recognize this fact. The informal sector acts as a bridge between unskilled workers and formal sector jobs. However, most of the policies and development plans pretended to be oblivious to the existence of the informal sector.

68  Economic Perspective on Inclusive Urbanisation JNNURM has also been criticized over similar grounds. City development plans must provide legal recognition and space for such activities. iv Land and housing market failures must be corrected The urban poor, migrants, and low-­income groups have been rooted out of the formal land market by the ‘master plans’. Market failure and inadequacy of the governments to cater to their land and housing demands have forced them to live in slums under sub-­human living conditions. A certain percentage of land being pooled by public authorities must be reserved for them. An excellent example of such a practice is the Gujarat TPS, which reserves up to 10 percent of the land pooled in every TPS for the socially and economically weaker sections. The model calls for replication throughout the country. Inclusionary zoning and inclusionary housing initiatives must be carried out efficiently to meet such demands. The issue has been discussed elaborately in subsequent chapters. v Universal access to basic services must be assured The productivity and economic efficiency of the urban poor and slum dwellers derive directly from their access to basic services like water supply, sanitation, electricity, education, health, skill development, and a proper dwelling unit. The seven-­point charter for the poor, including land tenure, affordable housing, water, sanitation, education, health, and social security, must be implemented to bring them out of the vicious circle of poverty. Skill upgradation and training programmes must be undertaken to help them sustain themselves in the competitive market. vi An affordable housing strategy must be designed and implemented Housing and transport form a major portion of the expenses of the poor. As practised in Bogota, affordable housing units connected to transit facilities will be a major relief for the urban poor. Affordable housing includes access to basic amenities. Rental housing options must also be explored. Inclusionary housing, where a certain percentage of the built-­up area of any new construction is reserved for low-­income housing either on-­site or off-­site with an option of providing in lieu fees at market rates, must be implemented. The topic has been covered extensively in subsequent chapters. vii Due importance must be given to small and medium towns Small and medium towns are often neglected in the urban planning process. However, they can play an important role in safeguarding the needs of the poor, inclusive development, and avoiding the proliferation of slums. They need government support to unleash dynamic agglomeration economies. This will help in developing the surrounding rural areas and provide access to inputs and markets. Schemes aimed at poverty reduction and economic rejuvenation of small towns are needed. viii Urban finance and governance systems must be reformed Indian urban local bodies (ULBs) are considered weak regarding access to resources and revenue-­raising ability. If cities are to generate external economies of agglomeration, they must be able to provide the infrastructure

Economic Perspective on Inclusive Urbanisation  69 firms and households need. Public goods and good governance are essential for entrepreneurs to create city employment opportunities while benefitting from agglomeration economies. Policymakers and urban planners must acknowledge that rural and urban economies complement each other. The reality, existence, and importance of rural–urban migrants must also be recognized. Policies targeting urban issues must appreciate the role of migrants and cater to their needs of employment, housing, and social acceptance. Dynamic cities generate agglomeration economies which can be tapped to ensure inclusiveness in India’s structural and spatial transformation process. 2.6 Lessons for Public Policy Cities play an indispensable part in the growth journey of a country. Agglomeration economies are due to the structural and geographic transformation processes accompanying economic development. Economic activities are subject to scale economies cluster. Cities offer economies of scale, scope, complexity, localization, and urbanization. They lead to larger markets, knowledge spillovers, specialized intermediate inputs, and skilled labour pools. Large cities create diversity and act as breeding grounds for innovation. They toughen competition by promoting excellence. India is undergoing rapid urbanization and has a huge potential for unleashing the benefits of urbanization and undergoing socio-­economic and structural transformations. The urbanization strategy must recognize that cities require a mix of workers, including migrants, to be functional and efficient. India’s economic growth and structural transformation are critically dependent on turning around our cities, and unleashing their dynamism and agglomeration potential. The cost of ignoring cities will be colossal. The nation cannot sustain its growth momentum unless it manages its growing cities well. Spatial planning is critical for city functionality, form and future; it needs to be participatory and decentralized to make cities inclusive. It must involve the majority of the urban dwellers, including EWS and LIG to accommodate their needs, concerns, and aspirations. However, the planning standards and regulations, the planners’ vision of cities and the bias of the planning authorities against the poor together have all resulted in the exclusion of the poor from the formal urban planning processes in India, driving them out of the ‘formal land markets’ and thereby converting them into illegal citizens of the cities (Mahadevia, Joshi and Sharma 2009). A holistic urban planning agenda, including the needs of the urban poor, is demanding, especially when the planning tools are rigid, intricate, and slow in responsiveness. Effective execution of integrated urban plans, including inclusionary zoning, is laced with legislative, technical, and governance difficulties. Financing is yet another challenge. Private participation is subject to the prevailing economic scenario and expectations of profit. The additional financial

70  Economic Perspective on Inclusive Urbanisation burden is associated with subsidizing socio-­economic development, including housing, for the EWS and LIG. However, innovative international experience and Indian practices such as the TPS in Gujarat suggest that these obstacles can be overcome. Boosting inclusion in cities would require a holistic approach, including an adequate legal framework, defining basic parameters regarding needs of the urban poor backed by rigorous research, facilitating coordination among different agencies and the three tiers of government, appropriate capacity building, proper designing of incentives, good planning, and effectively mobilizing and channelizing public funds. Constitutional or legal compliance following a right-­based approach is meant to ensure that the poor are not excluded from the housing markets and there are fair housing opportunities for residents in cities to live where they work. India can draw inspiration from South Africa’s Social Housing Act and United States’ Mount Laurel decision to establish a social housing regulatory commission. The social worth of measures such as security of tenure in slums and inclusion of the urban poor in land and housing markets cannot be understood with an entirely market-­driven approach. A joint initiative of government and market is necessary to accomplish the desirable spatial inclusion objectives. Such inclusion will not happen if the public value is not attached. Resource utilization of groups committed to the protection of the rights of the urban poor, including non-­profit affordable housing groups, can mobilize public opinion for affordable housing and meet funding and maintenance challenges associated with these housing projects. The challenges of urbanization in India are daunting. With proper management, urbanization will unleash powerful externalities to improve millions of lives, including the poor and marginalized sections. If left to itself or neglected, the resulting negative externalities will have dire consequences on society and the environment. Further, we will also lose out on poverty reduction and economic development opportunities. India must design urban policies and schemes to foster economically efficient, socially inclusive, and environmentally sustainable cities. Indian and international experience suggests that they must be based on the fundamental principle of people placed at the centre of development – including the poor, slum dwellers, and migrants who need the government the most.

3

Challenges of Affordable Housing Reform Strategy to Make Urban Planning Inclusive

3.1 The Challenges of Affordable Housing India is urbanizing at a fast pace, and as per the Census 2011 Report and the United Nation’s World Urbanization Prospects – 2018 Revision, the country’s urban population has increased from 286 million in 2001 to 377 million in 2011 and 460 million in 2018. This number is further expected to increase to 607 and 876 million by 2030 and 2050 respectively, taking the share of population living in urban agglomerations in India to 53 percent by 2050. In tune with the urban population, the number of urban agglomerations has gone up as well. The number of cities with 1,00,000 or more population went up from 394 to 468 from 2001 to 2011. The urban population of the nation has witnessed a much higher net increment than the rural population so far and is predicted to continue doing so (Census 2011). Society is transforming from rural to urban, adding many new cities and towns, and making Indian cities grow denser and larger. While rapid urbanization boosts the economic activity of the cities, it also draws people from the rural areas and towns, seeking work, into the urban hubs, resulting in what has been called ‘urbanization of poverty’. Dealing with this seismic shift in the rural–urban population composition of the country poses severe policy and managerial challenges. It has led to an increased demand for affordable housing, which in turn has led to mounting pressure on the limited resources of the cities, such as land, civic infrastructure, transportation facilities, etc. As these facilities cannot grow at the same pace as urbanization, the country is now dealing with the real picture of ‘urban future’ – a housing crunch. Despite a significant increase in housing stock, slums and squatter settlements have been growing considerably in urban areas, indicating a failure on part of the housing market in creating affordable and accessible homes for the urban population. Apart from the housing shortage, the country is also experiencing a shortage in supply of essential services like proper sanitation and drinkable water. The shortage of acceptable, litigation-free, well-serviced urban land, which is also situated at a reasonable commuting distance from place of employment, is a main barrier in providing decent and affordable homes for the urban poor DOI: 10.4324/9781003452171-3

72  Challenges of Affordable Housing and migrants. Another issue in this respect is that almost all the Indian states and cities have come up with the unrealistic controls over the density and Floor Space Index (FSI), which has led to a shortage of floor space across urban hubs. While land markets fail the urban poor, the master plans meant to develop the cities end up ‘mastering’ over the poor. The poor and low-income sections are left out of the inclusionary urban planning process, resulting in the culmination of ‘exclusionary urbanization’ instead. Even the public authorities have failed to respond to the market needs of low-income segments. These large-scale exclusions have led to the increase in substitute arrangements outside the formal systems. In lieu of absence of insufficient provision of basic amenities, housing arrangement and finance for the same have forced almost a quarter of the urban population – essentially the lower-income groups – to seek shelter in overcrowded and uninhabitable slums. There, they are faced with issues even in securing adequate drinking water and sanitation (HPEC 2011). Their sub-standard living situation and lack of access to transportation facilities to work, coupled with lack of suitable skills, push the urban poor into informal systems of accommodation and employment as an escape from starvation and abject poverty. All this results in loss of productivity and the dampening of economic growth. In this context, the provision of better accommodation to these marginalized sections can help elevate them to a better living situation. Provision of affordable housing and prevention of slums are major areas of concern for the policymakers in India and need to be addressed on an urgent basis. The solution to this issue calls for a multipronged strategy that aims at reforming the land use policies, zoning, floor space indices, and urban planning policies in the country. Cities contribute in both rural and urban development, as they strive to create employment and generate revenue in their role as the engines of growth. Agglomeration and knowledge externalities in cities offer cost-effective ways to raise productivity and reduce poverty. Economic growth and structural transformation of a developing nation critically depends on turning around its cities and unleashing their agglomeration economies. Cities also have the potential to fight social exclusion, provide opportunities for greater equality and access to services, and have a more harmonious and inclusive society. India can neither realize its economic potential fully nor can it ensure sustainable development without providing for affordable housing, as well as basic minimum quantity and quality of public services in all its cities and towns. It cannot sustain its growth momentum unless its growing cities are economically efficient, environmentally sustainable, and socially inclusive. It thus needs to ensure creation of more and more inclusive cities to ensure that people can enjoy the gains of urbanization. In this context, a range of mechanisms and institutions are needed to facilitate inclusion, including universal access to services, accountability, spatial planning, and participatory policymaking. This chapter revolves around identifying practical strategies for enabling the access of economically weaker sections (EWS) and lower-income groups (LIG)

Challenges of Affordable Housing  73 to affordable housing. Through the use of the techniques of inclusionary zoning (IZ) and inclusionary housing (IH), it aims to address the issue of exclusion of the poor, especially slum inhabitants, from the formal residential spaces in Indian cities. It presents a case for urban planners to introduce IZ or housing into the planning framework of the city to have sustainable cities through mixed-income housing, and include the spatially and socially excluded masses into the development. It also discusses the Indian experiences in the field of IZ along with the problems related to the affordable housing in India. At last, some suggestions to encourage the concept of IH in India are provided. Section 3.2 explores the genesis of affordable housing shortage. Section 3.3 presents the right to city perspective, first initiated in Brazil, to address the issues of exclusionary urbanization. Section 3.4 details the importance of providing accessible and affordable housing under the New Urban Agenda. Section 3.5 dwells on affordable housing strategy: International experience; Section 3.6 on IZ /housing paradigm: International practice; Section 3.7 on economic feasibility of IZ in India; and 3.8 on IH in India: Central and State Government policy measures. Section 3.9 draws lessons for inclusive housing strategy for India. 3.2 Genesis of Affordable Housing Shortage A housing shortage of around 18.78 million was estimated by the Ministry of Housing and Urban Affairs, Government of India, for the year 2010. Around 95 percent, or 17.6 million, of this shortage was ascribed to the marginalized urban sections – the EWS and LIGs (MoHUA 2010). Additionally, 3 percent of the urban households were homeless. Even amongst those of the urban populace who had some shelter or accommodation, the housing conditions were deplorable. As per Census 2001 and 2011 data, around 18.5 million and 25.3 million households respectively were residing in one room dwellings. Over the same period, the number of households living in dwellings without any restricted rooms or spaces went up from 1.25 million to 2.43 million households. On the whole, the share of urban households residing in dwelling with one room or less went down from 37.4 percent in 2001 to 35.2 percent in 2011. Nevertheless, the absolute number was still strikingly large. Over 80 percent of the urban households were found to be living in congested spaces and in need of better accommodation. The Census records suggested that 0.99 million and 2.27 million households lived in temporary non-serviceable houses and kutcha houses, respectively. Around 10 percent of these temporary homes were occupied by EWS, 2 percent by LIGs and 0.5 percent by middle-income groups (MIGs), indicating a class divide in the urban housing market. Another noteworthy aspect here is the irony of vacant Census houses – 10.1 percent of the houses were reportedly vacant as per the Census 2011. This is indicative not just of the of failure of the urban housing market in correcting the market forces of demand and supply (Mohanty 2014, 2016; McKinsey 2010; HPEC 2011; Judge et al. 2014).

74  Challenges of Affordable Housing The widening gap between demand and supply of housing is a major policy concern for India. Housing is the most basic and critical need of everyone, especially for the poor. Rising urban population due to natural growth, migration of people from rural to urban areas, and extension of city boundaries by taking up the rural areas, requires increased access to affordable housing and basic amenities like water, sanitation, education, health, etc. In order to uplift the marginalized, it is imperative to facilitate affordable housing and other essential facilities to them. Experience suggests that the government has failed to subsidize public housing; it has neither provided sufficient concessions to those in need of subsidized housing finance nor implemented efficient site-andservice projects targeting rehabilitation and redevelopment of slum dwellers and their homes. 3.2.1 Failure of Master Plans

It is due to India’s obsolete spatial planning model, based on the United Kingdom’s Town and Country Planning Act 1947, that around a quarter of the nation’s population resides in urban slums and more than 80 percent of the urban working class is engaged in the informal sector (HPEC 2011). While the United Kingdom revamped its urban planning programmes in 1968, India decided to stick to the original plan. The plan, now redundant, due to its ignorance of the class structure of the cities, overlooks the marginalized and economically disadvantaged groups – which now constitute the majority of the urban population. Additionally, the model does not incorporate inclusivity into city design, funding, or governance. It ignores the ‘informal city’ and solely acknowledges the formal sector. The city master plans did not leave enough room for the poor to work or live. The government’s method for allocating urban land ignores the informal employment in non-traditional workplaces and the housing demands of the poor. While shopping centres and other high-end commercial activities are almost always included in master plans, informal markets and vending areas are not. In addition, mixed land use zoning, which is suited for Indian settings given the prevalence of street vending and home-based employment, has been overlooked by the master plans. The lack of legal acknowledgement for the informal sector in the process of urban planning has frequently resulted in displacement of the poor from their houses and places of employment under the guise of enforcing master plans. The end-state spatial form and grand vision of Indian master plans are unrelated to the actual urban economy. The non-participatory method is what the technocratic master plans depend upon. They label different areas in the same neighbourhoods as ‘conforming’ for high- and middle-income groups’ accommodations while labelling nearby slums as ‘non-conforming’ and ‘illegal’. In addition, relying heavily on stringent development control norms through restrictions on height, density, FSI, setbacks, etc., the master plans artificially restrict the availability of built-up space for all sections of the

Challenges of Affordable Housing  75 city. They inflate residential and commercial rents and exclude many urban residents, including the poor from ‘formal’ property markets. Master planning defines the standards of land allocation based on norms for the middle class and destines the city to markets which cater to the middleand high-income groups. Thus, it ignores the vast sections in the ‘informal city’ who have precarious income and no means to compete for better homes in the housing market. Due to this, the master plans have led to shortage of space to accommodate the poor and LIGs in the urban agglomerations. As the UN-HABITAT (2009) aptly pointed out: The most obvious problem with master planning and modern urbanism is that they completely fail to accommodate the way of life of the majority of inhabitants in rapidly growing, largely poor and informal cities. The possibility that peoples living in such circumstances could comply with zoning ordinances designed for European towns is extremely unlikely. Inappropriate zoning ordinances are instrumental in creating informal settlements and peri-urban sprawl. It could be argued that city governments are producing social and spatial exclusion as well as environmental hazards, as a result of the inappropriate laws and regulations which they adopt. The unaffordability of housing by economically disadvantaged and the LIGs is directly related to the magnitude of urban poverty. While the absolute numbers of people living under poverty have reduced from 320.3 million in 1993–1994 to 301.7 million in 2004–2005, there has been an addition of 4.4 million urban poor to this pool over the said period (NSSO). 26.7 percent of the nation’s total urban population of 80.7 million was estimated to be living below the poverty line. In striking contrast to rural poverty, where both the overall number of rural poor and its incidence relative to the rural population have decreased, urban poverty has increased in number. Effective urban planning contributes not just to the inhibition of the development of informal and temporary settlements but also to the advancement of the existing ones. The provision of plot areas at decent sites that are appropriately sized and affordable at the same time facilitates the access to decent homes to the previously excluded sections of the. Additionally, techniques like mixed use of the land and social mix allow for improved social inclusion. In this context, inspiration can be taken from ‘The Right to City’ approach of Brazil. 3.3 The ‘Right to City’ Approach The central question in urban planning is: For whom are we planning the city? The Brazilian Federal Government’s attempt to answer this question led to the enactment of a path-breaking law, the City Statute – Federal Law No. 10.257 on 10 July 10 2001. This law aimed at addressing the divide between the ‘legal

76  Challenges of Affordable Housing city, rich and with facilities’ and the ‘illegal city, poor and precarious’. It recognized that the urban planning system built an ‘exclusionary’ model in which many lost and few gained. The City Statute was the result of a protracted movement by social activists calling for including the urban poor in city life, and the move by a civil society groups’ federation – the National Urban Policy Forum, Brazil, in 1990s – to advocate in favour of the right to universal housing in the 1990s. The federation had called for a ‘re-distributive and inclusive urban order’. The movement built up from below to accord the urban poor and slum dwellers ‘the right to the city’. It called out the existing master planning paradigm as the main factor behind culmination of ‘favelas or slums’, and ‘imbalanced’ and ‘chaotic’ cities: (a) The Master Plan creates a ‘virtual’ city, not related to ‘real’ conditions; it ignores the fact that most urban dwellers have very low income and no capacity to participate in an extreme market for built space. (b) Zoning regulations prescribe standards of urban land allocation based on the logic of the middle- and high-income brackets. (c) Master planning practically ignores the existence of low-income groups, leading to ‘self-created’ forms of settlements in the ‘left-over’ spaces. (d) The Master Plan reflects a technocratic vision of the city and a statist view of urban policy; it treats the city as a mechanical entity, ignoring human elements. (e) The illegalities and informalities of slums make them hostages to ‘favours’ from politicians for being recognized and for receiving civic services. (f) The Master Plan calls for large-scale investments, ignoring the implementation aspects altogether. The City Statute was enacted in accordance with Articles 182 and 183 of the Brazilian Constitution 1988, prescribing instruments to guarantee ‘the right to the city’ and defend ‘the social functions of city and property’. Article 182 made it compulsory for every city with more than 20,000 inhabitants to have a Master Plan that has been approved by the City Council. It stipulated that the municipal government may, by means of a specific law, for an area included in the Master Plan, demand that the owner of unbuilt, underused, or unused urban land provide for adequate use thereof, subject successively to compulsory parcelling and land tax rates that are progressive in time. Article 183 recognized the right of the urban poor to the city. The City Statute declared: Someone who has possession of an urban area or building of up to two hundred and fifty square meters, for five years, uninterruptedly and without contestation, who uses it for their residence or that of their family, can establish their dominion, as long as they are not the owners of any other urban or real estate. (The City Statute: Section V, Article 9)

Challenges of Affordable Housing  77 The City Statute included four basic components: (i) Constitutional interpretation of the parameters of the ‘social role of the city and of property in the process of city development’; (ii) development of instruments to facilitate urban planning and ensure order by the municipality; (iii) promotion of a procedure to secure the democratic management of cities; and (iv) identification of legal tools for monitoring and upgrading the slums in public and private urban areas. According to Article 2 of the City Statute, the goal of urban policy was to facilitate the growth in social functions of the city and the optimal use of the urban property by framing proper guidelines for urban planning. These guidelines included the following: (i) Securing the right to sustainable cities, which included the rights to urban land, housing, environmental sanitation, infrastructure, transportation, and public services, as well as to work and leisure for both present and future generations; (ii) democratic administration through community participation in the creation, implementation, and oversight of urban development plans, projects, and programmes, (iii) integration of urban and rural activities based on a regional approach to socio-economic development; (iv) regularization of land ownership and urbanization of areas inhabited by LIGs through unique urban planning and environmental norms; and (v) the creation of equal conditions for public and private agents in the promotion of activities related to the urbanization process, serving the social interest. 3.4 Housing and the New Urban Agenda Housing must be prioritized in urban policies to transform the cities into sustainable entities. Given the high poverty rates, rapid population expansion, and widespread inequality in urban areas, it is clear that housing is indispensable from urbanization and needs to be a socio-economic priority. Adequate and affordable housing has not been promoted by the housing policies that have been in place for the past 20 years and implemented through an enabling approach. Governments have pulled away from direct provision of housing without considering the housing markets and regulatory system enough, in order to allow other participants to step up and offer suitable and affordable housing. After spending a long time ‘in the wilderness’, the housing industry is now re-emerging as a significant sector. It is estimated that around a billion new houses would be required to accommodate the urban population by 2025 across the world, the provision of which would cost somewhere between $9.5 trillion and $11 trillion. An increase in the number of slum households in urban areas by over 28 percent from 689 million to 881 million from 1990 to 2014 suggests that the world, as of now, is looking at a shortage of homes not only in terms of numbers but also in terms of quality. The extant data also substantiates this, given that around 980 million households in urban areas lived in subpar housing conditions in 2010 and that number is expected to go up by 600 million by 2030. Given such unprecedented rates of growth of urban population and slum households, the current

78  Challenges of Affordable Housing shortage in housing supply is not exactly shocking. The situation has been amplified by the existing regulatory framework that is ‘enabling’ middle-class formal homeownership on the one hand and is ‘disabling’ an increasing proportion of destitute residents from having access to decent homes on the other hand. Among developing regions, sub-Saharan Africa alone is responsible for 5 percent of the rise in the number of slum inhabitants between 1990 and 2014. This indicates that housing shortages are more severe in some parts of the world than the others. In South Asia, for example, there is a shortage of 38 million dwellings. Informal sector is a significant provider of housing in other parts like Zambia (60 to 70 percent), Lima (70 percent), Ghana (90 percent), and Caracas (80 percent) (WCR 2016). Slums, anywhere and everywhere, represent the deprivations encountered by the people including poverty and inequality. Upgrading the lives of slum dwellers has thus been considered a sure way of ending poverty and the vulnerabilities it brings to the table. The challenge here is that while the percentage of urban slum population has been going down over the past two decades or so, the absolute number of slum dwellers has continued its increasing trend. However, the fact that 320 million people were pulled out of their slum habitations and relocated between 2000 and 2014 reinstates that collective action can be the solution to improve the slum situation. In lieu of the large section of the population that needs to be targeted, upgradation of slums requires a more comprehensive, inclusive, and integrated approach. Such a participatory approach is currently targeting only a limited two million slum dwellers across 160 cities spread out in 38 countries, and other countries need to draw from it. The strategy report ‘Housing at the Centre of New Urban Agenda’, published under the auspices of UN’s Habitat III of 2015 was an important step in addressing these issues with its focus on reinstating housing as the key to achievement of sustainable and inclusive urbanization. With the housing issue is at the core of the national- and local-level agendas for urban development, it aimed to realign the focus of policymakers from the mere construction of residential spaces to a more resilient framework of housing development that is pro-people in its approach. It sought to integrate the issue of housing not just with the nation-specific urban policies but also with the UN-Habitat’s strategic thinking on planned urbanization. It reinforced the idea that the authorities should encourage pro-poor mechanisms in the housing markets if the process of urbanization is to have a sustainable future. To achieve its goal of repositioning ‘housing’ at the centre of sustainable urbanization, the framework came up with a twin-tracked approach – curative, focused on improvements in existing stock of houses including slum redevelopment projects, and preventive, focused on creation of better quality and new accommodation. Policymakers and planners need to appreciate the complementarities between rural and urban economies and the role of rural–urban migration in benefitting both rural and urban area. Rural–urban migration is a resource that needs to be tapped, along with agglomeration economies in cities during India’s structural and spatial transformation processes to enable the country to

Challenges of Affordable Housing  79 move fast to the status of a developed country. Any approach to deal with urbanization issues must take into account the key role played by migrants and address their needs. 3.5 Affordable Housing Strategy: International Experience Housing shortage is not a phenomenon peculiar to India. Even internationally, housing shortages burden the low- and middle-income groups because of continuously increasing demand for housing. Due to the severe shortages and the quick increase in the value of urban land, land speculators capitalize on the inaction of local authorities to seize control of sizable landholdings. Building and compliance requirements and time-consuming approvals have increased the construction costs of housing and hence reduced the appeal of the community for new immigrants. In lieu of these issues, different countries have come up with varying solutions – some temporary and some lasting. Provision of public housing is among the most prevalent measures. For political considerations, all nations support social housing initiatives even though they strive to find effective ways to provide inexpensive housing. The demand for public housing is high in countries like Egypt, Tunisia, Brazil, and Colombia, where there is a severe shortage of affordable housing. In these countries, these dwelling units have mostly been taken over by middle-income groups and regular workers. Several countries allow residents to become property owners after leasing the house for a prolonged time period – around 10 or 15 years. Public housing initiatives include the construction of housing units in the urban periphery and their allotment to households uprooted by public works projects, natural calamities, and other human-made disasters. The remote locations of such projects, however, limit the benefits and result in spatial exclusion of families whose social and economic networks have already been shattered by relocation. These initiatives have been, however, ridden with problems which are clearly reflected in the experience of public housing schemes implemented by countries like Egypt, Morocco, and Syria and other countries of sub-Saharan Africa like the RDP housing project. Starting from the 1970s, the land prices in urban areas started increasing, which resulted in an increase in computed cost of the houses after accounting for building costs. Employing land in fringe areas for the projects, though cheaper, would have led to marginalization of some sections of the society and to social homogenization. An alternative in this situation would be to lay emphasis on the provision of rental housing instead as a way to reach out to the marginalized sections. Given the distorted nature of the formal rental markets in most of these countries, the unregulated informal market thrives in providing housing facilities. Though this segment of the housing market is not free from issues pertaining to selectivity, excessive charges, and harassments, it has nevertheless experienced rapid growth. The informal settlements are usually built violating several regulations and by-laws and accommodate mostly a mixture of middleand low-income groups. While these settlements exist both within and at the

80  Challenges of Affordable Housing periphery of the cities, there lies massive difference in the living conditions of slums, bidonville, and other informal settlements. These are a reflection of the socio-economic status of the residents and, in turn, are reflected in the environment of their living habitat. In Egypt, since the 1970s, the size and rate of growth of remittance-financed informal settlements have outpaced the ability of the city administrative bodies to regulate development in peri-urban and remote areas. Since 1966, the government has responded to haphazard urban growth with a series of decrees that both legalize the current state of affairs and impose severe penalties on those who violate them in the future. Informal developers and settlers are not deterred by these declarations or the drawing of urban perimeters around cities, towns, and villages; instead, they must wait for the next broad legalization to normalize their condition and draw a new urban perimeter farther away. The last few decades have seen a variety of policy and programme responses to slums and informal settlements, including large-scale public housing projects, affordable housing, basic service provision, ‘sites and services’, slum upgrading programmes, and a few preventive measures to stop slums through land use regulations. Slum upgrading initiatives are the most common of all. Housing, infrastructural access, and formal titling must all coexist. Despite the safety of occupation, it is obvious that investing in housing is impacted by the absence of a recognized right to land tenure. On the other hand, legal titling without improving infrastructure and living conditions has had few effects. In order to alleviate geographical inequalities, it is crucial to include housing, infrastructure, and basic services. Marx, Stoker, and Suri (2013) hold the opinion that slums might in some way serve as poverty traps, and suggest that a ‘big push’ could be a suitable course of action. They have noted the effectiveness of various initiatives involving large-scale investments in slum development and the resettlement of slum residents onto better accommodations. Neither of the two alternatives can be accomplished without a strong political will as many slums have undergone the uprooting of formal systems of governance and their replacement with other non-democratic sources of power. Such informal agents of the slums usually have compelling reasons to maintain the status quo in the slums and resist any changes. Unless this dynamic of power and governance is addressed and good governance is ensured, initiatives like coordinated large-scale investments and ‘big push’ will not have the desired effects. 3.6 Inclusionary Zoning/Housing: International Practice In order to provide decent housing at affordable rates for the disadvantaged sections of the urban population, many nations of the developing and developed world have turned to ‘inclusionary zoning (IZ)’ – alternatively known as ‘inclusionary housing (IH)’, or ‘mixed income housing’. This idea of including public housing in market-based developments is initiated through a planned project and enactment of laws and/or regulations. Under these models, the governments encourage the private players to offer inclusive and affordable

Challenges of Affordable Housing  81 housing through market-driven initiatives, by offering incentives. Developers are given concessions like changes in land use, density bonuses, lowered parking and approval requirements, waivers of impact fees, and other exemptions so they are not obligated to develop affordable housing as a charitable endeavour. IZ/IH mandates that either land or floor space, or both, should be set aside along with a certain number of housing units – usually between 10 and 15 percent – for low- and middle-income groups. Developers can provide land or funds to the building of social housing, or they can build affordable units elsewhere or inside the same complex (Calavita and Mallach 2010). Several countries including the United States, the United Kingdom, the Netherlands, Canada, Italy, Australia, New Zealand, France, Spain, and South Africa have implemented the IH/Zoning policy in different ways over the years. For example, Australia introduced a scheme of ‘development contributions’, and Ireland and Spain implemented a law mandating the development of affordable housing through market-initiatives. Italy on the other hand has promoted IZ at the local levels. In the United Kingdom, private developers are required under the ‘Planning Obligations’ of the Town and Country Planning Act (1990) to ensure that a fixed portion of the housing projects undertaken by them are set aside for affordable housing. Again in 2002, the Unitary Development Plan was initiated, which called for a reservation of 25 percent and 33 percent of on-site and off-site housing units, respectively, under affordable housing. By 2005, under the 1990 law and 2002 plan, the country managed to create over 40 percent of such residential units. In the case of the United States, an impact fee system is followed wherein the developers of new housing units have to pay a fee to compensate for the impact of their development project on provision of affordable housing. Many states and cities also follow the practice of IH through different measures. Some follow the system of providing incentives to the developers; other have rules laws mandating the construction of affordable housing units – in-site (on the development itself) or off-site (in other locations); and yet other states/cities allow for the payment of an in lieu fees to a fund demarcated for provision of affordable housing. Other practices where the developers are obliged to reserve 10 to 30 percent of the housing units with the purpose of selling or renting them out to LIGs and MIGs or provide the housing to these groups at less than the actual market rate are also followed in the United States. Several states have also come up with interesting ideas for smooth implementation of IH model. Portland (Oregon), for example, came up with a Metropolitan Housing rule, in the 1970s, which promoted the simultaneous existence of housing units for high- and low-income groups within the same residential complex. New Jersey follows the system of incentivizing the developers through waiver or deferred payment of impact fee, density bonus, low parking obligations, among other zoning incentives. This followed the ruling of the New Jersey Court in the Mount Laurel case, which obligated all municipalities in the state to fulfil their fair share in provision of affordable housing. Another example is Montgomery County (Maryland), which launched the Moderately Priced

82  Challenges of Affordable Housing Dwelling Unit Program in 1973 and managed to allot 10,000 housing units at affordable rates within the span of 25 years. The IZ models, apart from meeting the need for affordable housing of the LIGs, are avenues of employment generation in the informal market for them. These groups, once accommodated in areas where development is underway through IZ/IH, are then able to provide personal services to the other residents in the area at less prices, which provides them with much-needed livelihood. 3.7 Economic Feasibility of Inclusionary Zoning Conflicting opinions exist regarding the economic effects of employing IZ/IH as a tool to ensure the provision of housing for the LIG and MIG households. Several economists claim that regulating housing costs or rent is distortionary and results in a decrease in housing supply and its quality as price regulation hinders production (Gans et al. 2017). Some see IH as a type of rent control that limits the price of some new construction and forces developers to sell or rent the ostensibly ‘affordable’ units at prices below the market rates. The units must maintain this price control for a predetermined amount of time. For instance, this time frame is often 55 years or longer in California. Others hold the opinion that while price controls, if applied only to a portion of the new development won’t deter production as much as controls applied to the entire development, they will nevertheless deter development. It will increase the cost of non-price-controlled houses and, as a result, reduce the supply of new housing by acting as a levy on home development. Nevertheless, some economists are in favour of IZ. It has been argued that IZ facilitates the creation of a dual market for housing – one that is price controlled, where the houses are sold or rented at rates lower than the actual market rates, and one that is not price controlled (meant for houses priced at the market rate). Many traits of the rent-controlled markets, like shortages and production disincentives, will be present in the price-controlled segment of the market. However, under the system of IZ, builders are required to generate a specific number of price-controlled units in addition to any non-price-controlled units they wish to develop. This ultimately means that the price-controlled housing units will cause a financial burden on the developers if these ‘affordable’ units are not funded or incentivized by governments or private charities. If subsidies are inadequate to pay the expenses of below-market rate units, IZ will function similarly to a tax on housing or development at market rates. In layman’s terms, the price of a development will rise if a significant number of the housing units inside it are sold at a discount. As a result, in order to make up for the discounted apartments, the developer must significantly increase the price of the market rate units. As a result, the market rate housing units increase in price, ultimately leading to a decrease in housing output. Both a fall in house starts and a reduction in dwelling size could be indicators of this decline. Even though it might seem that the builders under IZ are paying for the below-market-rate units, they would instead be shifting some or all of this

Challenges of Affordable Housing  83 effective tax onto homebuyers or sellers of undeveloped land. If housing expenses rise enough, they may drive down property values to the point where some landowners decide not to sell at all. Less homes would be constructed as a result, and prices would increase. However, simple economics dictates that real conditions of the market, and more specifically, the elasticity of demand for housing in relation to the elasticity of supply of housing, will decide how the incidence of this tax is distributed between purchasers and sellers. 3.8 Inclusionary Housing in India: Government Initiatives In India, both the central and the state governments have initiated programmes – some successful, some unsuccessful, and others with mixed success – to cater to the issues in the IH market caused by expanding urbanization and rising demand for cheap housing. The focus of these plans has mostly been limited to the implementation of programmes for subsidized housing. The inadequacies and fallacies of the urban land markets and flaws in the master planning process have received less attention, in spite of the fact that these aspects are at the core of the problem of affordability. The authorities also had envisioned private sector-led initiatives as part of their plans, but they haven’t had the success they had hoped for. Some such inclusionary initiatives taken up by the central and state governments in India are presented below. 3.8.1 Government of India Initiatives 3.8.1.1 National Urban Housing and Habitat Policy, 2007

The National Urban Housing and Habitat Policy (NUHHP), introduced in 2007, was the first policy programme in India that focused on inclusionary urban planning. Developed in the context of the housing shortage trends estimated by the 11th Five-Year Plan and based on the demographic projections of Census 2001, the policy aimed at the development of a sustainable urban environment. It also took into consideration the United Nations’ Millennium Development Goals (MDGs) of 2000. The NUHHP mandated the provision of spatial incentives to the EWS and LIGs in both public and private housing development initiatives through a system of reservation of 10 to 15 percent of land or of 20 to 25 percent of Floor Area Ratio (FAR) for these groups, whichever was higher. However, even after five years of implementation of the policy, India recorded a housing shortage to the tune of 18.78 million, with almost 96 percent of it pertaining to EWS and LIGs, as per the Census 2011. 3.8.1.2 Jawaharlal Nehru National Urban Renewal Mission

Another policy measure taken by the government was the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Its two components, Basic Services to Urban Poor (BSUP) and Integrated Housing and Slum Development

84  Challenges of Affordable Housing Programme (IHSDP), called for the reservation of 20 to 25 percent of space in the housing development projects for the EWS and LIGs. To mitigate the financial burden on the developers, the scheme proposed the implementation of a cross-subsidization system, wherein those belonging to relatively higher-income groups would be charged more to incentivize the disadvantaged households. A recent report by Lok Sabha Secretariat (2015): Public Accounts Committee Eighteenth Report: Jawaharlal Nehru National Urban Renewal Mission informs that as against the central grant of Rs 1,00,000 crores initially envisaged and Rs 66,085 crores subsequently committed, only Rs 40,484 crores could be released by the end of the mission period 2015–2012. While about 15 lakh houses were sanctioned for the poor over the seven-year mission period, the progress towards completion of these houses has not been satisfactory. Among the factors responsible for the deficient progress of BSUP and IHSDP in cities are lack of availability of litigation-free land at suitable locations, lack of tenure or land title in slums, inability of states and urban local bodies (ULBs) to mobilize their share to match Government of India funds in time, non-payment of contribution by beneficiaries, poor capacity of ULBs and other implementing agencies, inadequate involvement of beneficiaries, contractor-led execution, non-implementation of reforms, and weak monitoring. 3.8.1.3 Rajiv Awas Yojana

Drawing from its previous experience with JNNURM, in 2009, the Government of India initiated the Rajiv Awas Yojana (RAY). It had the goal of establishing a ‘Slum-free India’ with fair and inclusive cities where every resident had access to decent housing, basic civic and social infrastructure and amenities, and strong livelihood connections. States and localities that granted slum residents property rights were covered by the scheme. This plan’s principal goal was to redevelop every existing slum and offer answers to the issue of the lack of cheap housing in order to stop the expansion of new slums. The expense of slum development and improvement, including housing, was to be covered by a central grant for a project to the tune of 50 percent. In order to fix the shortfalls of the existing urban development approach that facilitated the growth of informal settlements, and to make cities more inclusive, the RAY aimed to provide inexpensive housing to the urban poor. For achieving the same, it introduced significant policy changes, such as tenure protection and entitlement of the property rights to the slum residents. Just like JNNURM, RAY also imposed reservation of land for the disadvantaged groups in every housing project, whether private or public. RAY envisaged the preparation and implementation of Slum-free City Plans. 3.8.1.4 Smart City Mission

In order to encourage economic growth and enhance service delivery to urban populations, the Government of India established ‘The Smart City Mission’ in 2015. These cities were chosen based on the results of a national competition.

Challenges of Affordable Housing  85 The Mission is to create cities with adequate living conditions and basic infrastructure, and with the aid of ‘Smart’ solutions, to carry out inclusive and sustainable development in these cities. In this sense, the Mission statement offers the following four models: (1) City enhancement (retrofitting), (2) city rejuvenation (redevelopment), (3) city expansion (green-field development), and (4) pan-city effort. Additionally, the government suggested financial assistance as part of the Mission. It has pledged to invest a total of Rs 48,000 crores over the course of five years in 100 smart cities, with each receiving Rs 100 crores annually; states and ULBs were expected to contribute an amount of Rs 48,000 crores in accordance with the funding pattern of 50:50 basis. These funds were expected to act as a ‘catalyst’ to leverage money from external and internal sources. Innovative, technologically advanced, creative, digital, e-governed, and knowledge-powered service delivery systems are expected in smart cities. They would encourage mixed land use and transit-oriented development (TOD), as well as more inclusive housing. The Mission was supposed to focus on fostering effective physical and social infrastructure, ensuring fair access to service delivery, and enhancing urban government. Its basic tenet was to use technology to prevent leakages from the process of urban development and to enable effective provision. 3.8.1.5 Affordable Housing for All Mission

The National Mission for Urban Housing, labelled as the ‘Housing for All by 2022’, was introduced in 2015. Its objective was to ensure the access to safe, secure, hygienic, and affordable housing equipped with the essential services to the marginalized sections – EWS and LIGs, women, scheduled castes (SCs) and scheduled tribes (STs) – in the urban areas. It aimed at developing a total of two crore housing units over the seven-year span of the Mission. The Mission was to be executed in three phases, with the first covering 100 cities between April 2015 and March 2017, the second covering 200 additional cities between April 2017 and March 2019, and the third covering the remaining cities starting from April 2019 till March 2022. The Mission offered four options to beneficiaries, ULBs, and state governments which are elaborated below: In situ slum redevelopment is based on using land as a resource where ULBs and state governments will provide land free of cost, especially in slums. Private developers will construct affordable houses for slum dwellers on one part of the land and housing units for commercial sale in the market on the remaining part. State and city governments can give some financial concessions or additional FAR and Transferable Development Rights (TDR) to make slum development projects financially more viable. Private developers will be chosen through open tendering. Central government can provide a grant of Rs 1 lakh on an average per house,

86  Challenges of Affordable Housing and that can be used by the state governments for any slum redevelopment project in the state to make the projects more viable. Central ministries/agencies can also take up slum redevelopment projects on their lands without charging for land and will be eligible for central grant. Credit-linked Subsidy Scheme is a demand-side intervention. In this, the beneficiaries of EWS and LIG categories, who are seeking home loans, will get interest subsidy at the rate of 6.5 percent for a tenure of 15 years or the tenure of the loan, whichever is lower. This subsidy is eligible only up to a loan amount of 6 lakhs. Affordable housing in Partnership is a supply-side intervention. In this, the supply of affordable housing can be increased through private developers, public–private or inter-governmental partnerships. The programme shall reserve 35 percent of houses for EWS, and the minimum project size shall be over 250 houses. Each EWS house will be given Rs 1.5 lakhs on average as central assistance. Beneficiary-led individual house construction or enhancement: Under this component, the beneficiaries belonging to EWS/LIG sections will get assistance to either construct new houses or enhance existing houses on their own. Beneficiaries will be those who are excluded from any other component under the Mission. The maximum assistance under this programme is Rs. 1.5 lakhs. The Housing for All Mission is superior to others initiated before it, in the sense that it introduced the system of integration of the beneficiaries’ bank accounts with their Aadhar number and Jan Dhan accounts to streamline the entire process of identifying the beneficiaries, reduced the delays, and facilitated the tracking of the mission’s success. Further, its submission giving importance to technology has its focus on embracing innovative, modern, and green technologies. Another advantage of the plan is that it embraces cooperative federalism instead of the ‘one size fits all’ philosophy. It requires that a woman or she and her husband be the legal owners of the property. Each home in the EWS category was expected to have a carpet area of not less than 30 square metres. In the case of non-availability of land, state governments were allowed to relax this rule with the benefactors’ permission. By covering the necessary additional costs, they can help improve the neighbourhood. In spite of the benefits of this scheme, there are several challenges to creating affordable homes, which are listed in Box 3.1. In India, government institutions like Housing Boards and Development Authorities have sole control over housing (including low-cost housing). In the past, from both the policy and the structural standpoints, private sector property developers have been restricted from creating affordable housing. Since the global financial crisis of 2008–2009, there has been a growing trend in India wherein private sector developers are willing to take chances and use their entrepreneurial skills to stake a claim in the affordable housing market. Since 2009, numerous initiatives in the country’s affordable housing market have

Challenges of Affordable Housing  87 Box 3.1 Issues in the Development of Affordable Housing Developing affordable housing in Indian cities faces significant challenges due to several economic, regulatory, and urban issues. Whilst the lack of availability of urban land, rising construction costs, and regulatory issues are supply-side constraints, lack of access to home finance is a serious demand-side constraint, which impacts the ability of low-income groups to buy housing. Although some of these are gradually being mitigated, efforts are required by multiple institutions to facilitate mass development in this sector. Lack of Availability of Urban Land With high population density, there exists a huge demand for land in urban India. The real shortage has been further increased artificially by poorly conceived central, state, and municipal regulations. As a result, land prices in India are much higher than intrinsic levels that can support mass real estate developments. Rising Threshold Costs of Construction While the price of premium residential projects is largely guided by land costs, construction costs have a significant share in the price of affordable housing. This is because while land prices fall exponentially from city centre to peripheral locations of the city, construction costs generally follow a gradual trend from premium luxury, mid-income to low-income housing. Affordable housing projects get more affected by rising costs of construction than premium projects. Hence, it becomes important that costs are minimized for construction of low-income housing whilst balancing the amenities provided as well as ensuring the safety and serviceability of the built structure during its lifecycle. During the past decade, construction costs have significantly increased by nearly 80–100 percent. due to the appreciation in prices of construction materials such as steel, cement, and sand. Shortage of labour has also resulted in a rapid increase in wages. Regulatory Constraints There are severe regulatory constraints to real estate development in Indian cities, which range from lengthy approval processes to lack of clarity in urban planning. Source: CREDAI, 2014.

88  Challenges of Affordable Housing Box 3.2 Factors Leading to the Emergence of Affordable Housing Before Crisis

During Crisis

Affordable Housing

• Acquire land with part payment • Collection of customer advances with launch of projects • Starting construction and also seek construction finance • Using surplus fund for additional investment in new lands/project

• Acquire land with part payment • Subdued response • Lack of construction finance • High leverage leading to postponement • Distress sales in existing stocks

• Acquire land with part payment • Strong response housing that are affordable • Easy source of money and lower cost of development • Improved financial status of residential developers

Source: CREDAI, 2014.

been introduced across various cities. In this market, companies like XRBIA, VBHC, Provident Housing, etc. have a strong foothold as of now. The factors responsible for the advent of affordable housing are given in Box 3.2. The implementation of the Housing for All Mission has been challenging in several aspects. Firstly, there is a shortage of serviced land that can be used for developing houses. Secondly, the rapid growth in urban population driven by migration and annexation of rural areas into urban boundaries creates difficulties in estimation of housing requirements and planning of the urban areas. Thirdly, limited willingness of authorities, failure of the state and local governments in contributing funds to the scheme, red-tapism, and weaknesses in planning and implementation of the scheme have limited its reach. Fourthly, approval is needed from a number of agencies and authorities in order to plan affordable housing and undertake slum redevelopment programmes. Ensuring proper coordination amongst the various implementation agencies and government levels is also a challenge. The lack of serviced land for low-cost homes for the poor in acceptable places in larger cities is the fifth challenge to ‘Housing for All’ Mission. Another flaw, common to most of such schemes, is that all of these programmes are designed in isolation. However, in order to break the cycle of poverty, integrated programmes are more beneficial. In this context, a multipronged approach is required to address the issues, including adjustments in the zoning and urban planning practices that are already in place. The followed strategies need to be adopted to achieve the target of the ‘Housing for All Mission’: • Promote both demand- and supply-side interventions. • Focus both on rental and on ownership housing and proactively promote rental housing – past approaches laid emphasis of ownership housing only.

Challenges of Affordable Housing  89 • Segment the market with different strategies to deal with different income groups. • Stop promising universal ownership – enabling all to own house will take a very long time and also may not be optimal. • Address the constraints in the urban land market to ensure the availability of land for affordable housing projects. • Review the existing regulations and procedures that impact on affordable housing, including rental housing. • Abolish Rent Control Act and, pending that, make amendments to rent control law to reconcile the interests of owners with those of the tenants. • Provide security of tenure and adopt no eviction without alternative; upgrade slums. • Make urban planning inclusive; adopt IZ and housing paradigms. • Establish housing institutions and make them work. • Improve quality in rental housing stock. • Provide subsidy for low-income tenants as well as to private landlords for constructing low-income rental housing. • Develop housing finance system. 3.8.1.6 National Urban Housing and Habitat Policy, 2017

The formulation of NUHHP-2017 is driven by the need to align housing and habitat policy of India with the global agenda of sustainable habitat development. It also recognizes that the construction sector is the second largest employer in the economy, but is faced with low labour productivity. Efficiency in housing and real estate development can give the Indian economy a fillip. The demand for affordable housing at the bottom of the pyramid is high and could be a factor enhancing the viability and efficiency of the housing market. NUHHP-2017 recognizes the importance of ensuring a continuum between the old and the new policy frameworks by assessing the existing state of the urban housing sector from data available, appreciating the global practices and imperatives, determining the substantive issues of affordable housing, and outlining directions to address the problem. 3.8.1.7 NHHUP 2017: Rationale

NUHHP-2017 takes into accounts the experiences in implementation of past schemes of housing for the urban poor such as Valmiki Ambedkar Awas Yojana (VAMBAY), the two components of JNNURM –BSUP and IHSDP, and RAY. Further, it aims at the convergence of housing policy with new national initiatives such as Prime Minister’s Awas Yojana (PMAY), Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Swatch Bharat Mission (SBM), National Heritage City Development Augmentation Yojana (HRIDAY), and other initiatives of Government of India such as the Real Estate Regulation Bill, Ease of Doing Business, Street Vending Act, Model Tenancy Act, Habitat III National Action Plan, Digital

90  Challenges of Affordable Housing India, etc. In particular, PMAY aims at affordable housing for all by creating an enabling environment and opportunities for affordable housing to the massage with linkage to livelihoods. NUHHP-2017 also takes into account the National Urban Sanitation Policy, Urban and Regional Development Plans Formulation and Implementation (UDPFI) Guidelines, and exercises for the development of Model Town Planning Act and Model Building Byelaws. 3.8.1.8 NUHHP-2017: Goals

The goals of NHHUP-2017 include the following: • To promote inclusive, safe, resilient, and sustainable cities and habitats. • To address issues in the urban land market and ensure the availability of land for affordable and public housing at subsidized rates. • To facilitate innovative models of housing the urban poor and lower income through multiple strategies, approaches involving all stakeholders. • To lay special focus on the development of a viable rental housing market. • To use technology for fast-track construction. • To provide adequate infrastructure and services for affordable and social housing projects. • To make finance, governance, and institutional framework supportive of the process of providing housing for all. • To facilitate capacity building in the housing sector. • To promote pilot projects, review the housing policy, and build on the lessons learnt from time to time. 3.8.1.9 NUHHP-2017: Strategy

NUHHP-2017 recognizes that housing policy is a continuous process of policy evolution, building consensus and negotiation involving multiple interests and stakeholders such as central and state governments, ULBs, developers, housing institutions, NGOs, CBOs, housing associations, etc. The following are the key strategies of the NUHHP, 2017 to tackle the affordable housing crisis in India: Multipronged approach Supply-side interventions, like provision of public housing by the government, alone are not sufficient to fulfil the housing needs and requirements of the growing population. According to past experience, demand-side measures are also required. In fact, both demand- and supply-side measures need to be integrated. The United States has successfully managed to implement a combination of the demand- and supply-side measures in this regard. ‘Housing Vouchers’ scheme has been initiated on the demand side as the prime mechanism for provision of subsidized housing. Under this, the landlords can apply for the redirection of the funds from the housing amount accruing to their tenants

Challenges of Affordable Housing  91 under the government’s Universal Credit payments scheme. This way, the portion of the rent due from the tenants is directly paid to the landlord without any delays. Given that rent consumes 30 percent of the income of low-income households, the direct rent payment service has been beneficial. On the supply side, the nation has adopted the practice of IZ and IH, wherein the developers are offered financial incentives including density bonuses and tax credits against expenditure incurred for rented housing. For such instruments to be effective, the local context must be taken into consideration. Since private investors are not willing to invest in social housing or rental housing, the government must play a crucial role and all programmes should be combined to produce the desired results. Multiple housing options While JNNURM gave preference to provision of ownership of the houses, the current need is to promote the pursuit of a combination of both rental and ownership of the homes. The preferences of the people regarding housing are shaped by their incomes and requirements, which are different from those envisioned by many housing schemes. As per a housing survey, the household’s top priority is access to civic and social infrastructural amenities like streetlights, a safe neighbourhood, schools, and hospitals, etc. This is followed by accessibility to means of public transportation. Rental housing facility, which takes into account these preferences, would be able to meet the housing needs of large sections of populations, especially those who cannot afford ownership, and migrants and youngsters, who are likely to be on the move. Market segmentation The housing markets are usually characterized by their heterogeneity in terms of the requirements and income levels of the renters and buyers. Most market services exclusively cater to high-end rental segments, despite the fact that the demand for rental accommodation is higher in the region by those willing to pay a rent of Rs 7,000 to Rs 8,000 per month. The government has to step up to ensure the provision of housing to the beneficiaries of lower segments of market, who have lower income, since the incentive accruing to the private developers to meet the requirements of these groups will be less. However, the market could be influenced by policy interventions to meet the needs of the relatively higher-income groups within the LIG category. Public–private partnerships The visualization of housing for all – owned houses or rented housing – requires high investments in the housing market and in the creation of civic amenities and other social infrastructure required to cater to the needs of

92  Challenges of Affordable Housing the people. Given the magnitude of this target and the limited funding available with the public sector, it is difficult for the government to make much headway in this matter without enlisting some help. Here, the role of private sector in providing affordable housing units to the weaker sections and low-income groups of the society becomes significant. The public and private sectors can both collaborate in achieving the targets of IH. Design of incentives to stakeholders Inclusion of private sector in the process of creating and providing affordable housing usually requires the government to provide them with some incentives in exchange for their participation in the same. These incentives include the following: Density bonuses; tax rebates; waiver of impact fees, if applicable; faster approvals; lower parking requirements, and the like. These incentives, however, should be redefined for separate categories. For instance, the private sector can be entrusted with the supply of housing to those segments of the low-income groups that have relatively higher incomes without having to subsidize the developers much. But such subsidies might be necessary to compensate the private developers for providing housing to lower-income segments. Provision of affordable housing to the poorest of the poor segments should be separated from the private sector entirely and taken up by the government itself. To implement this, there is a need to revamp the overall business environment of the real estate sector. 3.8.2 State Government Initiatives

State governments in the past have also adopted inclusive practices to solve the problem of land, housing shortage, slums, civic amenities, etc. They have resorted to measures like transit-oriented zoning and inclusionary zoning practices to integrate transportation and housing as a measure of inclusive urban planning. Some of the state government initiatives are presented below: 3.8.2.1 Gujarat Town Planning Scheme

The Town Planning Scheme (TPS) in Gujarat, modelled upon the land readjustment schemes implemented in countries like Germany, Taiwan, South Korea, and Japan, has proved to be a rewarding approach in the planning of the cities and towns. The scheme is legally backed by the Gujarat Town Planning and Urban Development Act (GTPUDA), 1976. It lessens the burden on the government by the planning of urban development by ensuring that the town planning process is carried out in an inclusive, equitable, and pro-poor manner. It also guarantees that landlords are not uprooted entirely and ensures their inclusion in the planning and development process. As per the provisions of GTPUDA, an area development authority is formed and given the responsibility of developing selected urban areas through pooling of land. Both

Challenges of Affordable Housing  93 micro-planning, involving the formulation of the TPSs for small areas, and macro-planning, focusing on the demarcation of a development area around the city boundaries and then developing it, are a part of the planning process. The TPS carries out urban development in Gujarat through a two-step approach. Firstly, a Development Plan (DP) is prepared and then the planning schemes are formulated and implemented in different areas. The DP is an overarching blueprint for the city that identifies the new regions to be developed and provides an overall direction for infrastructure development. Each of the development region or area identified is further divided into several TPS, each ranging over 100 to 200 hectare of land and including 100 to 250 landowners. After ensuring the provision of basic services and infrastructure in the TPS area and earmarking land for accommodating the poor, the plots are handed back to the owners after retaining a portion of the original plot. Each TPS is obligated by the act to set aside 10 percent of the total land area for the socially and economically weaker sections (SEWS). Within the development area of a TPS, 15 percent is set aside for roads, 5 percent for parks, playgrounds, and other landscapes or open spaces, and another 5 percent for provision of social infrastructure including schools, medical centres, and other civic amenities, and 15 percent is retained by the development authority to meet the development cost in the area. Every TPS thus incorporates the features of inclusivity, equity, and a self-financing mechanism in the process of development. Costs and benefits are divided equally amongst all landowners. Betterment charges are levied on them in proportion to the land value increment due to spatial planning. Public participation is mandatory at every step of planning and reorganization of plots. The TPS aids in avoiding the expensive and complicated procedures involved in the process of dispute settlement and lawsuits. Gujarat TPS follows the following steps: • The planning area is thoroughly surveyed, taking into account all topographical and physical aspects including buildings, infrastructure, trees, compound walls, water bodies, drains, historic sites, etc. All types of public and private property are identified. • Land survey maps and the information pertaining to all the landowners are compiled. Of all these details, land tenure information, in particular, is recorded carefully, because in most cases the tenure system is retained post the development. • All the local records and maps, thus gathered, are used to prepare the ‘base map’. Physical survey of the area is then linked with this. This process is called melavni (matching) in the local language. Any discrepancies in the two sets of maps are rectified, and the base map is sent to the Land Records Department for approval. • The TPS border is defined on the base map after taking into account all the structural and organizational elements. A sales map is also developed at this time utilizing the relevant sales and prices of the land. This also allows in establishing the initial value of the plots as well.

94  Challenges of Affordable Housing • The actual or original plots (OP) within each TPS are also marked on the base map and assigned numbers. In case a person owns multiple land parcels, the parcels are combined and issued the same ‘OP’ number. This simplifies planning and reduces land fragmentation. • Details of landownership, original plot area and number, its estimated value, etc. are tabulated in ‘F form’. • If any city-level road is passing through the TPS, it is drawn on the base map. Then, a road network that maximizes efficiency is constructed and incorporated into the map while keeping in mind any future urban activities and their suitable locations. • A fixed proportion of land – 20 percent is marked to provide for public amenities like schools, open spaces, medical centres, etc., and affordable housing for disadvantaged sections, as prescribed by the law. • A percentage of the total land in the TPS used for provision of public services is subtracted in equal proportions from each OP and then the final plots are returned to the landowners. Efforts are made to ensure that the final plot retains its tenure and is as close to the OP as possible. A semi-final value of the plot is also estimated. • The irregular-shaped plots are reshaped and adjusted in line with the future development plans in the area. The final plots are then defined and drawn close to the original plots. • The costs of the infrastructure, compensation to the landowner, final value of the plot, and administrative charges are calculated. The increase in the value of land due to development of public amenities is also estimated and betterment charges are accordingly levied upon the landowners. Along with tabulation of these cash flows in ‘Form G’, the ‘Form F’ is also completed. • A meeting of the Area Development Authority with the landowners is organized by publishing a notice for the same in the local newspapers. This meeting is called to take suggestions and opinions of the landowners for the preparation of the draft TPS. • Based on the suggestions of the landowners, the TPS draft document is amended. This modified TPS is subjected to another round of suggestions from the public and changes. Then, it is sent for approval from the state government. Subsequent to the approval, the document is called ‘Sanctioned Draft TPS’ and the Area Development Authority is able to undertake physical charge of the space allotted for roads. • A Town Planning Officer (TPO) is assigned to oversee the project’s physical and financial prospects after the proposed TPS is approved. The TPO is responsible for resolution of conflicts related to issues of compensation, cost, betterment levy, etc. by liaising with the landowners. He or she also finalizes the draft TPS, makes the necessary amendments, and divides it into two parts – preliminary TPS, enumerating the physical planning proposal, and the final TPS, dealing with financial planning proposal. After this, the TPO hands over the final plots to the landowners. • In the final stage, each landowner is provided with an individual hearing session wherein they can raise any issue related to the allotment. Based on these

Challenges of Affordable Housing  95 hearings, changes are made to the preliminary TPS, if necessary. This is followed by a second round of hearing, after which, the TPS is sent to the state government, which is obliged to approve it within two months. After seeking approval from the state government, the final TPS is published in the local newspapers as the ‘Award of the Final TPS’. Appeals of the stakeholders, if any, are addressed, changes are incorporated in the final TPS, and it is sent back to the state government for approval again. The state government is obliged to approve it within three months. Once approved, the drawings and documents are sent to the state’s revenue department to update the land records. Gujarat TPS offers a landowner-friendly as well as an equitable alternative to mandatory land acquisition for urban development. It can be used as evidence to demonstrate the success of IZ in providing affordable housing and promoting inclusive development. Under TPS, the planning system itself delivers a major portion of land for affordable housing. 3.8.2.2 Maharashtra Slum Rehabilitation Scheme (SRS)

The Government of Maharashtra initiated the Slum Rehabilitation Scheme in December 1995 and established the Slum Rehabilitation Authority (SRA) to provide new tenements to the slum residents free of cost. The scheme had two components – rehabilitation and sale. Under this, the provision of the rehabilitation tenements was cross-subsidized and the developers were provided with additional FSI as an incentive and permitted to construct tenements for sale. The sale component was added to ensure that the developers could meet the expenses for construction of rehabilitation tenements and gain an additional profit. A screening process is carried out to identify the slum dwellers eligible for the in situ rehabilitation, following which the ineligible residents are displaced from the land. The project submitted by a developer and selected by the eligible slum dwellers is processed if it earns the approval of 70 percent of the slum dwellers. The key features of the SRS initiative of the Government of Maharashtra are as follows: • The scheme does not require the state government to contribute to any cost and adds no financial burden on the state exchequer. • Each eligible slum dweller receives a one-bedroom rehabilitated tenement with built-up area of 269 square feet, which is complete with a kitchen and a bathroom with fitted toilet. • The residents are required to pay Rs 20,000 per tenement to the developers to incur the maintenance costs of the rehabilitated building. • The tenements allotted to the erstwhile slum dwellers through this scheme cannot be sold by them for a period of ten years. • The FSI allowed for development of rehabilitation buildings on a given plot under the scheme is as follows: 1 for rehabilitation plots and plots in suburban areas, 0.75 for plots in city areas, and 1.33 for rehabilitation-building in Dharavi area.

96  Challenges of Affordable Housing 3.8.2.3 Rajasthan Affordable Housing Policy

The Government of Rajasthan launched the Affordable Housing Policy in 2009 with a focus on addressing the problems related to housing of EWS/LIG segments. In addition to this, the state launched other initiatives as well, which are as follows: (i) the Township Policy 2010 made mandatory provisions for affordable housing in new towns; (ii) the Slum Development Policy 2012 created an enabling PPP framework for slum redevelopment; and (iii) the Policy of TDR 2012 provided for land acquisition instead of providing extra FAR. The Affordable Housing Policy 2009 envisaged the construction of 1.25 lakh houses for the EWS and LIGs in the span of five years from the initiation of the project and framed the following alternative models to facilitate its execution: Model 1: Mandatory Provisions The model sets a limit on the minimum houses or flats that the various government agencies and private developers are required to construct or allot to the EWS and LIG segments under the schemes/projects undertaken by them. The Rajasthan Housing Board is obliged to construct at least 50 percent of the homes and apartments in each of its housing schemes for the EWS and LIG categories. The minimum limit for MIG-A category houses is set at 20 percent. The Jaipur Development Authority and all other ULBs have to allocate or build at least 25 percent of the plots/land or homes/apartments for the EWS and LIG and 20 percent for MIG-A categories in each of their schemes. The minimum limit for private developers is set at 15 percent of the housing units/plots or 5 percent of the total residential area (whichever is more). The private developers are permitted to develop only EWS housing instead of both EWS and LIG. An incentive of extra 0.5 percent FAR/FSI for the plots for EWS/ LIG is also provided to the private developers. Developers reluctant to include EWS/LIG houses in core area schemes are allowed to opt for other locations subject to guidelines and the provision of more flats for EWS/LIG categories. Model 2: Private Developers on Private Land Under this model, the selected private developers are to undertake the construction of flats/apartments for the EWS/LIG apartments by earmarking 40 percent of the total land under the project for the EWS/LIG categories and another 12 percent for the MIG-A category. They are required to entrust these constructions to the nodal agency – Rajasthan Awas Vikas and Infrastructure Limited – at predetermined rates, to be transferred to the beneficiaries. On the remaining land, they may construct high-income group (HIG) apartments of their choice. They are allowed to set aside and develop 5 percent of the ground coverage reserved for EWS/LIG and 10 percent of the total plot as commercial area. The private developers are also provided with other incentives.

Challenges of Affordable Housing  97 Model 3: Private Developers on Acquired Land The model provides for the identification of private lands for acquisition by the ULBs and their allotment for construction of houses/flats for EWS/ LIG/MIG/HIG categories to the private developers. The developers are required to pay an additional 10 percent over and above the cost of acquisition. Of the total land allotted to them, 40 percent of the flats for EWS/LIG and 12 percent for MIG-A are to be constructed, while remaining land area can be used to provide housing to other categories. A maximum of 10 percent of plot area has been allowed for commercial development as in the Model 2. Model 4: Private Developers on Government Land In this model, the government land is offered by the ULBs at zero cost to the private developers through an open bidding for the construction of EWS/ LIG along with flats for other categories. The project is awarded to the builder who offers to construct the maximum number of EWS/LIG housing units, given that 50 percent of the units in the total plot area are reserved for EWS/LIG. Post construction, the developer has to surrender the houses/flats corresponding to EWS/LIG and MIG-A to the ULB and may dispose of the remaining housing units as per his/her choice. Model 5: Slum Housing This model incorporates the different schemes initiated by the central government – BSUP and IHSDP under JNNURM, and the RAY to provide decent housing to the slum dwellers. It also includes the development of slum housing in the public–private partnership (PPP) model – based on the Mumbai model of slum development. Under the PPP model, the private developers are allowed to undertake slum housing projects in selected slums of Rajasthan, and on private and government lands as well. The Swiss Challenge model is also permitted, where the developer who prepares and submits a proposal to the government for the project is allowed the first right to refusal (right to match the best bid) after the government invites other bids/proposals. The developers are also provided several incentives to take up the housing projects in slums including the allotment of FAR of 4, TDR, permission to develop 10 percent of area for commercial use, and for construction of high-rise buildings (more than G+2 or G+3). The following incentives were also provided by the Government of Rajasthan to be applicable on all the models executing the housing projects in partnership with the private developers (Models 2, 3, and 4): • Provision of double of the normal permissible FAR, the facility of TDR according to the TDR Policy resultant of additional FAR allotment, and an extra 0.5 FAR for completion of project in time.

98  Challenges of Affordable Housing • Complete waiver of External Development Charges, Building Plan Approval Fees, and Conversion Charges. • Expedited approval of all the projects within a month. In addition to these incentives, two other announcements were also applicable on these models. Firstly, all the internal development costs were to be borne by the developers and the external development costs by the ULBs. Secondly, the buy-back rate of the flats from the developers by the nodal agency was fixed at Rs 750 per square feet (later increased to Rs 850 per square feet) of the super built-up area (saleable area) in case of EWS/LIG houses and Rs 1,000 per square feet in the case of MIG-A houses. The Rajasthan Affordable Housing Policy has been recently strengthened considerably to make it more effective. 3.8.2.4 Andhra Pradesh Group Housing Model

The Government of Andhra Pradesh initiated a Group Housing Model which stipulates that the developers of all the Group Housing and Group Development Projects in the state spread across a land area of more than five acres should abide by one of the following requirements: (a) they should assign 10 percent of the total built-up area for construction of housing units for the EWS and LIG categories, with both category receiving an area of 5 percent each, or (b) they should allot 25 percent of the total housing units constructed on the land area to EWS and LIG categories (12.5 percent each). The developers are offered a 10 percent reduction in and a complete waiver of the City Level Infrastructure impact fee for the main project area and the area with EWS/LIG units respectively, to ensure that the inclusion of affordable housing units is not financially burdensome to the developers. In case of Group Housing/Development Projects over the land area ranging from 3,000 square metres to five acres, a shelter fee at the rate of 20 percent of the total project area is imposed and collected by the local bodies. The revenue generated through the fee is used for the construction of additional EWS and LIG housing units under the JNNURM or other affordable housing schemes in urban areas; for the provision of basic services in slums and other areas inhabited by the disadvantaged groups; or for contributing the local bodies’ share in redevelopment or rehabilitation of slum areas or households under the RAY. Additionally, the ULB or the Urban Development Authority (UDA) can maintain the funds in a separate account for later use to incur expenditure under any/all of these heads. 3.8.2.5 Vijayawada Land Sharing Model

Land pooling/sharing model has emerged as a better alternative to land acquisition for accumulation of land to carry out development projects. This measure was employed by the Government of Andhra Pradesh to amass 226.54 acres of land under the jurisdiction of the Vijayawada Municipal Corporation in the villages of Gollapudi and Jakkampudi. A partnership was established

Challenges of Affordable Housing  99 between the landlords – mostly farmers – and the government to implement urban expansion programmes. Also, 40 percent of the pooled land was allotted for building affordable housing for the EWS and LIG categories as per the provisions of (BSUP component of JNNURM. After the process of land conversion for urban use, and layout development, the external and internal infrastructure, as planned, was developed by the ULBs. Of the developed land, 60 percent was returned to the landowners. This was a win-win for both the parties, as the government was able to generate decent accommodation for the disadvantaged groups, and the landowners were able to receive plots furnished with infrastructural amenities free of cost. They did not have to incur expenses towards land use conversion, registration, layout development, and infrastructure connectivity charges. Even in terms of financial expenses and benefits, the land pooling model fared better. The farmers would have gained an approximate amount of Rs 58.4 lakh per acre in compensation under the traditional land acquisition model. Instead, under the land pooling model, they received an allotment of 1,800 square yard of land per acre, where the worth of the developed land was estimated to range between Rs 5,000 to Rs 10,000 per square yard by the Vijayawada Municipal Corporation. As a result, the farmers received Rs 90 lakhs to Rs 180 lakhs per acre under the 60:40 land sharing model, reflecting a net gain of around Rs 31.6 lakh to Rs 121.6 lakh per acre over the land acquisition model. The government too similarly profited from this venture. It would have been required to pay an estimated Rs 5,292 lakhs in compensation, had they employed the land acquisition methods. However, under the land pooling scheme, they only had to incur Rs 4,600 lakhs towards infrastructural development, which amounted to saving Rs 692 lakhs. Thus, the land sharing model cut down the costs for both landowners and the government (Mohanty 2014). 3.8.2.6 The Madhya Pradesh Patta Act

The Madhya Pradesh Government passed the Madhya Pradesh Nagariya Kshetron Ke Bhoomihin Vyakti (Pattadhruti Adhikaron Ka Pradan Kiya Jana) Adhiniyam in 1984, also called the Patta Act, to provide leasehold right to landless people residing on the government-owned urban lands. The Patta Act was later amended to cover all the urban areas in the state in 1998, 2003, and 2008. An area of up to 50 square metres was approved to be given on lease to each beneficiary, and the lease was non-transferable by means other than inheritance. The 1984 act identified the beneficiaries as those landless people who were in possession and occupation of the municipal land before 10 April 1984. This date was extended to 31 May 1998 by the amendment of the Patta Act in 1998. Subsequent amendments advanced the cut-off dates to 31 May 2003 and 31 December 2007. In the initial phase of the implementation of the act, 20,790 plots out of the 40,600 identified plots in slums were accorded the leasehold rights. Under the 1984 act, two types of pattas were allowed: A permanent patta – provided to those living in settlements that required improvement and upgradation, or had to be rehabilitated in situ, and was valid for a period of 30 years;

100  Challenges of Affordable Housing a temporary patta – provided to those people living in settlements who had to be relocated. The temporary patta expired once the people were relocated and awarded permanent patta. The amendment in 1998 introduced a third category of patta: For the registration of disputed cases, along with the permanent lease of 30 years and also limited the lease period of the temporary patta to one year. Along with this, plot areas for different categories of cities were also revised (100 to 600 square feet). Lease rent was introduced at the rate of Rs 1 per square feet per year for Nagar Panchayats, Rs 1.50 per square feet per year for other towns and Rs 2 per square feet per year for Rajbhogi cities (Bhopal, Indore, Jabalpur, Gwalior, and Raipur) for ten years through this amendment. The introduction of Mohalla Samitis took place with the intent to empower the community in the management of development and social welfare, as well as to address public grievances. An amendment to the Patta Act in 2003 allowed pattas to be mortgaged for housing loans from banks, registered housing societies, or government organizations. 3.8.2.7 Delhi Master Plan 2021 (MPD-21)

The Delhi Master Plan 2021 is a multifaceted approach to provide affordable housing to the urban poor by rehabilitating those living in slums and Jhuggi-Jhompdis (JJ), redeveloping or reconstructing the resettlement colonies, providing new housing to the EWS and LIG categories, and developing night shelters. For the construction of new housing units under the plan, the private developers are incentivized through the provision of additional FAR and revised TDR, allowing for commercialization of a portion of the land, and adoption of cooperative resettlement model under which tenure rights are provided through cooperative societies. The low-income households are also provided with relaxed planning norms covering land use, plot size, density, FAR, ground coverage, setbacks, space for commercial use and physical and social infrastructure. In the case of group housing projects, the developers are obliged to reserve a minimum of 15 percent of the FAR or 35 percent of housing units, whichever is higher, for community service personnel and EWS/LIG. Redevelopment schemes or industrial housing can be used to meet these requirements in the case of old built-up areas. In Urban Extensions of Delhi, the acquisition and development costs of land to construct housing units for the disadvantaged are covered by the developer through cross-subsidization and the EWS, and LIG housing is promoted by handing over the reserved lands to the designated agency. MPD-21 provides spatial norms for informal markets as well, like street vending activities, cover servicing, repair, retail, and limited wholesale activities involving low turnovers, weekly markets, and second-hand book/furniture/ raw material bazaars. Separate ‘hawking’ and ‘no hawking’ zones are prescribed to promote organized street vending. Also, specific areas for stationary and mobile street vendors are reserved in consultation with the Resident Welfare Associations. Informal sector trade in planned developments at zonal and

Challenges of Affordable Housing  101 Table 3.1  Delhi Master Plan 2021: Planning Norms for Informal Shops/Units S.No.

Use Zones/Use premise

1

Retail trade: Metropolitan city centre, District centre, Community centre, and Convenience shopping centre Government and commercial offices Wholesale trade and freight complexes Hospital Bus terminal schools Primary/secondary senior secondary/ integrated parks District parks Neighbourhood parks Residential Industrial Railways terminus/MRTS stations

2 3 4 5 6 7 8 9 10

No. of Informal shops/Units 3 to 4 units per 10 formal shops (to be provided in informal bazaar/service market components) 5 to 6 units per 1,000 employees 3 to 4 units per 10 formal shops 3 to 4 units per 100 beds 1 unit for two bus bays 3 to 4 units 5 to 6 units 8 to 10 units at each major entry 2 to 3 units 1 unit/1,000 population 5 to 6 units per 1,000 employees To be based on survey at the time of preparation of the project

Source: Delhi Development Authority: Delhi Master Plan 2021.

local levels are incorporated at the time of approval of building/layout plans as per the norms indicated in Table 3.1. 3.8.2.8 Delhi: Transit-Oriented Development Policy

In the context of rising urbanization in Delhi and the MPD-21, TOD Policy of the Delhi Development Authority (DDA) is highly relevant to ensure optimum usage of the land in the metropolitan city. The plan was initiated to carry out low-carbon, high-density, inclusive, sustainable, and mixed-use developments across the mass rapid transit corridors of Delhi. This is to be achieved by encouraging the use of public transportation. The focus of the TOD Policy has recently been shifted from rapid transit corridors to specific identified transit nodes. The salient features of Delhi’s TOD Policy are as follows: 1 Development/redevelopment in the identified TOD zones is subsidized by providing a FAR of 4.0 on the entire plot being developed/redeveloped. 2 Additional FAR is allowed only through TDR, for schemes spread across an area greater than 1 hectare. 3 Entire approved layout plan of a scheme is included in the influence zone if more than 50 percent of the plan area falls in the influence zone. 4 The developers are obliged to reserve at least 30 percent of the total FAR for residential use, and 10 percent each for commercial use and provision of community facilities. The remaining 50 percent of the FAR is utilized based on the category of land use and guidelines laid out in the Zonal Plan.

102  Challenges of Affordable Housing 5 To avoid gentrification and promote the creation of community-oriented development projects, the TOD ensures the provision of a mix of housing types to accommodate the needs of a range of income brackets, and also the development of shared public spaces/greens/recreational facilities/amenities. 6 It is mandatory for the residential component spread across 30 percent of the FAR to comprise housing units of 65 square metres or less. Half of the 30 percent is to be reserved for construction of housing units for the EWS/ LIG in an area of 32 to 40 square metres. In addition to these features and mandates, the Delhi TOD Policy requires for 50 percent of the EWS housing units to be retained by the developer to be sold only to the apartment owners, at market prices, to accommodate community service personnel (CSP) working for the residents/owners of the Group Housing. These will be developed by the developer entity at the respective Group Housing site/premises or contiguous sites. The developer is required to sell the other 50 percent of the housing units to the DDA at the base rate of Rs 2,000 per square feet for accommodating the EWS categories. This base rate is fixed as per Central Public Works Department (CPWD) Index of 2013 (plus cost of EWS parking), which shall be enhanced as per CPWD escalation index at the time of actual handing over and can be developed by the developer entity at an alternative nearby site. Necessary commercial and public service facilities shall be provided by the entity for this separate housing project. The entity shall be allowed to undertake the actual transfer/ transaction of saleable component under its share/ownership to prospective buyers only after the prescribed land and EWS housing component are handed over to the DDA. 3.9 Some Observations and Directions for Reform As mentioned in the preceding text, a number of measures to improve the access to and provision of land and housing at cheaper rates to the EWS and LIGs have been launched by the central and state governments over the years. However, they have been unsuccessful in significantly affecting the supply of housing. The following findings can be drawn from an analysis of these initiatives: • The significance of rental housing in the market for affordable housing has not been acknowledged by these programmes. This emerges from their ignorance of the preferences of large sections of people who cannot afford the purchase of a house, or do not wish to own one irrespective of the lower prices. Some poor sections with very low income and non-fixed place of working need affordable rental houses rather than own houses. Also, a large population of migrants is seasonal; they come for specific purposes to the cities and they demand houses on affordable rentals.

Challenges of Affordable Housing  103 • City master plans in India have failed include the informal sector. Only recently, some master plans have allocated land for informal sector activities. The Master Plan for Delhi 2021 (MPD 2021), for example, incorporates provisions for redevelopment/rehabilitation of slum clusters, new housing for the urban poor and workplaces for informal sector workers, including street vendors. MPD 2021 makes provision for relaxed planning norms for low-income settlements, covering the parameters of land use, plot size, density, FAR, ground coverage, setbacks, space for commercial use, physical and social infrastructure, and the like. It also prescribes that adequate land be earmarked for new housing to EWS and LIGs. The developers of group housing projects are mandated to ensure minimum 15 percent of FAR or 35 percent of dwelling units, whichever is higher for community service personnel/EWS and LIG. In old built-up areas, this may be through redevelopment schemes or industrial housing. In urban extensions, the acquisition and development costs of land for the urban poor are to be borne by the rest of the project through cross-subsidization. The reserved lands are to be handed over to a designated agency for promoting EWS and LIG housing. • State and local governments have not paid much importance to the concepts of IZ and IH, although the same is articulated in national policies and programmes. Such practice is being increasingly pursued in developed countries to provide affordable housing to lower-income groups along with social inclusion. It is linked to developer-led housing with strong incentives to developers for affordable housing within the market system. A key requirement for the success of IH is that the government acts as a facilitator, not a builder. Such facilitation is based on flexibility in the urban planning and zoning, currently missing in most master plans of cities in India. • Most of the initiatives have concentrated on building new homes for private ownership; none have given attention to the existing stock of housing, which includes homes that are either in a dilapidated condition or are abandoned. Nothing has been done to look into the causes of the vacancy or to ensure that it doesn’t happen again. The problem of rent regulation, which discourages the construction of rental homes, was also left unattended. • All programmes have over-emphasized on subsidies for affordable housing. Some provided subsidies to developers, others to beneficiaries or the customers, yet others incentivized both of these stakeholders. While subsidies can be a crucial instrument in the provision of affordable housing to those in need, they can also be easily mis-utilized. Cross-subsidization can be an efficient formula in some cases. Land can be differentially priced within a development according to aesthetics and building control regulations; higher-income groups can cross-subsidize the prices for lower-income groups to some extent. Certain incentives can be provided to developers in the form of zoning benefits. Thus, precious resources of the government can be spent on development of infrastructure and civic amenities in relatively far-away locations which can absorb the next slot of affordable housing projects.

104  Challenges of Affordable Housing • Throughout the projects implemented thus far, a common challenge has been to ascertain whether or not the intended groups are benefitting from them. All of the programmes also have had issues with the identification of beneficiaries because of the absence of a sure way to link the identity of the beneficiary with a particular level of income. Also, if a group of slum dwellers have title to a land, then they can easily come and claim the benefits under the programme. But the slum dwellers in most parts of the country have no clear title to the land under their occupation. In some cities, it is seen that the areas which started as slums or JJ colonies have now developed into well-organized localities. If residents in these areas, having title to the land, can enter into a scheme, then they can easily get benefits, but they do not need it. So, it is very hard to find whether the beneficiaries under affordable housing programmes are the deserving ones. India has developed several effective models of inclusive zoning, such as the Gujarat TPS, which involves partnering with the farmers and landowners in the process of urban development, at no expense to the government. Such models have also had success in the case of Vijayawada and the development of the capital city of Andhra Pradesh – Amaravati. However, given that no two regions are same, it is necessary to frame the policies and models of IH in accordance with the geography, culture, economic situation, and policies of various states and regions. Each state must have an appropriate legal framework, similar to the Gujarat TPS, in order to streamline the process. Given the benefits of IZ/housing over the conventional models like land acquisition, it would be beneficial to encourage their implementation across the nation. This could be achieved in three ways: Firstly, a policy to reserve the land for weaker and disadvantaged sections can be implemented, similar to that in the Gujarat TPS model. Secondly, a mandatory but minimal limit on the provision of inclusive housing can be introduced in the existing framework of zoning until a separate framework is prepared. Here, the developers can be incentivized to help them cover the cost of providing subsidized housing. Thirdly, inclusive housing can be linked to the upzoning in specific areas to allow for higher-value capture and more dense use of the land. For the implementation of these measures and to facilitate the adoption of IH and zoning in India, a policy shift is essential. The private developers would have to bear the societal costs of development and the planning authorities and the local governments would be required to reduce the obstacles that prevent the developers from creating their ‘fair share’ of affordable housing units. In metropolitan cities, the developers and not the government should step up to address the issue of affordable housing as they can function better independently, given the rising land values and the agglomeration economies of these areas, which separate them from other cities and towns. The government can, however, step up and cover the expenses of providing affordable housing in the smaller cities and towns.

Challenges of Affordable Housing  105 3.10 Reform Agenda and Conclusion Given the magnitude and the intensity of the affordable housing crisis in India, it is imperative that the government authorities collaborate with the market forces to promote inclusiveness in access to housing. The governments can focus on the most vulnerable sections’ needs, and, simultaneously, IZ and IH strategies can be undertaken to address the issue to some extent. The utilization of resources of non-profit affordable housing organizations committed to defending the rights of the poor can also be involved to fund the affordable housing projects and their maintenance costs. India can also seek inspiration from South Africa’s Social Housing Act or the Mount Laurel ruling in favour of Regulation Commission on Social Housing in the United States, and undertake changes in the legislative framework to facilitate affordable or public housing. A combination of an approach based on ‘right to the city’ and a strategy to create as much affordable housing as possible through the market forces can also be implemented. Research suggests that securing the requisite number of affordable and social housing units cannot be achieved by using the planning framework alone. While the IH /zoning models are useful, they are not a silver bullet to offer a seemingly simple solution to the multifaceted problem of affordable housing. These models are useful for those who are at a relatively higher end of the affordability continuum and have little to offer in terms of affordable housing to those who are at the bottom end of the spectrum and have continuing, significant, and complex needs. India should instead borrow from the global practices of IZ and IH. The private developers should be adequately compensated and incentivized. Reforming the planning and urban management systems; updating the laws and procedures of governing municipalities, urban development, and town planning and the development control rules should be undertaken. Inspiration can be taken from state governments that are working for entitlement of property rights and security of tenure to urban poor through innovations, like the Patta Act in Madhya Pradesh, and Land Regularization Scheme in Telangana State among others. In conclusion, the governments at various levels can take into account the following reform and activities to encourage inclusive practices in urban land and housing markets. Understanding the Economics • IZ/housing policies and programmes operate through land use and zoning regulations. In terms of economics, they are fair, and if designed well, they will not increase the cost of new housing or rental housing. They may also not create adverse impacts on new development or discourage it. It may not be correct to say that IZ initiatives impose burdens on developers. They do not increase costs instead, they work at offsetting them. • The wider benefits of social inclusion and beneficial impacts of long-term affordability in the housing market are other desirable characteristics of

106  Challenges of Affordable Housing IZ, which supplement the economic arguments advanced in the literature on IZ/housing. In the absence of IZ, cities in India will be plagued by the evils of social exclusion such as drugs, crimes, etc., as in some Latin American cities. • IZ programmes work best when the urban housing market is flourishing. They can help create affordable homes within the market system if they are correctly planned. Additionally, they make sure that the poor are accommodated near their workplace and are not discriminated against. IZ programmes can have good application in very large cities like Mumbai and Delhi, which need to solve their affordable housing problems through the market rather than burdening central, state, or local government exchequers. • IZ/IH policies are not a panacea for all the issues pertaining to the provision of affordable housing in a country, including social housing for the bottom-most segments, which need government subsidy. Also, sometimes rental housing may be a better option than ownership housing. However, IZ/IH policies can address the problems of a large segment of the urban housing market at the bottom of pyramid. Adopting Key Principles • Internationally, IZ programmes are based on three broad principles – all inter-related. The first is: ‘Growth pays’. The second is: ‘Beneficiaries pay’. The third, related to the second, is: Incentives and cost offsets to developers are legitimate means to meet difficult social objectives. • The costs associated with new developments, including their effect on availability of affordable housing, must be covered by their developers. Landowners and developers should be required to contribute a share of the increments earned by them in lieu of the positive externalities that have accrued to them as a result of governmental actions and investments. This amount could be redirected to finance the provision of public housing. Instead of incentivizing the private developers for the creation of affordable housing projects, the government could extend a deal wherein these incentives, maybe of an increased magnitude, could be the payment in exchange for the development of such ventures. • Policies for IZ need to combine: ‘Impact’ mitigation similar to that through ‘impact fee’, ‘benefit capture’ similar to ‘value capture financing’ instruments linked to land value creation, capture, and recycling, and payment towards ‘measures that reduce or offset costs’. Developing National/State Policy • Blanket policy prescriptions fixing the percentage of land or housing to be reserved by developers for EWS and LIG section as in the NUHHP 2007, and the BSUP and IHSDP components of the JNNURM have not worked.

Challenges of Affordable Housing  107 • International experience suggests that the success of IZ and housing programmes is determined by their design. The same policies or programmes cannot succeed everywhere, say in metropolitan cities, metropolitan suburban locations, other large cities, small towns, and rural areas. The efficacy IZ/IH depends on the phase of the business cycle. If market sentiments are not strong, no matter whatever incentives are offered by the government, private developers would not come forward to build affordable homes. Establishing Legal Framework • The urban planning, development, and management policies and projects should be guided by law. The urban planning laws followed by most states in India are based on the Town and Country Planning Act of 1946 of the United Kingdom. These laws need to be modernized to suit changing realities. • Laws relating to not only town planning but also urban development and municipalities, including development control rules and regulations, need to be amended. • New rules and regulations pertaining to imposition of impact fees, generation of resources through Value Capture Financing (VCF), and IZ/housing need should be designed in a manner that they complement each other and not to hinder each other’s scope and implementation. Design of IZ/IH Instruments • Design is the single-most important factor for the success of IZ/housing programmes. Geography, culture, and economics of cities matter. The ‘pull’ and ‘push’ factors for affordable housing need to be evaluated, city by city and areas within a city. Incentives need to be designed taking into account the context, benefits, and costs of IZ. The following IZ instruments may be considered for adoption by cities and towns in India: • Urban renewal: This could include upzoning, focus on promoting land use activities that add value to the society, and re-densification in a few particular areas. Additionally, sections of an area could be divided to promote the upliftment of the entire area. For instance, the one-third–one-third–onethird rule recommended by the Supreme Court of India during the course of the Mumbai textile mills case could be applied. This called for reserving a third each of a given land area for development activities, for creation/ provision of civic services including parks and grounds, and for construction of affordable housing units. A modified version of this formula could also be used to suit the region-specific needs.

108  Challenges of Affordable Housing • Strategic densification: Growth nodes in cities can be offered density bonuses in the form of high FSI or FAR if corresponding investments are made in the course of the development process to decongest the infrastructure available, and to provide a predetermined amount of affordable housing units, possibly on a self-financing basis. The TOD Policy of Delhi can be considered as a standard benchmark for comparison and inspiration in this regard. • Planned urban extension: The Town Planning Scheme of Gujarat has been quite successful and has also been applied successfully, with some tweaks and adjustments, in Andhra Pradesh (in the development of the capital city of Amaravati), and in the development of the land pooling policy of Delhi. The Magarpatta city model of Pune Municipal Corporation is another example of a land pooling model in the form of an inclusionary partnership between the government and landowners/farmers. However, there is not an overarching legal framework for town planning or land pooling in the country, and the Government of India should consider the development of a legal framework for a Model Land Pooling Law for uniform implementation across the nation. A model of land pooling through the private sector, as implemented in Magarpatta, with added IZ provisions, could be a promising way to promote inclusive cities.

4  Financing Urban Poverty Alleviation through Inclusive City Reforms

4.1 Addressing Urban Poverty The present century is called the ‘urban century’ because, by 2008, urban areas were home to more than half of the world’s population. Interestingly, the growth in urban population is higher in low-­and middle-­income countries. Urbanization is often hypothesized as a driver of economic growth by opening up of opportunities, but it has led to the formation of slums and squatters in developing economies. Unregulated migration, the annexation of rural areas to cities and towns, and crumbling urban infrastructure have urbanized poverty. Urban poverty is a heterogeneous concept. Apart from the income and consumption criterion, it assumes multidimensional aspects such as the following: • • • • • • • •

Lack of land and housing. Threat of eviction. Lack of access to drinking water and sanitation. Inadequate healthcare. Lack of educational opportunities. Lack of public transport. Prone to environmental calamities due to the choice of risky locations. Low influence in governance.

These manifestations of urban poverty cannot be overlooked. There has to be reforms to integrate informal settlements and mainstream urban development with due responsibility to cater to urban poverty. This is important to avoid slums from becoming derelict and centres of drugs and crime, adversely impacting social cohesion as in Latin America. Finances must be allocated towards reorganizing the ‘informal dwellers’ as part of a community in order to empower them and also facilitate an efficient and cost-­effective urban transition process. The social protection measures should be strengthened as well. The urban local bodies (ULBs) must be proactive and pro-­poor to help these low-­income dwellers overcome their problems of exclusion. Policies and programmes aimed at directly reaching the urban poor have to evolve. There has DOI: 10.4324/9781003452171-4

110  Financing Urban Poverty Alleviation to be a realization that problems of urban poverty cannot be eliminated simply by income growth; it may require re-­distributional inputs, including direct transfers and capacity building. The economic growth in India has been robust. The service sector’s contribution to GDP is prominent. Urbanization has also gathered momentum, with 400 million Indians choosing to reside in urban locations. In India, where the level of urbanization is 33 percent, urban poverty stands at 25 percent. Economic growth and rise in urbanization are also accompanied by the rise in urban poverty. The benefits of growth and urbanization have not been shared equitably in India. Moreover, urban poverty gets amplified by the substantial rate of growth in population, high rate of migration from rural to urban centres, and mushrooming of informal settlements. About 40 percent of the growth in urban population is accounted for by migration and rural–urban reclassification, reinstating the rural poverty into urban areas. Urban poverty is matter of heightened concern for India. The contribution of urban areas to GDP has risen significantly. Unfortunately, urban poverty reduction has been given less emphasis than rural poverty. Urban poor have high incidence of vector-­borne diseases; they lack back-­up savings, are deprived of food stocks, education, healthcare, police, and other social support systems. Only one-­fifth of the workforces inhabiting slums and squatters have ‘regular wage employment’; the rest are informally employed, being either self-­employed or casually employed. India needs to address multiple challenges to reduce urban poverty. Firstly, consumption poverty needs to be eliminated by bridging the consumption gap. Secondly, efforts must be made to secure people in the borderline from slipping into poverty. Thirdly, basic services need to be provided to uplift the poor from sub-­subsistence livelihood by ensuring access to credit, training, skills, and overcoming the institutional and other barriers and making cities ‘slum-­free’ and ‘poverty-­free’. There have been several policy programmes and strategic interventions in India to gradually eliminate urban poverty, though with limited success. In the First Five-­Year Plan (1951–1956), the problems of slums were the basic thrust. The plan noted slums to be ‘a disgrace to the country’ and took the position that ‘from the national point of view, it was better to pay for the cost of clearing slums than to continue to pay the mounting cost of slums and suffer their destructive effects upon human lives and property indefinitely’ (Planning Commission of India 2011). There was an expansion of housing stock in the 1950s and 1960s to contain the expansion of informal settlements. The most extraordinary shifts in addressing issues of urban poverty in India occurred post-­1991. There were a series of initiatives to cater to urban issues of poverty, basic services, physical and social infrastructure, governance, accountability etc., comprising of the following: i . 74th Constitutional Amendment Act, 1992. ii. Capital market financing of municipal infrastructure. iii. Urban Reform Incentive Fund (URIF).

Financing Urban Poverty Alleviation  111 i v. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM). v. Rajiv Awas Yojana. These initiatives have given way to new mission-­mode initiatives: The Smart City Mission, AMRUT, and Housing for All Mission with new thrusts and approaches. The shift in approach and consideration in reducing urban poverty and managing slums emanates from the realization that cities are the powerhouses of growth. To sustain their increasing contribution to GDP, urban sector policies and programmes must be realigned to the emerging macroeconomic context at recent times. Cities create growth, opportunities, employment, and education. They facilitate skill formation and innovation. They channel the benefits of agglomeration and networking, leading to the overall economic transformation. Cities have been instrumental in generating revenues for facilitating economic development worldwide. City externalities accrue ‘agglomeration rents’ to both immobile and mobile factors of production. They capitalize into tax bases of all levels of government. Cities are thus instrumental to the mobilization of income tax, corporation tax, goods and services tax, value-­ added tax, business tax, excise tax, stamp duty, registration tax, motor vehicles tax, entertainment tax, land value tax, property tax, profession tax, entertainment tax, etc. Jane Jacobs (1984), based on a study of hundreds of cities over the course of history, emphasizes the importance of cities as ‘the greatest yielders of revenues in a nation or empire’. In the context of the United States, she reveals that, with the adoption of income tax in 1913, about one-­third of the entire revenue was mobilized from New York State, and most of the yield was from New York City alone. Further, she adds that in order to facilitate programmes on basic necessities requiring transfer payments, inclusive of the transfers to rural poor, it is mandatory to develop productive and efficient cities. The challenges of urbanization and making it inclusive warrant that municipal finances must be improved and budgetary allocation should be made to reduce poverty, contain slums, manage migration, and provide basic services in urban areas. If Indian cities have to be smart, a major intervention needed is to design a smart system of financing civic services, infrastructure, and poverty alleviation. This system will comprise of taxes, user charges, and fees, including ‘polluters’ pay, ‘congesters’ pay, and ‘exacerbaters’ pay, inter-­governmental transfers, borrowings, ‘growth’ pays, and value capture financing. It must also ensure that the poor have the first charge on city finances. Unfortunately, there has been no systematic research on urban public finance in India linking urban planning, urban infrastructure, and urban land and development financing while addressing the needs for exclusion. Accordingly, the most logical and elegant instruments of urban financing have not been harnessed, enabling resource sharing with the left-­out sections. This chapter is organised as follows: Section 4.2 portrays the state of municipal finances in India, including the investment needs of cities. Section 4.3 explains the reform for earmarked municipal budget for urban poverty alleviation.

112  Financing Urban Poverty Alleviation Section 4.4 refers to measures to improve city finances with reference to international practices. Section 4.5 suggests directions for the financing of inclusive cities in India. Section 4.6 concludes. This chapter refers to both theoretical and empirical research on urban public finance to draw lessons for India (Bahl and Linn 1992; Mohanty et al. 2007; Peterson 2010; HPEC 2011; Scruggs et al. 2013; Sankhe et al. 2010; MoUD 2013; World Bank 2013; Ahluwalia, Kanbur and Mohanty 2014; Mohanty 2014, 2016; World Bank 2014). 4.2 State of Municipal Finances in India Municipalities in India suffer from a lack of sync between the assigned functions and revenue. With all cities in the country abolishing octroi, property tax remains the only major tax with ULBs. The total revenues of ULBs in India were estimated at merely 1 percent of GDP in 2017–2018 (see Table 4.1). In 2002–2003, ‘own revenues’ accounted for 63 percent of total municipal revenues in India. The share declined to 55.7 percent in 2007–2008 and 51.6 percent in 2012–2013. The share of tax revenues declined from 37.2 percent to 32 percent between 2007–2008 and 2012–2013. Non-­tax revenues accounted for 18.5 percent in 2007–2008 and 19.7 percent in 2012–2013. The share of central transfers increased marginally from 9.1 percent to 9.5 percent. That from state government sources went up from 32.4 percent to 34.5 percent between the two years. All the key municipal fiscal autonomy ratios: Own revenues-­ GDP, own taxes-­ GDP, and property tax-­ GDP declined between 2007–2008 and 2017–2018. McKinsey (2010) estimates that around Rs 9.74 million crores would be needed by 2030 to be spent on cities. Of this, Rs. 5.31 million crores need to be dedicated to capital expenditure. The largest demand would accrue for affordable housing, and mass transit would appear next in the list. Excluding affordable housing from capital expenditure would reduce the figure to Rs 3.54 million crores. The McKinsey report informs that India’s annual per capita spending on cities at $50, including capital and operational expenditures, is 14 percent of China’s $362, less than 10 percent of South Africa’s $508, and less than 3 percent of the United Kingdom’s $1,772. With regards to capital expenditure, per capita, urban spending annually for India is $17 as against $116 in China, $127 in South Africa, and $391 in the United Kingdom. The report suggests that India needs an eightfold increase from $17 to $134, a rise to 2 percent of GDP annually from 0.5 percent of GDP. The High Powered Expert Committee for Estimating the Investment Requirements for Urban Infrastructure Services projects that India would require Rs 3.92 million crores from 2012 to 2031 for investments in urban infrastructure. The figure would rise to Rs 5.92 million crores if operation and maintenance (O&M) costs are added (HPEC 2011). Table 4.2 shows the spending needs of core urban infrastructure sectors. Sadly enough, the huge amount needed for investment in urban infrastructure is accompanied by extremely poor finances of ULBs, making infrastructure

Table 4.1  Trends in Municipal Revenues in India by Source: 2007–2008 to 2017–2018 Sl. Sources of Revenue No.

Total (Rs Crore)

2012–2013 % of Total Municipal Revenue

Total (Rs Crore)

2017–2018 % of Total Municipal Revenue

Total (Rs Crore)

% of Total Municipal Revenue

18,366 8,159 10,207 9,134 27,501

37.20 16.53 20.68 18.50 55.70

30,912 15,110 15,801 19,002 49,913

32.00 15.64 16.35 19.70 51.60

42954.3 25,551.9 17,402.4 30,377 73,331.3

25.02 14.88 10.14 17.69 42.71

3,515 986 9,342 6,653 1,355 21,851 49,351 45,82,086

7.10 2.00 18.90 13.50 2.70 44.30 100.00

5,387 3,760 18,537 14,809 4,234 46,727 96,640 93,88,876

5.60 3.90 19.20 15.30 4.40 48.40 100.00

8,244.9 12,324.5 55,573.9

4.8 7.18 32.367

22,222.5 98,365.8 17,1679.1 1,70,95,005 (at market prices)

12.943 57.29 100.00

1.08

1.03

1.00

Source: ASCI (2014) – based on data furnished by state governments to the Fourteenth Finance Commission of India; Indian Public Finance Statistics 2013–14; Mohanty (2016); Mishra and Sen (2020).

Financing Urban Poverty Alleviation  113

A. Own sources 1 Total taxes Property tax Other taxes 2 Non-­taxes Total Own Source revenues B. Other sources 1 Government of India transfers 2 Central Finance Commission transfers 3 State assignment/evolution 4 State grant-­in-­aid 5 Others Total other Source revenues C. Total revenues Gross domestic Product at factorCost in current prices (GDP) Municipal revenue as a % of GDP

2007–2008

114  Financing Urban Poverty Alleviation Table 4.2   Urban Expenditure Estimates for Core Sectors (Rs crore at 2009–2010 prices): 2012–2031 Sector

Water supply Sewerage Solid waste management Urban roads Storm water drains Urban transport Traffic support infrastructure Street lighting Total

Total Capital Expenditure – Rs Crore

Total Operations and Maintenance Expenditure– Rs Crore

Average Per Capita Investment Cost) – Rs

Average Per Capita O&M Cost (Annual) – Rs

320,908 242,688 48,582

546,095 236,964 273,906

5,099 4,704 391

501 286 155

1,728,941 191,031

375,267 34,612

22,974 3,526

397 53

449,426 97,985

304,386 36,690

5,380 945

371 34

18,580 3,098,141

4,717 1,812,637

366 43,385

8 1,806

Source: High Powered Expert Committee on Urban Infrastructure Report (2011).

development and planned urban development a difficult task. The share of municipal revenue in combined central and state revenues declined from 3.71 percent in 1990–2091 to 2.43 percent in 2000–2001, and less than 2 percent presently (Mohanty 2016). The ratio of municipal revenues to GDP in India is about 1 percent – compared to Poland (4.5), South Africa (6.0), Germany (7.3), Brazil (7.4), Austria (7.8), the United Kingdom (13.9), Norway (14.2), Italy (15.3), Finland (22.4), and Denmark (37.1) – see Buckley (2005) for Poland and South Africa, Afonso and Araujo (2006) for Brazil and OECD (2012) for other countries. India needs to make effort to significantly raise the size of the municipal sector if cities are to act as vehicles of economic growth. Reforms in municipal finances are long overdue. The smart cities of India need to lead the way by adopting smart principles, tools, and instruments of city financing. 4.3 Earmarked Municipal Budget for Urban Poverty Alleviation JNNURM was the first ‘reform-­linked grant facility’ aimed towards urban areas in India. Its objective was to maintain and accelerate GDP growth as well as improve the access of urban poor to shelter, including basic services like water and sanitation. In other words, it aimed at making cities ‘inclusive’. The uniqueness of the mission comes from its integration of the grants-­in-­aid component and urban reforms. JNNURM required ULBs to implement reforms aimed at institutionalizing ‘internal earmarking of funds in their budgets specifically for basic services to the poor’. The Mission also sought commitment from ULBs for the following:

Financing Urban Poverty Alleviation  115 • Ensuring internal earmarking of funds for urban poor by reforming budgeting and accounting systems. • Setting targets for expenditure incurred on delivery of services to the poor. Internal earmarking of funds refers to the percentage of the total estimated municipal income that would be utilized for the provision of housing and basic services for the urban poor. Despite being a key element for efficient municipalities, budgeting systems and processes are grossly neglected, with few exceptions. ‘Internal earmarking, within local body budgets, for basic services to the urban poor’, is an important reform required for the attainment of the following larger objectives envisaged under JNNURM: • Increasing delivery of services and civic amenities with a specific focus on universal access to the urban poor. • Providing urban poor with basic services inclusive of security of tenure, affordable rates, better housing, water, sanitation, etc., which ought to be accompanied by other government services like social security, health, and education. • Improving slums by undertaking projects aimed at integrating provision of shelter, basic services, and civic amenities to urban poor. 4.4 Rationale for the Reform The rationale behind internal earmarking of funds for the urban poor in ULB budgets is to ensure equity, efficiency, transparency, and accountability of the local body: Equity: Urban poor form a certain proportion of population of every city. A common budget with generic items fails to cater to the resource allocation needs specific to the urban poor. The current practice has systemic and structural limitations which fail the urban poor. A separate budget head or an entirely different budget targeted towards the urban poor will enable better allocation of resources towards the targeted class on an equitable basis. Efficiency: A separate budget head aimed towards welfare of the urban poor improves allocation efficiency as well as promotes efficiency in resource utilization. Further, it also facilitates performance monitoring. Transparency: Separate budget head including details of receipts and expenditures will promote transparency. It enables easy computation of the amount spent by ULBs on urban poor and the head under which such expenditures are undertaken. Accountability: Performance monitoring ensures accountability on the part of appropriate authorities by tracking under-­performance and non­performance. A separate budget head is believed to be beneficial to all stakeholders, particularly the urban poor and the ULBs.

116  Financing Urban Poverty Alleviation Reform Components The reforms comprise of the following three major components: 1. Adoption of clear, affirmative policy of earmarking (allocating) certain quantum (recommended to be 25 percent of municipal budget, including funds flowing from higher tiers, by the Government of India) of funds for urban poor by the state and each municipal body of the state. 2. Constitution of ‘Basic Services for Urban Poor Fund’ and setting the rules/ modalities for contribution to and disbursement of funds. 3. To ensure that the allocated funds are spent only for the desired purpose, i.e., on the urban poor, by creating and operating requisite budgetary mechanism. In response to the internal earmarking, within local-­body budgets, for basic services to the urban poor reform conditionality, states and ULBs have initiated processes (policy adoption) aimed at earmarking a certain percentage of the budget exclusively for the urban poor. For example, Gujarat has adopted a policy for earmarking 20 percent of its budget for urban poor and has made it mandatory for ULBs in the state to earmark the same proportion of their budgets for provision of services to the urban poor. Andhra Pradesh has given policy direction to municipal bodies to allocate 40 percent of total budget for provision of services to the urban poor. Table 4.3 describes the entire process of reform of the internal earmarking of funds. As a complement to the JNNURM, the Government of India introduced a novel initiative called the Rajiv Awas Yojna (RAY), which envisages a ‘Slum-­ Free India,’ in which every citizen has access to basic civic and social services and decent shelter. It aimed to achieve this vision by encouraging states to tackle the problem of informal settlements in a definitive manner, by a multipronged approach that focuses on the following: (i) Bringing all informal settlements within the formal system and enabling them to avail of the same level of basic amenities as the rest of the city. (ii) Redressing the failures of the formal system that led to the creation of slums. (iii) Tackling the shortages of urban land and housing that keep shelter out of reach of the urban poor and force them to resort to extralegal solution in a bid to retain their sources of livelihood and employment. The RAY did not succeed, and JNNURM and RAY have been replaced by Smart Cities Mission and AMRUT. The reform for internal earmarking of municipal budget has been abandoned. There is increasing realization that the issues of slum development and urban poverty alleviation in India will have to be addressed by cities by improving their municipal finances and allocation of special component plan budgets for the urban poor – the P-­budget.

Financing Urban Poverty Alleviation  117 Table 4.3  Process of Implementing Internal Earmarking of Funds Reform Component

Description

Roadmap for internal earmarking of local budget for basic services to urban poor

Defining a clear roadmap and implementation plan which comprises:

Institutional framework

Realignment and regrouping of staff, administrative processes, and other organization resources on the lines of a separate budget head for urban poor welfare with detailed budget items under this separate budget head, or separate budget structure for urban poor. Examination of all the budget processes – identification and selection of development works for the urban poor, processing and implementation of works, etc., are necessary. Earmarking must be accompanied by a programme of change in management of the organization. Opinion-­building and attitudinal transformation exercises would be needed. Budget formulation and implementation process should be made participatory. Budgets of urban poor and non-­poor (general category) should be expressed in physical terms and also in terms of outcomes expected from each and every budgeted development work or allocation of resources.

Business process reengineering Opinion-­building and attitudinal transformation Participative budgeting Performance and outcome budgeting

• Adoption of concept of urban poverty sub-­plan in every city. • Creating a state’s vision for poverty-­free, slum-­free cities. • Conducting poverty, slums, livelihood surveys, assessing backlog, current and future growth needs, and undertaking prioritization. • Preparing of city development plan, urban poverty reduction strategy, municipal action plans, detailed project report, etc. • Setting milestones for providing basic services to the urban poor including affordable housing with secured tenure etc., and estimating requirements of funds. • Reviewing legislative framework and adopting a legal framework based on public policy for internal earmarking of funds on local budget for urban poor. • Constitution of BSUP Fund. • Creation of an appropriate municipal budget structure. • Setting up of urban poverty and livelihood cell. • Capacity building of ULBs and handholding support to ULBs in implementation.

Source: JNNURM Primers.

4.5 Measures to Improve Municipal Finance: International Experience Internationally, cities have access to a broad basket of revenue sources, including taxes, inter-­ governmental transfers, and capital financing instruments unlike India. Income taxes (corporate and personal) were the most important source of local tax revenues in 14 OECD countries. In Denmark, Finland,

118  Financing Urban Poverty Alleviation Norway, Sweden, Luxembourg, and the Czech Republic, income tax accounts for more than 90 percent of local revenues. Local sales taxes constituted 20 to 76 percent of total tax revenue in ten OECD countries. Local governments in France, Italy, Greece, and Turkey rely fairly heavily on business taxes. Property tax constituted the most important local tax in five countries: Australia, Canada, Ireland, New Zealand, and the United Kingdom. However, central governments in these countries provide sizeable grants to local bodies; in the United Kingdom, such grants exceed 70 percent of local revenues. Table 4.4 shows the portfolio of taxes in select cities of the world. Internationally, not only taxes of cities but also their systems of inter-­ governmental transfers to ULBs are broad-­based, unlike India. For example, Brazilian Municipalities received the following shares in federal and state taxes in 2005: Federal income tax (22.5 percent), federal value-­added tax on manufactured goods (22.5 percent), federal financial operations tax on gold (70 percent), state tax on motor vehicles (50 percent), and state value-­added tax on goods and inter-­state and inter-­city transportation and communication services (25 percent). Sub-­provincial governments in China were provided with

Table 4.4  Portfolio of Municipal Taxes: International Practice Name of City

Year of Data

Composition of Municipal Tax Revenues (Percentage)

Barcelona

2009

Beijing

2009

Buenos Aires Cape Town Chicago

2007

Lima

2010

Sao Paulo

2010

Tokyo

2008

Delhi

2010

Property Tax (64.7), VAT Share (12.0), Sales Tax (11.8), Vehicles Tax (8.6), Construction Tax (2.9) Sales Tax (39.3), Corporation Income Tax (22.5), VAT Share (9.4). Individual Income Tax (9.3), Property Tax (8.1), Deed Tax (5.4), Construction Tax (3.7), Stamp Tax (1.7), Vehicles Tax (0.6). VAT Share (78.5), Property Tax (9.0), Vehicles Tax (8.7), Stamp Tax (3.8). Utilities Tax (68.2), Property Tax (31.8). Property Tax (39.3), State Sales Tax Share (9.6), Sales Tax (8.5), Utilities Tax (8.3), State Income Tax Share (8.2), Gasoline Tax (6.7), Telecommunications Tax (6.0), Transportation Tax (4.0), Amusement Tax (3.3), Excise Tax (2.7), Hotel Tax (2.0), Other Taxes (1.0). Property Tax (58.8), Vehicles Tax (22.6), Excise Tax (8.3), Gambling Tax (7.9). Sales Tax (53.9), Property Tax (38.2), Individual Income Tax (6.6), Gasoline Tax (1.4). Individual Income Tax (42.4), Corporation Income Tax (23.9), Excise Tax (5.6), Vehicles Tax (2.0), Other Taxes (7.2) Property Tax (88.8), Utilities Tax (11.2).

2009 2009

Source: Bahl, Linn, and Wetzel (2013)

Financing Urban Poverty Alleviation  119 the following shares from national and provincial taxes in 2003: Value-­added tax (19 percent), business taxes (70 percent), enterprise income tax (21 percent), individual income tax (24 percent), and urban maintenance and construction tax (90 percent). China allows its cities to retain 25 percent of value-­added tax (equivalent to $4.5 billion per year in Shanghai). In Nigeria, 13 percent of oil revenues are assigned to oil-­producing states on ‘derivation’ principle. The remaining amount is divided between the federal government (53 percent), state governments (27 percent), and local governments (20 percent). Revenues from customs, excise, and corporation income taxes are split between the three tiers using the same formula without the derivation principle. Revenues from VAT are divided as follows: Federal government (15 percent), state governments (50 percent), and local governments (35 percent). In South Africa, the distribution of nationally raised revenues between national, provincial, and local governments over the period 2008–2009 to 2010–2011 was as follows: National 48.1–50.0 percent, provincial 42.5–43.7 percent, and local 7.5–8.2 percent. The central government in South Africa funds 40–50 percent of infrastructure investments in large cities and 60–70 percent in small cities through grants and loans. Philippines, under the Local Government Code 1991, allocates 40 percent of the national internal revenue taxes actually realized during the third fiscal year preceding the current fiscal year to various local government units (LGUs) as per the following formula: Provinces (23 percent), cities (23 percent), municipalities (34 percent), and barangays or village units (20 percent). As regards urban infrastructure financing, countries around the world have adopted a mix of instruments: (i) Revenue surplus from local taxes including land and property taxes, (ii) local user fees, utility charges, benefit charges, and congestion tolls; (iii) central and state government capita grants, tax abatements and credit assistance, including revolving loan funds, tax credit, seed capital, venture capital, mezzanine funds, and loan guarantees; (iv) equity financing, including public–private partnerships (PPP); (v) debt financing, including municipal bonds, pooled finance bonds, green bonds, bond banks, and institutional credit and financial intermediation; (vi) planning and development–related tools, including development charges, developer exactions, and impact fees; (vii) land value capture instruments, including betterment levies, special assessments, and tax increment financing; (vii) emerging financial market instruments such as structured bonds and infrastructure investment funds, (viii) special purpose vehicles that combined equity, debt, and other types of funding, etc. Internationally, cities have combined a mix of methods to address their infrastructure needs. However, borrowing has been a key instrument for financing major urban infrastructure projects, backed by escrowed revenues. For example, municipal bonds, comprising revenue bonds and general obligation bonds have been the principal instruments in the United States to build city infrastructure facilities. Land-­ based instruments have played a key role in the scheme of financing urban infrastructure and services (see Table 4.5).

Table 4.5  Land-based Financing Instruments: International Practice Revenue Instrument

A. Land-­based taxes 1. Property tax 2. 3. 4. 5.

Stamp duty/ Registration tax Land value tax (LVT) Land value increment tax (LVIT) Land gains tax (LGT)

6.

Vacant land tax

7.

Real property gains tax

Description

Where practised/Remarks

Imposed on both land and buildings; most cities in India follow rental value-­based or unit area-­based property tax linked to location, building, and use parameters. Paid by buyer/seller (buyer in India) on any transfer of registered property title or other land rights to another party. Based on capital value of land or specific characteristics/ parameters of land. Based on increases in land values between two dates.

All over the world – trend is to shift to capital value base

Gains in land value when land is held beyond a certain period – paid by seller of land, in addition to capital gains income tax; the tax applies only to gains attributed to land, not buildings. Based on capital value of land held idle beyond a pre-­specified period.

United States (Vermont State), Canada (Toronto)

Chargeable on gains arising from disposal of real property or of interest, options or other rights in or over land as well as the disposal of shares in real property companies.

All over the world – in some countries, sellers also pay registration tax Taiwan, Australia, Denmark Taiwan, Germany, Denmark, South Korea, Latin America

Latin American countries, Taiwan, South Korea, Andhra Pradesh, Telangana Malaysia

B. Development financing tools 1. Developer Based on land use regulations aimed at making land developer or The United States, Canada, Shanghai, extractions builder contribute towards on-­and off-­site infrastructure Bangkok facilities warranted by new development. 2. Development impact Charges paid under law and not based on negotiation, by new The United States, Hyderabad, fees development towards the cost of new infrastructure or Ahmedabad expansion of old infrastructure facilities, which are located outside the boundaries of such development (off-­site) and which are required to serve the new development. 3. Planning obligations Covers the installation of infrastructure, financial, or in-­kind The United Kingdom contributions, or provision of affordable housing based on negotiation between developer and local authority.

120  Financing Urban Poverty Alleviation

Sl. No

Table 4.5  (continued) Sl. No Revenue Instrument 4. 5.

Development contributions

Description

Where practised/Remarks

Local authorities collect development contributions from Australia developers towards shared local and regional infrastructure as condition of granting permission for development or rezoning. Based on land pooling or land sharing – in-­kind instrument; South Korea, Taiwan, Japan, Latin farmers/landowners are partners in planned urban expansion America, Gujarat, Andhra Pradesh and development. (New Capital) Developed countries, India Hong Kong

Brazil (Certificate for Additional Construction Potential – CEPAC models) United States, Brazil, Mumbai, Hyderabad India (Mumbai), Egypt (Cairo), Turkey (Istanbul), South Africa (Cape Town) Japan, Mumbai, Gurgaon, Hyderabad The United States, Canada, Europe

Latin America (Colombia: Bogota), Argentina, Hyderabad The United States, Australia

Financing Urban Poverty Alleviation  121

Land readjustment/ consolidation/land pooling C. Land value capture methods 1. Sale of developer’s Real estate developers install internal and external infrastructure land in layouts and recover costs through sale of land or housing to buyers. 2. Lease or sale of extra Lease or sale of land in vicinity of major public infrastructure project land/excess facilities like highways and mass transit after development; condemnation often accompanied by rezoning, higher-­order land use and enhanced development rights. 3. Lease/sale of Lease or sale of Floor Space Index/additional zoning/land use/ Development development rights than normally permitted. Rights 4. Transferable Transfer of development right from one zone of a city to another Development zone subject to fulfilling master plan requirements Rights 5. Monetization of land Selling or leasing some of the publicly owned unused or assets underused lands with rezoning and enhanced property values. 6. Joint development A form of partnership between a public authority and a private mechanism developer to build a real estate project on land owned or controlled by a public authority. 7. Special assessment Local governments set geographical boundaries or ‘districts’ district within which differential taxes are imposed on land and property whose values are expected to increase due to proximity to new infrastructure and spatial planning. 8. Betterment taxes and Levy on land value increments due to infrastructure development charges and spatial planning in a designated area or city-­wide. 9. Value/tax increment Public authorities earmarking whole or part of the revenue financing increments arising from a value-­creating venture to service the debt incurred.

122  Financing Urban Poverty Alleviation 4.6 Strategy for Financing Inclusive Cities The strategy for financing inclusive cities calls for adopting smart instruments designed based on robust principles. In this context, we refer to the golden principles of local public finance (Bahl and Linn 1992): • User charges are the appropriate financing instruments when the benefits of public services are measurable and accrue to identifiable individuals. • Benefit taxes levied on residents, where beneficiaries cannot be identified easily, and benefits cannot be measured accurately. These taxes can help to finance local roads, street lighting, and public safety and security. • Services with significant spillovers to neighbouring jurisdictions (e.g., health, education, and welfare) should be financed substantially by inter-­ governmental transfers. The above rules suggest that functions and finances should be in sync with each other, and different financing instruments may be adopted for different functions for promoting accountability of public authorities and for incentivizing the taxpayers. They are based on the benefit principle of public finance (Wicksell 1896; Lindahl 1919). Users and beneficiaries pay for infrastructure and services they receive. User charges are considered the ‘first-­best’ financing alternative and draw upon the marginal cost pricing principle. These promote efficiency in service delivery by providing information regarding demand as well as the type of service. This enables public authorities to supply goods which are valued (at the margin). In order to be efficient, user charges ought to be levied on the direct users. If required, the poor may be subsidized directly rather than distorting the entire market by reducing prices. Whenever direct user charges are not feasible owing to difficulties in identifying the beneficiaries or measuring the benefits received, specific ‘benefit taxes’ may be imposed on the local residents either as a new tax or as a part of property tax. Services like street lighting, drainage, sewerage, roads, and fire services can be financed using such benefit taxes. Land-­based financing instruments are considered ideal benefit taxes to finance cities as the benefits of spatial planning and investments in urban infrastructure capitalize into land values. Whenever, user charges and benefit taxes fail to mobilize the requisite revenue, generic taxes and inter-­governmental transfers may be resorted to. For long gestation infrastructure projects whose benefits spill over and spread over generations, borrowing is considered appropriate and practical. It is in fact, the only practical way to meet the huge demands of lumpy urban infrastructure projects. The municipal bond market in India has not been successful. This is evident from the fact that a meagre sum of Rs 13,531 crores was raised from 23 municipal bonds over 15 years. Despite being highly desirable, the municipal bond

Financing Urban Poverty Alleviation  123 market has not been able to raise desired amount because of the lack of creditworthiness of the ULBs, which are themselves facing precarious finances. This is one of the key issues that smart cities of India need to address. ULBs need a holistic approach in order to raise resources, promote fiscal discipline, generate seed money to leverage borrowed funds, and improve credit rating. Such an approach would also promote projects undertaken through PPP mode based on annuity and other models. The Tax Increment Financing (TIF) model adopted by the United States and Australia’s value increment financing models are quite successful and innovative approaches in this regard. Smart city projects will lead to increases in land values due to spatial planning, infrastructure development, local economic growth, and agglomeration externalities. They are expected to create both area-­ based and citywide impacts and benefits. Thus, a combination of area-­based and citywide financing approaches will be warranted for planned development of smart cities in terms of the theory of local public finance. Benefits of major investment projects spillover and local authorities may not have the needed financial instruments to capture all their benefits. For example, while an area-­based approach will be able to tap the land value increases in designated development areas, a citywide approach is required for linking resource mobilization to the broader impacts of projects, leading to agglomeration externalities and increased tax bases for different levels of government in different areas. The reasons for combining both the approaches in a developing country like India are summarized as follows: 1. Area-­wide financing approaches like developer exaction, special assessment district, betterment levy, business improvement district, impact fee, and tax increment financing are desirable options. However, the revenue so generated may not be able to entirely finance the lumpy infrastructure projects. 2. Innovative projects, prepared to serve particular areas, may not be self-­ sufficient as they often need connectivity to citywide infrastructure systems, such as highways, public transit system, water and sewerage trunk lines, storm water drainage system, and citywide solid waste disposal facilities, etc., whose capacity may need augmentation due to the demand from new projects. 3. The city economies of agglomeration and networking spill over jurisdictions. The benefits and costs, thus, may not be limited to the demarcated area alone. These externalities lead to unearned increments in land and property values and may also enhance the tax bases of public authorities across tiers. Thus, internalizing such externalities requires a broader resource mobilization strategy rather than an area-­specific approach. 4. Cities may not have the required instruments to exploit all the benefits of spatial planning and infrastructure development in an area of say, 50–500 acres. Benefits of area development projects capitalize into both area and citywide tax bases of all levels of government and require broader

124  Financing Urban Poverty Alleviation partnerships between local, state, and central governments for financing infrastructure and value capturing. The above considerations suggest that it will be appropriate for smart cities of India to follow a combination of both targeted and citywide financing approaches, although those who benefit more must contribute more. Public finance theory and international experience suggest that special assessment district, business improvement district, developer’s exactions, impact fees, and value capture financing tools, including tax increment financing (TIF), are desirable options for area-­based projects. These projects require ring-­fencing to repay debt. They lead to special benefits in the vicinity of projects and general benefits in a wider development district or zone or project-­influence areas. Thus, it is desirable that they are financed through instruments applied to the project-­ vicinity area as well as the broader project district and the city. Benefits know no geographical limits. While theoretical research highlights broad ‘principles’ and empirical studies present ‘common practices’ of land-­based financing, the choice of fiscal instruments by cities in India will be subject to the country’s fiscal federalism framework. The framework matters as changing it would require a constitutional amendment, which is not easy. While out-­of-­the-­box suggestions are useful for long-­term solution, they cannot be immediately implemented unless they are politically feasible or acceptable. Keeping this consideration in view and given the discussions in this chapter, we suggest a menu of options of land-­based instruments to finance infrastructure in cities India, including smart cities. We highlight alternatives, which are most likely to be implemented, and for which a strong justification or legal backing is available or an innovative practice in India or developing countries exists. These include the following instruments: Area-­based financing instruments: Developers exactions; project impact fees; planning obligations; development contributions; infrastructure development levy; sale/lease of project-­vicinity land; sale/lease of project area land; sale/lease of development rights; excess project land condemnation; monetization of land assets; joint development mechanism; project betterment charges, etc. Citywide financing instruments: Vacant land tax (VLT); property tax; non-­ agricultural land tax; property transfer tax; land use conversion tax; area impact fees; area-­ wide development/betterment taxes/charges; value-­ added tax; business tax; excise duty; civic services taxes, etc. Most area-­based projects will require a mix of financing instruments that target the project-­vicinity area, broader project benefit zone, and the city. The discussions in this chapter suggest that the tax increment financing principle, in conjunction with different approaches, could be an appropriate tool for smart city financing in India.

Financing Urban Poverty Alleviation  125 4.6.1 Tax Increment Financing

A tax increment financing (TIF) framework, widely followed in the United States, is very relevant for India’s Smart Cities Mission. This is because, while most cities suffer from a lack of current revenue surpluses to take up development projects on a pay-­as-­you-­go principle, they can still bank on future tax increments due to smart urban planning and implementation of smart, value-­ creating projects. However, a TIF approach is yet to be adopted in India to finance area-­based urban infrastructure projects. This can be attributed to the disjoint practices undertaken by multiple authorities at the city level including the ULBs, urban development authority, infrastructure development branch, highways authority, transit authority, etc. The lack of a holistic approach deprives them of several self-­reinforcing externalities suitable for value creation, capture, and recycling. They are also not equipped with appropriate instruments to mobilize tax increments. Due to these factors, cities have failed to exploit their agglomeration potential and raise resources for planned development and for supporting economic growth. It is worthwhile to note that an area without a planned project deprives all the three tiers of government of any incremental tax gains. However, with the implementation of a project which passed the cost-­benefit analysis, all the three tiers, that is, centre, state, and local, stand to gain from an increment in ‘own-­tax’ base. It would result in a win-­win situation for inter-­governmental partnership in designing, financing, and capturing benefits from planned urban development projects with substantial spillovers of benefits and costs. Escrowing a part of the increased taxes resulting from core infrastructure investments can be utilized for repaying the debt incurred for such investments. This would make infrastructure financing a self-­financing process. However, in the Indian context, authorities or special purpose vehicles taking up planned urban development projects may not have the requisite ability and authority to capture the tax increments accruing from planned projects. India’s current fiscal federalism framework, different tiers of government and their concerned authorities execute different fiscal roles assigned to them. Land use conversion charge and non-­agricultural land assessment in cities and their peripheral areas are carried out by state governments. State government established parastatal agencies like urban development authorities levy charges for institution and change of land use with reference to the Master Plan. These bodies and ULBs can impose impact fees and internal and external development charges. However, water and sewerage boards have not been given the right to collect water and sewerage betterment charges. ULBs have the authority to levy such charges but are not in a position to effectively mobilize these revenues, and even if they do, they are reluctant to share the proceeds with water and sewerage boards. Value-­added taxes and stamp duty accrue to state governments. Capital gains tax and service taxes are levied by the central government. Sometimes the local governments incur debt for financing planned urban development projects but the benefits capitalize into

126  Financing Urban Poverty Alleviation the tax bases of state and central governments. Thus, local government is deprived of the incremental taxes. Such critical issues can be sorted with inter-­ governmental partnerships and agreements. One way is to structure partnerships between different authorities through the formation of SPVs for specific projects based on consensus and ring-­fencing of likely increments in taxes, charges, and project revenues based on the benefit principle of public finance. An efficient TIF project needs to be implemented by an authority who is in a position to capture, recycle, and create further benefits. TIF thus may need to be accompanied by other financing instruments such as impact fees, incentive zoning by offering higher FAR, density including mixed land use etc. in the demarcated zone. The basic principle of TIF may be well adopted by private sector projects along with PPP. One PPP option is that the private developer securitizes loans on the basis of expected public monies and undertakes development based on an annuity model. Another model could involve public authority developing connectivity, and the private sector can follow suit by undertaking development on a revenue-­ sharing formula. Yet another model could comprise of proactive spatial planning and zoning by public authorities and the private sector bearing the cost of development. A good example of value creation in this regard is the Magarpatta city, developed on 430 acres of land at the outskirts of Pune in a period of ten years. A total of 120 farmers pooled their land and formed the Magarpatta Town Development and Construction Company as shareholders. This company acted like a TIF authority and developed a world-­class township with borrowed funds. There was no need for escrowing tax increments accruing to the local body to repay debt for development. Facilitation by the Pune municipal corporation and the Government of Maharashtra permitting the development of an integrated township under the Maharashtra Regional Town Planning Act, 1996, was adequate to create sufficient values. In fact, Pune Municipal Corporation is now benefitting through a sizable increase in property tax from Magarpatta city. The state and central governments are also reaping tax increments through growth in value-­added tax and income tax, respectively (see Mohanty 2016). 4.6.2 Development Impact Fee

Despite the global relevance and success in generating revenue for planned urban development, impact fees remain a rather unexploited tool in India. Impact fees are strongly recommended and suitable for financing planned area-­based urban renewal and development. However, even the largest municipalities of the country, where financing through land-­based tools is not just self-­ sustaining but also surplus-­ generating, have no adopted impact fees which comply with the ‘growth pays’ and ‘beneficiaries pay’ principles. Thus, urbanization in India is deprived of establishment of the requisite internal and connectivity infrastructure networks. This needs to be avoided. Impact

Financing Urban Poverty Alleviation  127 fees may be combined with development charges and other instruments adopting a tax increment financing strategy to undertake area-­based development programmes as both the mechanisms are based on the principle that beneficiaries pay. Certain Indian municipalities like Maharashtra, Gujarat, Andhra Pradesh, Telangana State, and Haryana have adopted the concepts of internal and external development charges. However, they have unintentionally prompted sub-­standard development by adopting policies to subsidize developers. This is because the cities do not have capital improvement plans for local areas and zones ready. Ironically, master plans take long years to complete. Zonal development plans do not get ready for years. Thus, when developers take up projects in urban expansion areas, authorities do not insist on them to contribute for zonal plan roads, water supply, sewerage, drainage, and garbage disposal systems. Some critics call it ‘rbanization on the cheap’. Development around cities like Mumbai, Delhi, Bengaluru, Hyderabad, and Pune puts them in a position to raise funds through land-­based tools, because of their high land values, so as to mitigate the adverse effects created by new developments. These cities are not able to meet the costs of planned urban infrastructure development by letting go on potential revenue sources. Several developed countries including the United States have addressed the problems through impact fee, which even covers affordable housing. Cities in India need a robust legal framework for such fees. There is also need for documentation of best practices and development of toolkit on ‘how to implement’. Lack of capacity in local authority is another issue. The city of Hyderabad has been a pioneer in this regard. It has levied the impact fees and has been doing so for 15 years now. The city demonstrates the potential of impact fees as an important financing tool for meeting the costs of planned urban development. Recently, Gujarat has imposed mandatory impact fees for services like parking, sanitation, fire safety, etc. under the Gujarat Regularisation of Unauthorized Development Act, 2011. It is worth noting that around 40 to 50 percent of all regional infrastructure requirements over two decades in Mumbai can be met easily with a 10 percent development impact fee on new constructions. However, it is essential to formulate a robust legislative framework in this regard. The local government must also be able to prepare comprehensive city development plan and a long-­term infrastructure investment plan or Capital Improvement Plan (CIP) and scientifically design impact fee, satisfying the various legal tests: Needs, rational nexus, and proportionality. It must have the authority to levy impact fee. 4.6.3 Strategic Densification

Density in Indian cities, especially metropolitan cities, is very high and Floor Space Index (FSI) is precariously low compared to international benchmarks. The population density of Mumbai, Delhi, Kolkata, Chennai, and Ahmadabad exceeds 20,000 people per square kilometres, compared to density of

128  Financing Urban Poverty Alleviation New York City (NYC) at 12,000. However, FSI is hardly more than 2 in many of India’s metropolitan cities, while it is more than 10 in NYC. For instance, FSI is 1.2–3.5 in Delhi, and 1.5 in Chennai. In Mumbai, FSI is 1.33 for the island city; in suburban areas it is 1.00, subject to additional FSI of 0.33 as incentive on payment of fees and fulfilling certain conditions. Internationally, it is observed that FSI is increased with development. However, the Indian scenario depicts a different picture. FSI in Mumbai has declined from 4.5 in 1964. This has made renovation and redevelopment difficult, especially for dilapidated buildings. City centres and downtowns have significantly higher FSI internationally: Tokyo – 20; Denver – 17; New York – 15; Hong Kong and Chicago – 12; Los Angeles – 13; Singapore – 12–25; Vancouver and San Francisco – 9; and Bangkok and Shanghai – 8. Sao Paulo grants a FSI of 1 as landowner’s right and an additional FSI up to 5 is granted through Transferable Development Rights (TDR) and incentive zoning, specifically in areas with good public transport connectivity (see Mohanty 2014). It is evident from international cases that accessibility to public transit and high FSI go hand in hand. But Indian cities have uniform FSI over large areas and do not reflect differential accessibility and serviceability. Indian spatial planning, till recent times, did not attempt to integrate land use planning with density and transit. Thus, several cities, including large metropolitan cities, have failed to develop dynamic regions of agglomeration, supported by well-­ connected and accessible sub-­ centres. There exists a strong rationale for increasing FSI in Indian cities. It should be accompanied by the principle of strategic densification based on transit-­oriented development principle. This would require simultaneous development of infrastructure facilities, specifically transit. In order to be successful, an integrated policy of promoting land use and transport in a holistic manner needs to be attempted proactively with flexibility and transparency. Area-­based development programmes should try to integrate strategic densification of growth nodes, mixed land use zoning, and commensurate public transport investments to promote TOD. Incentive zoning could be used to mobilize the resources required and make the programme viable. 4.6.4 Purchasable Development Rights

The OODC and CEPAC models followed in Brazil are transparent and market demand-­driven financing tools. These are replicable models which should be explored by Indian cities while taking up TOD-­linked strategic densification of urban growth nodes. This would not only generate resources for financing infrastructural needs of the city but also generate surplus for citywide development plans, including transit networks between rural and urban areas. In order to raise revenue for financing planned urban development, Indian cities of Bengaluru and Hyderabad have formulated FSI charges in the regions drawing significant benefits from transit connectivity, roads under master plan and mass rapid transit. This significantly draws on the concept of incentive zoning

Financing Urban Poverty Alleviation  129 adopted by developed countries. FSI charges have been recommended as a suitable tool to finance urban infrastructure by HPEC (2011). 4.6.5 Land Pooling: Town Planning Scheme

The Town Planning Scheme, variants of which have been practised in South Korea, Japan, Taiwan, Latin America, Gujarat, and Andhra Pradesh, provides a robust mechanism to deal with urbanization and planned development of cities. The scheme has many advantages. Firstly, the urban planning process has all the flexibility and freedom that a new township offers without burdening it with cumbersome land acquisition, associated costs, and prolonged court litigations. Secondly, the scheme is believed to be equitable since the reduction in land area and costs and returns under the scheme are spread across all landowners. Thirdly, inclusive urban development occurs with a reasonable extent of land allocated for financially deprived sections under the planning system itself, and thus the problem of the urban poor being excluded from urban land markets is addressed. Fourthly, the local authority has the scope to mobilize revenue through betterment charges in proportion to land value increments due to spatial planning and development of infrastructure. Lastly, effective and mutually beneficial PPP are promoted for planned urban expansion and development. The TPS provides an excellent example of inclusive and self-­financed area-­ based planned urban development. It is also practical, given the difficulties of compulsory land acquisition. However, the process as practised in Gujarat is time consuming and needs to be simplified. A model of TPS driven by the private sector is also desirable. The Magarpatta city development model provides an excellent example of new township development by the private sector facilitated by government with no land acquisition and no cost to public authorities, while generating sizable public financial resources. An appropriate TPS model is worth replication throughout the country. With compulsory acquisition of land increasingly being difficult, a partnership between the government, farmers, and developers appears to be the most pragmatic way of addressing the challenges of planned urban development in India. The Government of India may work out a model TPS to be executed through PPP and assist cities in capacity building to implement the scheme. 4.6.6 Citywide Financing Strategy

Area-­based financing strategy may not be adequate for effective financing of all types of urban development projects. In many cases, it will need to be supplemented by a citywide financing strategy. Revenue instruments linked to ‘special benefits’ and ‘general benefits’ will need to be combined to make development projects viable. While there is a case for empowering cities with an alternative to Octroi by a buoyant source such as Goods and Services Tax, the subject is not a part of this research. However, we suggest that key land-­based

130  Financing Urban Poverty Alleviation financing options for Indian cities under a citywide financing strategy may include the following. 4.6.7 Vacant Land Tax

Land comes under the purview of the existing provisions of property tax in India. However, some municipalities make a specific levy on vacant land based on its capital value in the form of a vacant land tax (VLT). There is a strong case for a levy of VLT, and it can be easily imposed under the current property tax provisions. The Greater Hyderabad Municipal Corporation (GHMC) levies vacant land tax at 0.5 percent on prevailing registration value of land. The state permits other municipalities to levy VLT at 0.2 percent. But sadly, this buoyant source of revenue has been grossly ignored by municipalities throughout India. Not levying VLT amounts to letting go of a remarkable opportunity to garner revenue, especially when the city undergoes a boom in land markets. Also, infrastructure developments further boost land values. Thus, even landowners could have appropriated a good price for their land. VLT is especially suitable in the urban context since it enables planned urban development as per the norms, objectives, and principles of spatial planning, by discouraging speculation and hoarding of land. It also subscribes to the principle of benefit taxation by making a case for charging landowners who gain unearned increments in land value because of infrastructure development. A good urban development plan requires judicious land allocation for varied uses according to the zoning requirements, compatible land use objectives, and infrastructure development. VLT not only prevents land speculation but also promotes proper land usage including for housing and other activities of economic value and generates employment. Further, it also promotes sustainable and effective use of land in accordance with the urban form and design. Drawing lessons from Telangana State and Andhra Pradesh, other states in India should also mandate collection of a VLT based on the land’s market value or capital value. Trunk infrastructure facilities can be financed through a VLT at the rate of 0.5 to 2 percent of the land’s capital value. To begin with, VLT rates may be fixed at 0.5 percent for large cities and 0.2 percent in smaller towns, similar to the VLT implementation by erstwhile state of Andhra Pradesh. Though these rates are significantly smaller than the international benchmark, they are still capable of mobilizing significant revenue if we take the land values, vast extent of cities, and continuous extensions of city boundaries into account. The rate of tax may be kept higher for vacant land than built-­up property in order to prevent land speculation and encourage housing and investment in other productive activities. Properties which have more than 50 percent of land utilized for building may be exempted from any form of VLT. It is high time, large metropolitan cities like Mumbai and Bengaluru should consider elevating their extremely low tax rates on vacant land. A certain grace period, of

Financing Urban Poverty Alleviation  131 maybe five years, should be provided for completing construction on a vacant land after the layout approval or connectivity infrastructure provision. Following this, VLT must be imposed in a steeply graduated manner. In case of evasion of VLT on a certain property, the same can be recovered under law with a penalty, when any development or transaction takes place on such property later. The duration for which the land is held vacant may determine the extent to which VLT rates may be hiked. It may go up to 2 or 3 percent of the value of land. Brazil levies a graduated VLT after an amendment in the national constitution. India should also opt for a graduated VLT with clear provisions under the municipal laws. 4.6.8 Property Tax Reforms

Property tax, a land-­based instrument of local public finance, is of particular interest to India at this stage of urban development for three reasons. First, it is the single largest ‘own’ source of revenue in cities. Second, it is identified with municipal fiscal autonomy and public accountability. Third, it remains grossly under-­exploited; studies reveal that there is a scope for increasing property tax yield by three to four times. Indian municipal laws have two major components of property tax: A general component and a service-­related component. The service-­related components can be broadly categorized as lighting tax, fire tax, street tax, water tax, conservancy tax, and drainage tax. According to the principles of public finance, it is appropriate to levy user charges on the direct service recipients whenever it is feasible, rather than imposing generic taxes. Even internationally successful practices indicate in this direction. Thus, it is appropriate to delink water tax, drainage tax, and conservancy tax from property tax and link it to the quantity of water consumption instead. However, collective services, for which measuring the amount of benefits is not feasible, may be met by either property taxes or other non-­user benefit charges. India’s JNNURM envisaged 23 major reforms at the state and ULB levels to strengthen urban governance. One of them was property tax reform with GIS mapping, with a target to improve collection efficiency to at least 85 percent over the mission period 2005–2012. However, the design of this reform did not provide for a scientific estimation of the property tax base. As a result, the denominator of collection efficiency was not properly defined by cities. The evidence that the ratio of property tax to GDP declined over the seven-­ year mission period calls for a serious enquiry into its causes. International and Indian practices suggest that the reasons why the potential of property tax in India is far from being realized include systemic problems as well as administrative inefficiencies. These are rooted in multiple issues pertaining to the tax base, rate, law, valuation and revaluation, coverage, assessment, exemptions, billing, enforcement, collection, dispute resolution, maintaining and updating data and records, and ultimately the capacity and quality of municipal administration.

132  Financing Urban Poverty Alleviation Considering the role of cities, the huge urban investments needed for sustaining economic growth, relevance of property tax in municipal fiscal autonomy, and its huge potential that remains unexploited, property tax reforms assume critical importance in the Indian context. Successful property taxation practised worldwide advocate for a holistic approach in this regard. Bogota, Colombia, stands as a replicable model of a city that embraced a successful property tax reform regime following a comprehensive programme. Bogota initiated reforms in 2008 by updating the physical records and tax values of 2.1 million properties. This resulted in a remarkable rise in share of property taxes in total municipal ‘own revenues’ from 20 percent in 2008 to 40 percent by 2010. Experiments in property tax reforms in India include initiatives by the cities of Patna, Hyderabad, Ahmedabad, Delhi, Bengaluru, and Mumbai. Bengaluru’s Self-­Assessment Scheme provides a good case of property tax reforms in recent years that could be considered for replication – with modifications. Bengaluru is lauded to be the first Indian city to adopt a GIS-­enabled database on a citywide scale for property taxation. About 1.7 million properties have been identified and assigned unique Property Identification (PID) numbers. Due to two spells of Self-­ Assessment Scheme (SAS), property tax collection in Bengaluru increased by 33 percent during 2000–2001, and by 39 percent between 2009 and 2010 and 2010 and 2011. There is a need to look to theory and innovative initiatives launched by cities like Bogota and Bengaluru to design and pursue a robust agenda of property tax reforms in India with the objective of shifting to full capital value system. Since a complete transit to a full-­fledged property tax regime based on the capital value method cannot be undertaken overnight, we suggest a split rate property tax system during the transition. While one rate can be fixed for land value, another rate may be specified for ‘collective’ services, except water supply, drainage, and sewerage. A separate land tax is suggested keeping in mind that unearned benefits to land may be much higher than those to buildings. Current property tax regime includes a ‘general tax component” which is linked to the land value. Certain states like Telangana and Andhra Pradesh have modified their municipal laws so as to enable municipalities to levy vacant land tax based on the capital value method. We recommend a progressive land value tax as a substitute for the general tax component of property tax. The valuation method adopted should most appropriately be the capital value method. The ready reckoner value of land as determined annually by the Registration department for the purpose of stamp duty may be followed for calculation of this tax too. The component of property tax for city services may be determined taking into account the cost of collective services for which user charges cannot be levied. The unit area method may be used to calculate this tax pending switchover to a capital value system as the area of a property is a good proxy for civic service usage by the property owner or tenant. This method is particularly suitable for residential properties, which can be easily divided into homogeneous

Financing Urban Poverty Alleviation  133 groups. For highly heterogeneous non-­residential properties, e.g. hotels, hospitals, nursing homes, function halls, etc., the principle of ‘averaging” inherent in the unit area method makes the tax regressive apart from resulting in a loss of tax legitimately due from high-­value properties. 4.6.9 Sharing of Stamp Duty

It is theoretically justified as well as internationally accepted that ULBs should have access to stamp duty or real estate transfer tax. Most of the value increments in land and property occur in cities because of city governments’ endeavours and investments in developing infrastructure and civic service provisions. A city real estate transfer tax may be considered for being levied on the seller subject to appropriate deduction under the capital gains component of income tax. This tax ought to be earmarked for ULBs towards developing regional infrastructure, including public transit. Till such a tax is in place, ULBs must be provided a share in stamp duty as in Telangana State, Andhra Pradesh, and Tamil Nadu. A strong case exists for garnering funds for smart cities development from access to land transfer or registration taxes. Several expert committees and commissions have also recommended a share of ULBs in taxes on property and land transactions. However, such tax rates should be preferably kept low so as not to discourage property registrations. 4.6.10 Betterment Taxes/Charges

Spatial planning, infrastructure development, transit connectivity, and civic service provisions capitalize into land and property values and result in unearned increments in land values. This creates the rationale for tapping such unearned increments to meet the cost of financing infrastructure and services. However, it is difficult to segregate the various factors that lead to such ‘betterment”. Research reveals that there could be some practical difficulties in implementing betterment levy as follows: i. Clear demarcation of benefit or betterment area, including justification for such demarcation. ii. Disaggregation of sources of increase in land values such as master planning, permission for particular developments, infrastructure, owner’s initiatives, economic growth, others’ initiatives, agglomeration economies, and other factors. iii. Determination of the base and rate of levy, since land prices tend to rise even prior to public investments. It has been noted from international experiences that levying a betterment charge at a rate of about 80 to 100 percent was met with vehement opposition and resistance, and subsequently rates had to be declined drastically. Some experts opine that a betterment levy following spatial planning or public works

134  Financing Urban Poverty Alleviation is unwarranted, unnecessary or is a form of double taxation, since such works increase property’s taxable value and are already captured through property taxation. However, it is also noted that infrastructure development boosts land value to such an extent where it cannot be effectively captured through property tax because of a huge jump in the tax due. Special benefits can only be captured through special instruments. Further, generic taxes such as property tax are not feasible for capturing broader market trends in land value increments resulting from agglomeration externalities. Drawing lessons from successful international practices, it is advisable for Indian cities to levy a betterment charge at the rate of 25 to 30 percent. Since it is difficult to identify and demarcate the exact source of betterment, the practice adopted by Bogota is preferable. Bogota levies a citywide betterment charge and carefully demarcates zones, mass transit alignment for instance. To begin with, the betterment and external betterment levy models adopted by Hyderabad are worthy of replication throughout the country. 4.7 Conclusion Currently, an utmost policy thrust is given to boost economic growth in order to reduce the count of the poor in a sustained manner. But for growth to ultimately benefit the poor, it needs to be coupled with rapid expansion in employment; greater investment in health, nutrition, education, water, waste management, and sanitation; and directly targeted poverty reduction programmes. The municipal finance system of cities must be reformed to support infrastructure for economic growth, affordable housing, and basic services to the poor and urban poverty alleviation, including wage employment and self-­employment support. Though cities pose challenges, they also provide opportunities. City regions act as the engines of economic growth and innovation. They create external economies of agglomeration and are homes to knowledge externalities. Cities are generators of public finance for all levels of government. Agglomeration economies in cities capitalize into the tax bases of governments: Income, corporation, sales, value added, business, excise, land, property, property transfer, motor vehicles, entertainment, advertisement, etc. McKinsey Report (2010) informs that 80–85 percent of central and state revenues, so critical for socio-­ economic development and poverty alleviation, are going to be generated by cities. Resource generation for economic development, including urban and rural development will not be possible in the absence of financially healthy cities. Cities have always played the role of mobilizing resources for development and poverty reduction throughout history. Indian cities need to be financially strong and allocate adequate budgets for the urban poor and slum dwellers with the realization that the first charge of the budget must be that of the poor, who need the government most. Inclusive urbanization requires inclusive municipalities, which strengthen finances and allocate a due share for the urban poor in city budgets in recognition of the contribution of the poor to city building, thus making cities function and contribute to growth.

5

Urban Participatory Governance Including the Urban Poor in Public Service Delivery

5.1 Case for Participatory Governance Governance is considered as the cardinal factor to promote development, inclusion, and poverty reduction. However, developing countries like India suffer from governance deficit. Official documents of the Government of India such as Five-Year Plans refer to the following issues of poor governance in India: • Poor management of economies, persisting fiscal imbalances, disparities in the pace and level of development across regions and across districts. • Denial of basic needs of food, water, and shelter to a substantial proportion of the population. • Threat to life and personal security in the face of inadequate state control of law-and-order situation, resulting in crime, violence, social unrest, etc. • Marginalization, exclusion or even persecution of people on account of social, religious, castes or even gender affiliations. • Lack of sensitivity, transparency, and accountability in many facets of the working of state machinery, particularly those that have an interface with the public. • Lack of credibility – the gap between the intent and the actions of governance institutions in society. • Deterioration of physical environment, particularly in urban areas, and unsustainable energy use, congestion, pollution, etc. • Inadequate system of incentives/disincentives for people (particularly for a civil servant), subversion of rules, evasion of taxes, and failure in getting timely justice. • Existence of a significant number of voiceless poor with little opportunities for participating in institutions of local governance, despite the Constitution 73rd and 74th Amendment Acts. One of the key indicators of governance deficit in India is the lack of participation of the poor and the marginalized in the service delivery and socio-economic development processes. DOI: 10.4324/9781003452171-5

136  Urban Participatory Governance Research reveals that the participation of the poor and the marginalized ensures their voice in the resource allocation, programme design, and implementation processes concerning their welfare. ‘Participatory governance’ is thus considered intrinsically valuable. It is described as ‘a regulatory framework in which the task of running public affairs is not solely entrusted to government and the public administration but involves co-operation between state institutions and civil society groups’. Participatory governance arrangements (PGAs) are increasingly gaining support in city politics which target at involving citizens in diverse forms of interactions with policymakers at election intervals. Numerous promises are brought forth by this ‘participative movement’ (Bherer 2010) at the governmental local level like those of revitalizing and intensifying local democracy by giving more opportunities for political participation by citizens, ensuring increased efficiency in service delivery, educating and empowering citizens into political actors, substantiating knowledge domains that are fundamental to policy decisions, strengthening social capital, and paving paths for sustainable and resilient cities. In this type of governance, the citizens participate through deliberations and voting over the use of state authority and allocation of public resources. It also brings in new players into incremental decision-making processes. Representative democracy is often perceived to be unable to single-handedly empower and educate citizens, efficiently use limited public resources, and ameliorate state performance. This forms the basis for encompassing participatory governance (Pateman 1970; Barber 1984; Fung and Wright 2001 and 2003; Santos 2005). Embracing participatory governance does not signify the rejection of representative democracy. It rather is a representation of the effort to refurbish processes and institutions to enhance the quality of social well-being, democracy, and the state. When designed and implemented appropriately, participatory governance tools enable the poor and low-income groups in the society to get their voice articulated and heard, ensuring that they are able to exercise their right to the city. Participatory governance has the potential of promoting democratic decentralization and grassroots democracy. It is the foundation of India’s historic Constitution 73rd and 74th Amendment Acts 1992 aimed at taking ‘power to the people’. The acts emphasize the need for elected local government and civic participation mechanisms for improving the delivery of public services in cities and towns. Urban politics and governments have been recognized as the ‘privileged loci for deliberative experiments’ (Melo and Baiocchi 2006). Nevertheless, owing to the accelerating complexity of problems of social conflict, inequality, economic crisis, and austerity measures, the quandaries of deliberative participation may seem daunting. The challenges of globalization and ever-increasing expectations of the people, powered by information and communication technology (ICT) make urban governance tasks difficult. Even so, it has been seen that governmental initiatives like the participative budgeting of Porto Alegre, Brazil, and other examples of ‘empowered participative governance’, which target empowering citizens in order to shape policymaking has resulted in deepening of local democracy, augmenting citizen power and paving way for social change.

Urban Participatory Governance  137 Furthermore, it has been perceived to strengthen representative democracy by making it more efficient and justifying its legitimacy (Fung and Wright 2003). Studies on participatory development and governance do not always support the approaches adopted by governments and civic society organizations to ensure participation for yielding results. They present both positive and negative sides of participatory mechanisms in improving governance and public service delivery. Some researchers find that PGAs, such as participative budgeting, structured town meetings, neighbourhood councils, deliberative panels, and polls, rarely amplify citizens’ influence in politics, and do not increase the efficiency of public services. However, most researchers argue that the design of participation and efficacy of implementation are crucial matters that need to be considered in the evaluation of participatory governance. In fact, participation is regarded as a foundational and non-negotiable element of good governance paradigm. This chapter deals with participatory urban governance as an instrument to promote inclusive socio-economic development and poverty reduction. Section 5.2 discusses the role of participation in the context of the good governance paradigm. Section 5.3 presents theoretical perspective on participatory governance. Section 5.4 describes the case for participatory urban planning as a tool of good governance. It also presents the concept of participatory urban appraisal. Section 5.5 discusses examples of mechanisms of participatory governance in India. Section 5.6 highlights some international examples on the subject. It focuses on South Africa and Brazil to draw lessons. Section 5.7 suggests directions for adopting participatory governance instruments to promote inclusive urbanization in India. 5.2 Good Governance and Participation Governance has numerous facets. Under its ambit, groups and societies undertake processes of making and implementing decisions – taking in society’s outlays and inputs and converting them into outputs and outcomes which have broader socio-economic impacts. It involves multiple actors including the state, the civic society, and the private sector which continuously engage in interplay. Various relationships and processes involving institutions, mechanisms of service delivery and regulatory frameworks also operate in the governance wing. It covers the rules of the game, players of the game, and the manner in which the game is played. Good governance paradigm is based on some key characteristics of governance that relate to both processes and outcomes in managing society’s affairs to achieve socio-economic development and welfare objectives. These include: Rule of Law An impartially enforced legal framework is the foundation of good governance. This requires optimum protection of human rights, especially those of the poor, the destitute, the minorities, women, and children. To ensure this, the independence of the judiciary and an honest and uncorrupt law enforcement arm is paramount.

138  Urban Participatory Governance Strategic Vision and Consensus Orientation Good governance needs a long-term approach which is strategic and developed through a consensus-building and democratic process. Consensus-building is usually faced with conflict of interests among multiple societal actors and their respective viewpoints. However, keeping the best interest of the community in mind, broad consensus may be reached by comprehensively mediating between these multifarious interests and orientations. The long-range nature of the approach is to secure sustainability and inclusivity in development. This requires a wholesome understanding of social aspects of the community and the realization that some shall lose while others gain. Transparency Transparency warrants that decision-making and enforcement fall well within the ethical and legal framework and information is disclosed to the benefit of all. Free availability and direct accessibility of information to those affected by such decision-making and enforcement forms the crux of transparency. Transparency also means that the stakeholders and the media are also endowed with ample information in legible formats. Responsiveness Responsiveness in good governance requires that services are provided to stakeholders by the organizations, institutions, mechanisms, and processes in place in a time frame which is reasonable. Equity and Inclusiveness Inclusivity is important to social welfare and is ensured by convincing each of society’s members that they possess a stake in it and making them a part of all the mainstream processes of society. This warrants that all groups, in particular the poor and the vulnerable, are given enough opportunities to safeguard their well-being. Effectiveness and Efficiency Good governance calls for institutions and processes producing consequences that meet the necessities of the society while optimally utilizing resources: Physical, financial, manpower, etc. at their disposal. The concept of efficiency also covers the tenets of sustainable use of natural resources and environmental protection. Accountability Accountability is fundamental to good governance. In addition to the government, the civil society and the private sector who act as partners of the former must remain accountable to the public and their respective institutional stakeholders. The actions of an institution or organization

Urban Participatory Governance  139 being external or internal decides who must be accountable to whom. Usually, an institution or organization is accountable to those who will bear the consequences of its decisions or actions. Accountability also covers legal, financial, and performance dimensions. Transparency and rule of law are inevitable to ensure accountability. Participation Participation across genders is the cornerstone of good governance. Participation may be direct or indirect, either through legitimate intermediate institutions or representatives of the people. In the latter, addressing appropriately the concern of participation of the vulnerable in society in the decision-making process may not be ensured. Nevertheless, participation must be structured and informed. An organized civil society and freedom of expression and association are imminent for informed participation. The Global Campaign on Urban Governance presents good urban governance as characterized by sustainability, subsidiary, equity, efficiency, transparency and accountability, civic engagement, and citizenship security, and that these norms are interdependent and mutually reinforcing. These norms, which include participatory democracy, are introduced below, and include a range of illustrative operational principles for their implementation: Sustainability in all dimensions of urban development: Cities must maintain equilibrium in terms of economic, social, and environmental necessities of not only the present but also the future generations. Urban poverty reduction must be focused on with commitment. Having a long-term and strategic outlook of sustainable human development and competently being able to handle the reconciliation of conflicting interests for the common good is necessary on the part of leaders of urban society. Subsidiary of authority and resources to the closest appropriate level: The responsibility of providing services ought to be distributed based on the subsidiarity principle, which means it should be at the closest appropriate level of government and consistent with cost-effective and efficient service delivery. This should optimize the capacity for including the citizen folk in the urban governance process. Decentralization and localized democracy are supposed to improve policy responsiveness and initiatives according to the needs and priorities of the citizens. Ample resources and autonomy should be ensured to empower cities to meet their responsibilities. Equity of access to decision-making processes and the basic necessities of life: Equitable access and utility of resources is the resultant of power sharing. Equality in participation of men and women must be there in all resource allocation, priority setting, and decision-making processes. Inclusive cities must provide for everyone irrespective of their class, age, religion, ethnicity, or physical health with equitable access to education, employment, livelihood, nutrition, medical care, housing, safe drinking water, sanitation, and other necessary fundamental services.

140  Urban Participatory Governance Efficiency in the delivery of public services and in promoting local economic development: Cities must remain financially healthy and cost effective in their management of sources of revenue and expenditures, in the administration and delivery of services, and in creating an enabling environment, based on comparative advantage of communities, the government, and the private sector to contribute formally or informally to the urban economy. One of the principal components in achieving efficiency is to acknowledge and enable particularly the contribution of women to urban economy. Transparency and accountability of decision-makers and all stakeholders: One of the fundamental aspects of good governance is the accountability of local authorities to their citizens. Corruption, hence, should find no place in cities. Corruption undermines the credibility of the local government and may aggravate urban poverty. Transparency alongside accountability remains essential to the stakeholders’ understanding of the local government and the beneficiaries of its policies and actions. Access to information is cardinal to this aspect of good governance. Application of laws and public policies should be done in a predictable manner ensuring transparency. Government officials and other civil servants must exemplify high standards of integrity, both professional and personal. Transparency and accountability also require increased citizen participation. Civic engagement and citizenship: The principal resource of any city is its people. They serve as the means and aim of sustainable human development. Civic engagement signifies that cohabitation in cities is an active exercise ensured by the population actively contributing to the common good. Empowerment of women must be ensured for them to effectively participate in decision-making processes. The poor also possess civic capital which must be acknowledged and encouraged. Security of individuals and their living environment: Every human being has an inalienable right to life, liberty, and personal security. Lack of security results in disproportionality, further marginalizing the indigent communities. Cities must endeavour to minimize human conflicts by involving various stakeholders in prevention of crime and conflict. They also must prevent natural disasters by strengthening their disaster preparedness. Security also means that the city provides the security of tenure and is free from persecutions and forced evictions. Cities ought to encourage cooperation among implementation agencies and other social service providers like health, housing, and education and seek help from social mediation and conflict resolution and reduction agencies. 5.3 Participation: Theoretical Perspectives Governments must make citizen groups partners in governance. The reasons as to why this should be so are twofold. Firstly, governments may comprehend that their aims cannot be realized without the active support of organized private

Urban Participatory Governance  141 constituencies. It is expressly or impliedly expected from this that the participating organizations will show support to decisions to which they are party and will be able to bring their constituents to agreements. The justification behind such arrangements is the catalysis of ‘social partnership’ values and the inducement of cooperation of organized interest groups and reduced resistance by them birthing from cooperation in common interest. Secondly, participatory governance expands and intensifies democracy by widening the range of population engaged in influencing or making government decisions. A collateral rationale is the expression of popular sovereignty represented by democracy in which all members of the political fraternity are entitled to an equal expression in public affairs. Only exercising franchise rights is not enough as it does not guarantee participation directly in policy decisions. Individual voting is towards a specific party which doesn’t automatically translate to vote for any policy. Hence, democracies must augment opportunities for participation between elections. The effort is to normatively expand the range of participating citizens and not the instrumental aspiration to ensure governmental engagement of persons whose cooperation it necessitates. Therefore, advocates of participatory governance ground their support on it being a contingency for durable and sustainable development in addition to being an instrument for effective public management. 5.3.1 Participatory Governance: Rationale and Theories

Generally, the fundamental criterion for participatory governance is contemplated under two principles: Participation and local economic development. The political science literature discusses the existence of a relationship between the two that is not without controversy. Three varied approaches can be identified in theory: Negative impact of ‘too much’ participation on local economic development: Several arguments support that a purely representative type of democracy is superior: Firstly, extensive participation of citizens and social groups is regarded as counterproductive as it obstructs the effective and efficient functioning of the political elite. Secondly, decision-making in complex political issues requires certain skills and knowledge which an average citizen might not possess. The general public do not have enough substantive information at their disposal in order to essentially contribute to policies and problems. The danger of populism, minority oppression, and decreased influence of the less educated are some alternative arguments. No connection between participation and local economic development: Certain authors reject the connection between input and output altogether. They regard input arrangements as not necessarily influential on the output. Institutional configurations, a country’s socio-economic status, or the capacities and values of the governing elites may constitute crucial variables.

142  Urban Participatory Governance Positive impact of participation on local economic development: The supporters of participatory democracy propose a positive connection between participation and outcome. They consider that efficient functioning of a political system can only be ensured if there is elevated involvement of citizens in exercising democratic control. The focal point of the arguments of some authors like Lindblom (1965) and Fischer (2000) is knowledge of the people, that is, the special knowledge possessed by citizens which is indispensable for building effective, meaningful, and practice-oriented solutions to problems. Stakeholders’ involvement allows knowledge gathering making for optimal results. A majority of authors assume that the acceptance rate of political decisions is increased when the people affected by such decisions are involved in the decision-making process. Hence, a participatory policy process would promote its enforcement. From this viewpoint, participation is a condition that is precedent to optimal output rather than being antagonistic to it. Budge argues by criticizing ‘the elective dictatorship of a majority party’. Thus, ‘unpopular policies can be enforced years after support for them [the parties] has evaporated – even without putting them in an electoral programme’ (Budge 1996: 192). In recent years, the last perspective has been gaining more and more endorsements. International organizations of networks of state and non-state actors also believe that participatory governance benefits positively. Institutions such as the Organisation for Economic Co-operation and Development (OECD) argue that the fact that the power or capacity of collective institutions to map out a specific path depends to an accelerating extent on the active participation of the governed is now being growingly recognized. The Commission of the European Union (2001) has indicated towards the significance of participation of people in its White Paper, too (‘European Governance. A White Paper’, COM 428, Brussels). The World Bank also suggests participatory governance as a means to reduce poverty in developing countries. It holds true for the UNDP and the UN HABITAT as well. 5.4 Need for Participatory Urban Planning Participatory urban planning is a key element of good urban governance. Urban planning and its management have evolved in the 21st century due to a variety of factors, i.e., rapid urbanization, lack of corresponding improvement in urban infrastructure, slums and the informal economy, increasing instances of crime and social unrest, and rising expectations. To counter these problems, there has been a particular approach that has become popular, i.e., the participation of citizens in planning and management of cities and towns. The ability to participate in planning helps in empowering communities and creating better design of urban projects and service delivery planning which take into

Urban Participatory Governance  143 account the citizens’ concerns. Citizen participation in urban planning also facilitates building social capital. These considerations have led to the emergence of tools of participatory planning in cities and towns to promote good urban governance. In India, the enactment of the Constitution 74th Amendment Act 1992 has led to the recognition of the importance of democratic decentralization and participatory planning. The 74th Amendment Act has included planning for social and economic development and town planning in the Twelfth Schedule of the Constitution as legitimate functions of urban local bodies (ULBs). It has also included slum development and urban poverty alleviation as key functions of ULBs. The mandate and spirit of the 74th Amendment Act and the search for paradigms of good urban governance have resulted in a search for participatory approaches to the planning of India’s cities, towns, local areas, and communities. The state of Kerala has taken exemplary initiatives in the country to promote participatory planning as a tool to promote inclusive governance. In countries, at the community level, participatory planning has taken varied forms in recent years with different outcomes. The terminology used for these approaches is diverse even though practically they have common attributes, especially focusing on recognizing local needs and priorities, finding solutions, and conceding on implementation arrangements, operation, and maintenance. The process of identifying necessities and priorities at the grassroots level is often called Participatory Urban Appraisal (PUA), while arriving at proposals and implementation arrangements is usually called Community Action Planning (CAP). Till recently, participatory approaches have been used mainly in rural areas, in situations of agro-ecosystem analysis and farming systems research. However, in the recent past these methodologies have been increasingly used in urban contexts. The attempts to use participatory appraisal methods for urban planning and development programmes recognize the differences between the rural and urban areas with respect to: a) Type of livelihood opportunities: The urban population has a greater tendency to take up employment in the area of services, manufacturing and public sector. b) Availability of natural resources: The urban population has lesser options of direct household utilization of fuel, food, and water. c) Diversity in the communities: Urban communities have residents that come from a wide range of backgrounds and hence the population is more heterogeneous with respect to communities. d) Tenure: Legal tenure is often not available to urban population residing in slums which are constantly under the threat of eviction, and which are subjected to disasters. e) Local government: Government at the local level is stronger and better organized in urban areas.

144  Urban Participatory Governance 5.4.1 Participatory Urban Appraisal

Participatory appraisal means the involvement of the community members in finding out information about the issues faced by them and their requirements. It is a methodology to learn about rural/urban life and the environment from the people themselves. Researchers/field workers are involved in doing their own analysis and planning. It is based on the principle that the concerned people are creative and able to investigate their problems themselves, do the required analysis and come up with necessary planning. Participatory Urban Appraisal (PUA) methods are mainly focused on gathering community-level information and taking up assessment of preliminary needs so as to plan for implementation of community development programmes. Participatory urban appraisal is rooted in methods of participatory rural appraisal. There are demonstrations showing that such methods can be utilized in urban areas with proper modifications, where the communities are bigger, with transient populations and higher pressures on inhabitants’ time. Nevertheless, Participatory urban appraisal methods have been primarily used for gathering information at the community level and commencing preliminary needs assessment. They are required to be integrated with citywide systematic data which is suited for small area disaggregation with regard to well-being indicators, critical service provision, and social groups (age, gender, etc.). Additionally, participatory urban appraisal furnishes information inputs towards decision-making instead of being a decision-making tool in itself. Hence, it needs to be advanced ahead via community action planning or participatory action research. Typically, the primary motivation for PUA in developing countries has remained regenerating or upgrading in order to ameliorate infrastructure and housing, rather than land use planning. The incorporation of PUA methods to urban planning remains a challenge in developing countries like India. Divergent players including the government, communities, NGOs, CBO federations, and other external agencies may commence a participatory appraisal process at the local level. Opportune organizational participatory arrangements and local-level planning differ contingent to the social characteristics and size of a particular area and the disposition of the political system. At the community level, the nature and output of participation depends upon where the initiative is sourced and the nature of connections among NGOs, communities, and the political and administrative system. Many a times, these relationships are collaborative. For example, in the Philippines, there is more probability that CBOs emerge in such municipalities wherein politicians are in favour of collaborations opposed to the ones wherein they remain hostile. The former tends to be the ones where neighbourhood inhabitant votes remain significant to the ones having political control. The demeanour of elected politicians also impacts the sense of agency in CBOs. Those which face hostilities find it rather difficult to keep up collective action. Time and again, nonetheless, the relationships between the wider political systems and communities are described by confrontation or clientelism.

Urban Participatory Governance  145 Confrontation occurs particularly where informal settlements exist which are illegal and are threatened with eviction. Clientelism, on the other hand, means circumstances where demands and claims are exchanged for votes and the neighbourhoods compete. Deserving NGOs may have the potential to play an intermediary role in aiding the participatory urban appraisal process and community action planning, especially if the associations of the local government are with failed antecedent interventions, limited understanding of participatory methods on part of the residents and municipal staff, or the city-level political control is not in favour of the poor. In certain situations, community organizations are prone to elite capture; however, participation may foster creation of local democratic spaces where new leaders can locally emerge and prove worthy in meeting the expectations of citizens regarding their interactions with machinery of the government. 5.5 Participatory Urban Governance: Indian Examples 5.5.1 Community Participation Law

The Constitution (74th Amendment) Act 1992 envisages that the municipal council and Ward Committees act as platforms for information-sharing and deliberation on citizens’ issues. The reform agenda under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) mandated the constitution of Area Sabhas below the ward level. The Government of India has circulated a model Community Participation Law (CPL) – Nagara Raj Bill – to states, requiring the constitution of an Areas Sabha for one or more polling booths, not exceeding five. However, with the JNNURM being over, the focus on CPL seems to be reduced considerably. The Community Participation Law, prescribed as a mandatory reform under JNNURM aimed at the following: • Strengthening municipal governments by • Institutionalizing citizen participation. • Introducing the concept of Area Sabhas (consisting of all registered voters of a polling booth) in urban areas. • Involving citizens in municipal functions like setting priorities, budgeting provisions, exerting pressure for compliance of existing regulations, etc. JNNURM envisaged the formation of another level of decision-making below the ward level in the municipality – the Area Sabha. Community representatives, i.e., the Area Sabha representatives will be the link between the Area Sabhas in a ward and the ward level Ward Committee. Hence, three tiers of decision-making are contemplated in a municipality: The Area Sabhas at the lowest level, the Ward, and then the Municipality. Furthermore, an intermediary level may be created for administrative reasons by choice of the states

146  Urban Participatory Governance containing clusters of multiple wards which form regional structures amidst the ward and the municipality. One of the mandatory reforms under the JNNURM has been the CPL. It concerns the formulation of appropriate provisions in the statutes of the state municipal in order to institute the three-/four-tiered structure. It was mandated by the JNNURM that the states either make amends to their current municipal laws or enact a CPL separately. These statutes are supposed to ensure that the powers, functions, and duties of each tier are clearly defined, and make provisions for proper devolution of funds, functions, and functionaries to each level. The reason for the CPL as given by JNNURM was centred on the premise that for effective and strengthened democratic processes, citizen participation is essential. It serves to cater a platform to the citizens to bear a persuasive effect on policymaking, programme development, and implementation by the local government. Several organically developed platforms exist for citizen participation; nonetheless, a need is felt to institutionalize them and cause them to be effective as well as sustainable. It is the aim of the CPL to effectuate the institutionalization of such community participation systems. If enforced in its true essence, it is ought to have the following advantages: • It will aid in intensifying democracy, facilitating efficiency, sustaining socio-economic growth, and promoting pro-poor initiatives. • It will aid in making urban governance and service delivery better. It will bolster transparency and accountability in governance. • It will enhance the quality of decisions made, as they would be based on consideration of local realities and requirements. • It bears importance for regional planning structures like the District Planning Committee (DPC) and the Metropolitan Planning Committee (MPC), both of which need the participation of citizens in planning from the grassroots. • Citizens will have a say in deciding the manner of sharing of information, setting of policies, utilization of resources, and implementation of programmes/plans. Table 5.1 shows the reform components and timelines prescribed by JNNURM with regards to CPL reforms. Under the CPL, each Area Sabha is to elect an area member of the Ward Committee. The functions of Ward Committee include the following: Preparation of ward development plan and budget; supervision over sanitation works; maintenance of street lights and parks; assistance in identification of beneficiaries under welfare schemes, implementation of development programmes and collection of municipal taxes and charges; mobilization of local resources and community participation in service delivery; and undertaking voluntary activities. The functions of Area Sabha are to prioritize schemes for inclusion in the Ward or Municipal development plan, identify eligible persons for inclusion

Urban Participatory Governance  147 Table 5.1  JNNURM Prescribed Reform Components Components

Timelines

Resolution by the state government expressing commitment to establish a new CPL

To be passed within six months of signing of MoA under the Mission and submitting a copy to the Ministry of Urban Development Within a year of signing the MoA

Interim process for community participation in municipal functions while CPL is being enacted and notified Progressive devolution of functions to the lower tiers. For example, the municipality may devolve monitoring of solid waste management to the lower tiers of Area Sabha to provide political education to the grassroots. Enactment of the law by the states according to the timeline committed to buy them in the tripartite Memorandum of Agreement (MoA) signed Notification of the ‘Rules’ pertaining to the CPL or amendment in legislation

Within a year of signing the MoA

As per the timeline committed to by each state As per the timeline committed to by each state

under beneficiary-oriented schemes, make suggestions regarding public works, promote public health and sanitation, etc. 5.5.2 Citizens’ Report Cards

In the city of Bangaluru, report cards are having been used by the Public Affairs Centre (PAC), Bengaluru, founded by Prof. Samuel Paul with the purpose of monitoring the delivery of services and also helping NGOs in other cities to execute similar actions in their respective cities. Till now three exercises have been undertaken by the PAC in regard to Citizens’ Report Cards (CRCs) in Bengaluru. The beginning of all of it can be dated back to 1993 when inadequacy and inefficiency were lurking around the public services in Bengaluru. There was abuse of discretion, and corruption among the service-providing authorities was rampant and the media and the citizens were complacent. Escape was sought and the motivation for change had to be extended from civil society’s active members. The evolution of the CRC concept was seen to be from the reality that strengthening citizens’/consumer’s ‘voice’ to raise the demand for change and reforms on the one hand and ‘strengthening agency/providers’ ‘responsiveness’ to further participation and involvement of citizens on the other hand were the only way out. CRC is a simple evaluation tool like any report card but for evaluating public services. It is structured in a way which facilitates lucid communication, providing performance feedback summative

148  Urban Participatory Governance with a scope for comparison with other units and can be treated as the onset for reflection and corrective action. The benefits of CRCs can be enlisted as follows: • Ensures reliable feedback of users on public services. • Makes it convenient for communities to claim increased access, accountability, and responsiveness from the service providers. • Serves as an effective diagnostic tool for the service providers and pushes them to employ citizen-friendly practices. • Facilitates demand mobilization and strategies which are ‘rights based’. • Ensures a continuous benchmarking in public services. Several cities in the country have experimented with the CRCs, following the Bengaluru model. The preparation of CRCs implicates six stages, as presented in the flow diagram in Figure 5.1. The CRCs take feedback from actual users of services regarding the following: (1) Availability, access, and usage of services; (2) quality and reliability of services; (3) incidence of problems and response to the problems by the service providers; (4) hidden costs, if any, of provision of services, in other words information on all kinds of corruption; (5) satisfaction with the service; (6) reasons for dissatisfaction; and (7) suggestions for improvements. In the case of Bengaluru, the data compiled from the CRCs suggest the following: (1) Among the slum households, the percentage of people giving bribes is much higher as compared to the general households. Incidence of reported corruption had gone down over the CRCs. (2) Compared to the 1999 CRC (the second CRC), the 2003 CRC (the

Assessing situation & defining scope of action

Preparations and collecting citizen feedback

Rating of services

Dialogue and response of agencies

Citizen engagement in reform

Periodic benchmarking and public

Figure 5.1 Schematic Diagram: Citizens’ Report Cards.

Urban Participatory Governance  149 third CRC) showed a reduction in problem reporting with respect to service delivery among both kinds of households, slum and general. (3) The slum households reported the problems regarding access to services more than the general households. (4) Improvement in the behaviour of the staff providing services was seen over the duration of the three CRCs. Both general and slum households reported the same for all service providers in the city. A similar study was carried out in the peri-urban areas in two slums in Bengaluru for the assessment of the quality of services provided by authorities in respect of water and sanitation facilities to the slum dwellers. The survey evaluated the sources and extent of corruption occurring while providing these services, possibility of inhabitant participation in the management of services and the willingness of the slum dwellers to pay for these services. Recommendations were made on the basis of the study which were then shared with the service providers for execution. 5.5.3 Urban Resource Centre: Ahmedabad

In Ahmedabad city, SAATH, an NGO, has set up Urban Resource Centres (URCs) and has propagated a model of participatory governance. The URC in the Vasna ward had collaborated with a team at CEPT University to carry out a survey in the same ward. The conception of an URC originated when the need for a platform was felt, which could adequately connect the service providers with the service users at the Bottom of the Pyramid (BoP). There was also a simultaneous requirement for a platform where different stakeholders of the city could gather to ensure sustainable development and growth. URC served as such a platform where even the inhabitants of slums could participate in demanding services effectively from the apropos service providers. Thus, it acted as a platform for both the potential consumers and service producers to interact in a market context. Figure 5.2 provides the rationale and organizational framework for the functioning of an Urban Resource Centre (URC) as a change agent.

Monitoring

Information

URC

Service delivery

Advocacy

Government / Municipal Services / Private Market

Increase Access

Figure 5.2 URC as a Change Agent, SAATH, Ahmedabad.

Urban Poor

150  Urban Participatory Governance URC is an organization based on membership. Each URC consists of an executive committee which includes a representative from each of the slums, elected ward members, members from a government department, and members from private sector/institution, among others. The function of each URC should be to provide linkages with the current programmes of the government, monitor delivery of services, advance the access of services to individual households, maintain community databases, train citizens, especially the youth and women, and help communities in developing local development programmes. The purpose is to develop local governance and development structures through NGO facilitation. This should result in the NGO eventually withdrawing and allowing the communities to manage the development in the local area. SAATH has aided in establishing four URCs in Ahmedabad city. 5.5.4 Bhagidari System: Delhi

The Delhi government launched the Bhagidari scheme in 2000 which is unique in itself. Its goal is to bring in participation of the people in governance. ‘Bhagidari’ as a concept signifies citizen participation and serves as a conduit for facilitating changes throughout the city of Delhi. It fosters people’s participation in governance, using principles and processes of collaboration of multiple stakeholders (the government departments, NGOs, and citizen groups), employing the methodology involving ‘Large Group Interactive Events’, aiming at developing ‘joint ownership’ by the government and citizens of the process of change. The Bhagidari scheme is based on the fundamental rationale of establishing a dialogue between Citizens’ Groups like Residence Welfare Associations (RWAs) and Markets and Trader Associations (MTAs) and stakeholders like government departments so that solutions to ordinary civic problems can be devised. Bhagidari made public–private partnership into a relevant and concrete programme of action by identifying and acknowledging the position of civil society organizations in public administration. It upheld citizens’ role in local governance and, by doing so, furnished a participatory design of governance. This design is distinct from the notion of ‘closeted governance’ given by Weber. In many areas, this scheme has resulted in success. Workshops have been organized by the government in all the nine Revenue districts of Delhi, with a view to increasing the participation of the RWAs. In these workshops, the local officials of Delhi Vidyut Board, Delhi Jal Board, Delhi Police, Delhi Development Authority, and the Municipal Corporation of Delhi deliberate with representatives of the RWAs on local issues and try to devise suitable solutions to common problems of the residents. Consequently, there has been ease in the dialogue process and finding of joint solutions between public utility service providers, Market Traders Associations, Civic Agencies, and Resident Welfare Associations.

Urban Participatory Governance  151 5.6 Participatory Urban Governance: International Examples 5.6.1 South Africa

In South Africa, post-apartheid formulations have been seen to stress the rationale for participatory governance mechanisms – extending voice in planning, programme formulation, project implementation, etc. Different kinds of participatory governance mechanisms were used in Africa, and the results obtained are presented in the following text. 5.6.1.1 City Development Strategy, Johannesburg

The Johannesburg City Development Strategy (CDS) was prepared by adopting a participatory approach following the local demand for a post-apartheid vision for the city. The CDS process involves an action-oriented process, devised and owned by local stakeholders. It recognizes that for the city to be the driver of growth, it needs to position itself as an agent of effective service delivery, sustained poverty reduction, local economic development, social inclusion, and good governance. The CDS concept emphasizes civic engagement, capacity building, empowerment of local authorities, and promotion of vibrant markets. The CDS generally concerns four common themes: Livelihood, environmental quality, service delivery, and energy efficiency; spatial form and infrastructure; financial resources; and governance. The CDS is developed in following stages: (i) Initiation of CDS guided by a group of major stakeholders representing the main interests in the city; (ii) formulation of the scope of CDS in terms of spatial scale and width of issues; (iii) identification of key drivers of change like that of technology, demography, industry, etc.; (iv) setting up of a collective vision of the city; (v) analysis of strengths– weaknesses–threats–opportunities of the city (SWOT analysis); (vi) determination of strategic thrusts for poverty reduction and growth; (vii) articulation of vision and focus areas; and (vii) implementation. CDS envisages a continuous process of stakeholder group consultation in order to ensure formal political commitment, agreed vision, strategic framework, and coordinated implementation. The CDS exercise yields a state-of-the-city report, covering city profile and key problem areas; economic base analysis; vision and mission statement, including measurable objectives and targets; findings from SWOT analysis; outline development strategies and cost estimates; action plans and interventions for each strategy, including priority projects; and performance management framework. In Johannesburg, by 1997 there was a serious financial crisis seen in the four municipality divisions of the city resulting from poor collection of revenue, giant service backlog in poor black areas and a boycott of rates by the residents who were wealthy. The first integrated metropolitan government had been established in Johannesburg in 2000 after having phased out several transitional arrangements. Certain institutional changes were incorporated including the production of an interim management plan. The CDS approach was

152  Urban Participatory Governance followed, and a process of long-term city visioning had commenced, fostered by data collection and research by external consultants. A steering committee was formulated consisting of key stakeholders from communities, labour unions, the government, and the business sector which advised the management of the process by a project team. In 2000, a city summit, focus groups, and a stakeholders’ forum actualized an extensive process of consultation, developing on the established local practices of consensus-building and negotiation. Nevertheless, at the end of the year 2000, following elections, the said research was entangled in a distinct internal policy formulation process, resulting in the adoption of a long-term strategy, namely Johannesburg 2030, in 2002. This policy strongly focused on the economy. It was integrated from between 2003 and 2005 with the existing environmental management plan and the then newly devised human development agenda in order to come up with a revised strategy (2030 City Development Strategy). There was heavy opposition seen to the restructuring of municipal services, including limited privatization, and strengthening over the New Privatization Forum, which connected the leftist intellectuals, trade unions, and popular emerging movements. Hence, Johannesburg 2030 did not catch a wider public. It concentrated on placing Johannesburg as an emergent competitive global city with the backing of the African National Congress and councillors. Nonetheless, pro-poor concerns were taken into consideration in the CDS owing to the formal participation processes including electoral representation. In the ongoing processes of planning, the focus is on improving living conditions and service delivery and reducing poverty in response to both the internal and the external critiques of the CDS. 5.6.1.2 Integrated Development Plans by Cities

South Africa’s city councils have completed the Integrated Development Plan (IDP) in which they aimed to include citizens in identifying priorities. Where the municipal councils did permit limited opportunities for participation, mostly organized and more affluent groups were subjected to it. Hence, meetings were held involving ‘non-governmental organizations, community-based organizations, labour and other service-oriented groups’ as well as a ‘representative group of socio-economic development and cultural organizations’. In one of these meetings, the council tabled its ‘final draft policy for social funding’. A special meeting was organized where business organizations were invited to comment and ‘a grand finale’, a ‘stakeholder summit’, was convened in the city hall, at which interest groups submitted their comments which in turn were responded to by the executive mayor. Newspapers published meeting notices, and 14 ‘stakeholder sessions’ were convened, even though the details of attendees are unclear. Two-thirds of the councils proclaimed that their respective ward committees had ‘no powers’ after the meeting, and around 44 percent reported that ward councillors tabled reports on the issues which were raised by ward committees; less than 50 percent reported that committed affect

Urban Participatory Governance  153 decisions of the council. It was grasped that the people who voice themselves in the council’s IDP consultation process mostly belonged to the better resourced groups who contributed to public policy debates. 5.6.1.3 Community Policing Forums

In 1993, before the end of constitutional negotiations, came the concept of community-police forums (CPFs), which were established in 1995, just a year after achieving democracy. CPFs were a welcome change from the apartheid-era way of policing – in which the police were protected from scrutiny by civilians. This ended up securing a concern for effective civilian supervision of policing and for ‘community policing’. Community policing can be defined as a strategy which local communities advance to ensure the rendering of a more effective and humane service. CPFs have been prevented from playing their proposed role because of two trends. Firstly, they became a means for ‘building relations between the police and the community’ as opposed to their initial pursuit of maintaining oversight. Two years post establishment, they were changed into problem-solving partnerships by virtue of a departmental policy document. Hence, there was a clear advancement from citizens’ voice to police support groups. They were involved in community awareness programmes, in crime prevention projects and being of assistance to the police. The CPFs were therefore seen being engaged in helping the police rather than enabling and aiding in citizen participation. The second trend has remained that the CPFs have failed to act as representatives of citizens. A study finds that the CPFs cannot be seen as representing the communities in which they operate, and, hence, they have not been successful in accomplishing the primary goals of the community policing policy. They have failed in gathering intended inputs on needs and priorities of the community, improving responsiveness of the police to needs of the community, and ensuring joint responsibility and developing capacity to address crime. More than half of the citizens had not known of CPFs, and only a third knew of a CPF operating in their locality. Two-thirds of ones who had known of CPFs could talk about their functions, and many of the respondents actually wanted the CPFs to function alternate to their actual functions. There was very low participation seen in CPF activities and meetings, including the ones called by CPF. Only about 6.5 percent of respondents reported participating. It was also apparent that the forums were unable to communicate with the local public. CPF communication was reported to be received by 84 percent of the sample, but only by 24 percent of those who know the CPF in their area. 5.6.1.4 National Housing Policy Forum

Not enabling the authorities to comprehend the needs of the poor is perhaps the most critical accusation upon structured participatory governance

154  Urban Participatory Governance mechanisms. Over the past decade, research and observed behaviour have indicated that there remains a gap between the preferences of the poor and the anti-poverty policy. This is illustrated by the housing policy. Housing Policy was endorsed by the first post-apartheid government during early 1990. It gave a model for negotiated policymaking amongst all social interests. The policy was negotiated by the National Housing Forum which included participants from sections of the ANC alliance which involved trade unions and civic associations and were regarded as champions of the poor. An extended negotiation between ‘popular interests’ and business was its focus in respect of ensuring that the poor were equipped with mortgage finance. However, no question was raised as to the assumption of the poor’s need for mortgage finance. Research shows that a long time was spent in offering the indigent something they did not desire. It was seen in focus group interviews nationwide that the respondents were anxious to avoid mortgages as they associated them with evictions. It has been found via research that there are other social policy areas wherein progress has been hindered by a gap between social policy and grassroot preferences. The crux is that an official approach which has valued formal participatory governance mechanisms has been incapable of discerning the needs and preferences of the indigent accurately in order to formulate viable social policy. A failure of representation is at the base of policy misreading the desires and dynamics of the grassroots, and this in turn results in the failure of the formal mechanisms meant to ensure that the voices at the grassroots are heard. 5.6.1.5 Treatment Action Campaign and HIV/AIDS

Non-inclusiveness of the public in decision-making and a failure to ensure government responsiveness to people have been usually evidenced. However, the fight on behalf of people living with AIDS by the Treatment Action Campaign (TAC) shows a sharp contrast. Essentially TAC is aided by influential civil society figures of South Africa and crucial international NGO allies, and with this support, in late 2003, it influenced the government into agreeing hesitantly to anti-retroviral medication distribution to the people living with AIDS by the public health system. TAC can be seen as promoting participatory governance in two ways. It has aided in persuading the government to pay attention to the issues of an important social constituency, i.e., the people suffering and living with AIDS, a deadly virus with which well over five million people are approximated to be infected. Most TAC members are not people from affluent or influential backgrounds but rather unemployed black women in the ages 14 to 24. Hence, TAC has ensured that those people who are not otherwise heard can now raise their voices. TAC has facilitated engagement of citizens in decision-making and implementation of policies in a manner about which two points are crucial. Firstly, in structured forums, participation has not been important to influence; rather, in the beginning TAC was kept out of the South African National AIDS Council (SANAC), a government forum offering a role to civil society in

Urban Participatory Governance  155 deciding for policy and programmes regarding AIDS. Later, SANAC’s role was looked over by the Minister of Health as TAC paved its way in through a decision letting civil society organizations to choose their representatives. Formal forums have been seen to have deflected and not channelled the encumbrances of proper treatment of people living with AIDS. TAC activists see participatory structures as vehicles complementing organizational benefits already achieved rather than viewing them as substitutes. Structures such as community health committees are utilized to support TAC’s cause. Secondly, TAC’s campaign has functioned within the norms and rules of constitutional democracy, i.e., it seeks to mobilize its constituency to utilize the rights already conferred by the governance system to ensure participation in public decisions. Hence, it acts as an instrument for participatory governance, indicating the process where citizens’ democratic rights are used to voice demands regarding the way they are governed as opposed to participation in only formal forums. TAC has demonstrated that participatory governance is most effective when rights embedded in constitutions and sustained by surrounding democratic context are used and not through government established channels. Therefore, by experience, participatory governance will most likely succeed when citizens exercise their democratic rights in ways of their choice and governments engage with them. Forums may supply platforms for engagement with organizations, the members of which have already been seen voicing their concerns. However, forums cannot extend voice – that power only lies in citizen action. 5.6.1.6 Lessons for Participatory Governance

It is suggested from evidence gathered from Africa that democracy cannot be intensified by structured participation forums by involving those who need to be listened to in government decision-making. Participatory governance must be seen as a process in which citizens channelize mobilization and organization in claiming a say in the way they are governed, rather than one in which governments birth forums to include citizens in decision-making. However, this does not signify that governments have zero role in encouraging participation. Nevertheless, the governments cannot help by devising more effective forums, but they can willingly make themselves more accessible to citizens, particularly the poor. Their role is to enable citizen activism and respond positively when citizens engage. From the South African experience, we learn that participation is most probably effective when governments reach out and engage in dialogue with the grassroots ‘survivalist’ organizations. The manner of this contact is significant. The engagement ought to be open-ended whereby organizations are briefed about the functioning of government beforehand so that they may decide if and how to participate, rather than preferring a mode structured in a manner convenient to government officials. The endpoint need not be a forum. It can be any engagement mode which remains most appropriate for the preferences and capacities of the organizations. However, this strategy would not

156  Urban Participatory Governance make governments reach all those who may be required to participate. Nevertheless, participation could be significantly expanded, catalysing a process which would broaden the range of heard voices in policymaking. 5.6.2 Brazil

Notwithstanding two decades witnessing consolidation and transition, in Latin America the quality of democracy continues to be afflicted with inequality and social exclusion, particularly in Brazil’s case which continues to be a ‘difficult democracy’. Despite the multiple adversities, some cases like that of the city of Porto Alegre have institutionalized a compelling agenda for an increasingly participatory and accountable form of governance via participatory budgeting. 5.6.2.1 Participatory Budgeting: Porto Alegre

Participatory budgeting was introduced for the first time in Brazil and has traversed to Latin America and other countries. Brazil’s 1988 Constitution made provisions for various mechanisms additional to democratization and decentralization, furthering deliberative democracy and public supervision, specifically at the local level. Developing on antecedent experiments in different municipalities and heightened volumes of municipal finance, a growing number of cities adopted participatory budgeting during the 1990s. This was followed by Porto Alegre in 2001, where an intricate budgeting system was consolidated which saw participation of organized citizens from surrounding neighbourhoods, city planners, public servants, and political leaders of municipal administration gathered to discuss, decide, and prepare an annual budget for the city. Participatory budgeting is incorporated into an annual cycle, and through this the following fiscal year’s budget is determined. In many Brazilian cities including Porto Alegre, there are four elements in the arrangements for participatory budgeting: (1) The delegation of sovereignty by elected municipal councils/mayors in a set of regional and thematic consultations or assemblies which function through the universal criteria of participation. In these assemblies, every citizen is allowed to participate and vote on budget issues. (2) Based on alternative participatory traditions, a combination of different elements of participation is employed, like indirect participation in committees and sub-committees and direct participation and the election of local councillors. (3) The self-regulation principle: The rules for participation and deliberation are outlined by the participants themselves and are altered or adapted every year. (4) There is an attempt to invert the distribution of public goods through a combination of participation and technical decisions.

Urban Participatory Governance  157 In the budget preparation process, since 1989, 16 regional and 5 thematic plenary assemblies have participated in Porto Alegre. Each year, three rounds of assemblies occur. In the first round, city officials acquaint audiences with general information regarding the city budget, and there is election of representatives by participants to year-round forums. In the second round of assemblies, following the neighbourhood meetings the residents identify the priorities for infrastructure investment. During these, there is also an election of delegates for each district who negotiate district-wide priorities in district budget forums. In the last round, the Municipal Budget Council district delegates decide upon the distribution of usable funds among districts. At this stage, the district forums and council supervise investment and discuss extensively with service-providing agencies. For safeguarding equal participation of men and women in budgeting meetings, in 2002 three initiatives were introduced by the Women’s Coordination Group: Installing mobile play areas at meeting locations to ensure participation of women with childcare responsibilities, spreading information about the process in meeting areas to encourage women to get involved, and holding meetings involving women’s groups and government officials to deliberate upon ways to encourage participation of women. As an outcome, a thematic forum for women was to be created which looked particularly into women’s issues. The budgetary cycle in Porto Alegre commences in March and April with the initial round of plenary meetings in the local areas on the themes. Organizing accountability in respect of the prior and the current investment plan as declared by the administration is the primary objective of meetings. These meetings witness the attendance of leading civil servants, the mayor and many of his municipal secretaries, totalling 22 (16 regional and 6 thematic plenaries). Over the years, these meetings have transitioned into mass meetings, especially in the regions which constitute the poor districts of Porto Alegre. The spokespersons for the various active regional grassroots associations predominantly take up the meetings’ agenda. Regional delegates are voted for at the end of these meetings who will chair the Regional Budget Forum and will accompany and coach the process further. All attendants older than 16 years of age vote for the delegates, and, hence, prior registration is required on part of all participants. The size of the plenary meeting decides the number of delegates to be elected as one delegate is elected for every 20 participants. Candidates are enlisted according to competing neighbourhoods. The more delegates, the more is the influence in later parts of the cycle. Various small-scale meetings make up the so-called intermediary rounds in thematic working groups and specific neighbourhoods. The primary rationale behind these meetings is discussing and prioritizing investment needs as intimated by the organized citizens of each neighbourhood/area. Therefore, the 16 budget regions are sub-categorized into multiple ‘micro-regions’. The forum delegates elected representatives earlier in the first round to play an active role here. Moreover, municipal employees monitored by the municipal

158  Urban Participatory Governance Coordinating body for Community Relations (CRC) called the Regional Participatory Budget Coordinators (RPBC) are regionally placed and actively participate in the meetings. Specific investment demands are materialized from these meetings in the form of prearranged lists of plans and other investments, which are then presented during the plenary second round meetings. Discussions on the prior proposals culminate into a consolidated thematic or regional investment proposal at the second round of the meetings. Unresolved priority issues are voted on. Simultaneous to this, investment proposals for the theme or region are submitted by the municipal administration for scrutiny in plenary debate. A new Council of Participatory Budgeting (COP) is set up by election of members by the plenaries: Each thematic and regional plenary is allowed to send two members and two substitute members. The winning of posts depends upon the proportion of votes received. The COP becomes the gravitational centre of the process of participatory budgeting from August forth. Presently, the COP consists of 48 members including 12 thematic and 32 regional representatives. For COP proceedings, an executive secretary is provided by the CRC. The COP discusses the budget proposal in August and September based on a draft made out of regional and thematic priorities submitted by the Municipal Planning Office (GAPLAN). The COP puts this proposal to scrutiny and deliberates with representatives from different municipal administration agencies. A systematic approach is taken by COP and GAPLAN, which may seem complex but, nevertheless, aims to make the process of resource allocation transparent and rational by basing it on ‘objective needs’, the population of the region, and their votes for preferences. In this approach, fixed criteria are employed by COP and GAPLAN to allocate the investment budget for each policy sectors to different regions. These criteria consist of the number of residents of the region, the priority as assigned to the sector by the regional plenary and a sum of weighted grades for the deficiency of the region in a given investment sector (e.g., sanitation, healthcare, and paved streets). Consequently, funds are allocated to a particular region depending on its score for a certain sector. After completion of this step, the budget proposal is officially submitted by the COP to the mayor by September end. The mayor then forwards it for discussion and approval by the municipal council, that is, the Porto Alegrean legislature. The last date for the council to vote on the budget is 30 November. An active analysis of the said proceedings is carried out collectively by the COP, representatives of grassroots organizations and delegates. Simultaneously, an intricate investment plan is established by the COP within the budget proposal criteria. Redistributive significance of the participatory budgeting process can possibly be assessed in respect of public goods and services, even though proper systematic data does not exist that could oversee the impact and outcome of investments and projects settled in participatory budgeting. In Porto Alegre, the percentage of the overall investment budget out of the city’s total annual budget is 15 percent (mostly payroll and overhead expenditure). The direct

Urban Participatory Governance  159 revenue capacity of the municipal administration significantly increased throughout the 1990s resulting in reduction of outstanding public debt. Consequently, there has been substantial growth in the actual availability of investment resources. About half of the investment budget is estimated to have responded to priorities of the community brought forward through participatory budgeting channels. The remaining seems to be based on ‘administrative and technical’ priorities which, although discussed by the COP, forums, and the plenaries, were introduced by the city’s administrative apparatus. The regional or micro regional priorities are bestowed with about 35 percent of the investment budget. Over the years, there has been significant institutionalization of the Porto Alegre participatory budget system. Frequent alterations have been made to the format mainly with regard to details except some. The regional division of sectoral investment funds, criteria for assembling priorities, and the meeting rounds with specified procedures are what strongly stand as the pillars of the budgeting process. Although efforts are consistently made to communicate the structure and functioning of the participatory budget system, it is only expected that not everyone is well equipped with the details. It has been found by Bailey (1999:12) that about 50 percent of the 1998 plenary participants reported knowing ‘little or nothing’ about the budgetary rules. However, the COP councillors, forum delegates, and grassroots association leaders were found to be relatively more knowledgeable. Nevertheless, rank-and-file participants are of the belief that participants are heard in the budget and that councillors and delegates pay heed to the plenary meeting priorities in spite of complexities apparent to the system. Several appraisals point out to the following regarding the Porto Alegrean participatory budgeting: • That it has empowered civil society by encouraging the emergence of open and democratic civic associations and catalysing broader participatory processes. • That it has provided scope for previously excluded groups to exert influence over decision-making (although the most indigent are usually not engaged in the participatory process). • That it has brought forth investment to communities which have been neglected. • That it has supplied a partial alternative to clientelist political practices which used to be politically motivated rather than based on assessment of community needs. Marquetti (2001) reports improvement in public investment efficiency with regard to ‘good governance’ as he observed a commendable investment to civil servant ratio than before. However, a clear causal relationship between this and participatory budgeting is not yet established. Generally, public scrutiny of investment plan implementation tends to push forth the delivery by the administration’s apparatus. Supra-regional investments and externally funded projects

160  Urban Participatory Governance like multilateral agency loans also come under the ambit of such scrutiny. Furthermore, via a tripartite commission for the civil service, the COP has earned substantial influence over issues of public employees. Good governance should not be dimensionally limited to ‘effectiveness and efficiency’ only and must extend to ‘accountability’ as well. The participatory budget seems to be open and transparent in this regard by way of its meetings and publicly distributed material. Account rendering by the administration alongside direct oversight by citizens’ commissions of implementation have been put on a specialized pedestal in this regard. By 2005, participatory budgeting had spread across more than 150 cities in Brazil and also emulated in other countries around the globe with some modifications in arrangements and resultant difference in outcomes. It has been argued that the success of participatory budgeting in Porto Alegre may be attributed to conditions unique to the city, which are essentially absent in other Brazilian cities. Cities which tend to have strengthened civic associations, particularly at the level of lower-income neighbourhoods, previous tradition, and tendency to participate, possess adequate resources for redistributive investment, and a cooperative governing coalition devoted to stimulating participation has been found to have emanated successful and durable participatory budgeting systems. Besides, evaluations indicate that the Brazilian participatory budgeting processes are not technical or detachable from local political structure, relationships, and power dynamics. All these factors have an effect on the design of the process as well as its outcomes. Three basic principles are recommended to be adhered to for intended outcomes: Open local assemblies fostering grassroots democracy; resource allocation of bigger share to the most disadvantaged to ensure social justice; and an ongoing council of participatory budgeting that monitors implementation to secure citizen control. Embedding of the basic criteria and requirements for participative budgeting in law may prove to be useful as done in some municipalities. However, this may hamper the ability of the municipality to adapt on the basis of experiences. Additionally, transparency remains crucial for a fruitful process. It is important that available resources are adequately revealed and coherent, uniform criteria are set to provide proper guidance for priority setting and redistribution among districts, and actual investment is appropriately monitored. Participatory budgeting is found to be less successful where opposition is faced from elected councillors owing either to ideological differences or to resentment from the fact that budget forums are replacing them or where crucial expenditure decisions are excessively made by the executive. Participatory budgeting edifies us with the significance of the culture of participation. Participatory budgeting is not supposed to be substituting healthy local politics, which is effective political party and political representation based. Single-handedly it cannot generate ‘more democracy, social justice or transparent administration’. Moreover, at the city level, although participatory budgeting can emerge from participatory plan-making, the interconnection

Urban Participatory Governance  161 between participatory budgeting and the long-term strategic and development plans of a city seems challenging to deal with. Therefore, in certain Brazilian cities, parallel deliberative councils in the health sector have been set up for citywide decision-making. 5.7 Framework for Inclusive Urban Governance in India Experiences from India, South Africa, Brazil, and countries around the world suggest that a number of key issues have to be considered while working on approaches and frameworks for participatory urban planning, appraisal, and management in order to address the complex issues of governance at multiple levels: Urban neighbourhoods, communities, cities and towns, and broader urban agglomerations or regions. These include the following: (1) An important matter in participatory planning to be considered is the way in which communities are defined. Territorial or official boundaries in cities/wards/localities might not be clear enough for participatory action. Therefore, at the very beginning it is important to define the limits of the communities according to the residents themselves, whether administrative or perception based. In India, under the Government of India programmes like JNNURM, AMRUT, Housing for All, Prime Minister’s Awas Yojana (PMAY), and National Urban Livelihoods Mission (NULM), ‘slum’ has often been taken as the focus area for participatory activities connected with affordable housing and urban poverty alleviation. However, often slums, e.g. Dharavi in Mumbai, are very large and may not be suitable for application of participatory planning or governance tools. Anyway, existing community arrangements need to be respected while working on participatory governance structures and mechanisms. (2) The utility of participatory urban appraisal and governance methods can be increased significantly if the tasks of collecting information at the community level and undertaking community needs assessment are integrated with systematic citywide data disaggregated by service provision, well-being indicators, social groups, etc. (3) Participatory urban appraisal needs to be advanced through ward, local area, city, and regional planning and community action planning processes as it is not merely a decision-making tool. While at certain times these tend to be collaborative, they are as often characterized by clientelism or confrontation. Where community-level participation and activity are appropriate, neighbourhood or local planning needs to be linked to wider city and regional planning frameworks and administrative processes. (4) Even where some community initiatives are feasible, the same need to be linked to wider political–administrative systems and structures. This can be attributed to the fact that indigent communities do not survive devoid of external economic, political, or organizational contexts and that they are dependent on others for resources. Further, governance structures

162  Urban Participatory Governance derive legitimacy from laws and constitutions, while community structures are often informal or quasi-formal. (5) As compared to community action planning, urban planning, and service-level improvements require strategic policy and decision-making as they cater to a larger geographical area and an extended time scale. The allocation of resources, resolving of priority-related conflicts, setting of wider objectives, and the aggregation of local plans require intermediate, city, and metropolitan arrangements based on the urban centre’s size. (6) A key practical issue in participatory urban governance approaches is the scheduling of participatory exercises. This is because people in urban areas work long hours away from the community which is unlike the people living in rural areas. It is important to ensure the time of the day during which people will be available in the area. Above all, the exercises must be owned by the people and considered useful. (7) In urban areas due to the lack of cohesiveness between groups in communities, group and individual interests differ drastically. The concepts of Neighbourhood Groups, Self-Help Groups, Neighbourhood Committees, and Community Development Societies as advocated by National Urban Livelihoods Mission (NULM) tend to be far more heterogeneous in urban areas than in rural areas. Consensus-building is a difficult task in urban communities. Participatory governance with the involvement of people and their groups needs broader policy and financing frameworks to succeed and sustain. In order to ensure sustainable urban development, enhance the quality and nature of public services, ensure accountability as well as improve the structure of incentives, it is crucial to implement strong systems of governance, good policies, and sound arrangements to finance public services (Rao and Bird 2010). While increasing number of voices are needed to be included to deal with challenges faced in urban governance, a more sophisticated manner of approach, along with precisely assigned functional duties, commensurate financing arrangements, strong coordination among various levels of government, and a consistent as well as creative method of correspondence with the civil society, is necessary for effective delivery of urban public service. Governments around the world now recognize that enhancement in the quality and scope of public services can only be achieved with an increase in accountability with regard to performance of service delivery. Schemes like AMRUT, the Smart Cities Mission, and Housing for All envisage concerted measures for structural reforms that would improve local autonomy over priorities of service delivery, address the disjunctions in authority for urban governance, help separate the roles of policymaking, regulation, and provision of services, as well as strengthen direct methods of accountability towards citizens. In the present day, various spheres of government seem heavily interdependent. Proper response to the needs of the citizens requires effective decentralization, transparent mechanisms, legal power, and empowered local governments

Urban Participatory Governance  163 with adequate resources. Still, India as well as other countries tend to widen the gap between allocation of resources and responsibilities to the local governments. Local governments need capacity building in order to generate local revenues for emancipating mobilization of local resources, in addition to obtaining sufficient national and state resource shares via predictable mechanisms of transfer and equalization. However, the issues of tax assignment and inter-governmental finance, especially for poverty alleviation, have not been addressed by India. Capacity-building programmes are heavily necessary for strengthening the capacities of all local stakeholders: Organizational structures, finance and assets management, enhanced mobilization of endogenous resources, integrated urban and transportation planning, inclusive service delivery, and enforcement of legal frameworks, promotion of economic and social development, as well as gender-responsive planning and budgeting. As fragmentation results in spillovers across jurisdictional boundaries, missing out on efficient provision of services, and inequalities in service-level and regional income, these programmes become specifically relevant in metropolitan areas. Encouraging cooperation culture in metropolitan areas should aid in dealing with fragmented governance, bringing down the effects of externalities, and fostering increased inclusion, competitiveness, and efficiency. Coordination mechanisms like that of pool financing, coordinated tax agreements, metropolitan development fund, inter-municipal cooperation, legal impetus for development and planning agencies, cost-sharing arrangements for service delivery, advanced linkages between policies, and programmes ensuring the reduction of imbalance and increase in efficiency at the local government level and national/state level have been emerging recently in different countries. There is a need for cooperative and collaborative mechanisms to address the issues of poverty and exclusion in urban regions, especially metropolitan agglomerations. Performance monitoring, functional budgeting, effective public asset management, transparent service provision, public disclosure, and access to information for citizens as well as the acceptance of public responsibilities and mistakes are vital to a responsible leadership. Improved mechanisms for safeguarding accountability are becoming growingly fundamental to healthy municipal and metropolitan governance. Regional and local governments are trying their level best to capacitate all residents to fully participate in the local social, cultural, economic, and political life, which will further assist in addressing problems surrounding vulnerable people, marginalized groups, and inequalities. In this context, ensuring proper access to information becomes crucial for participation of citizens. Additionally, authorities ought to introduce anti-corruption practices corresponding to applicable international standards in order to instil people’s trust in government institutions. The Right to Information Act 2005 needs to be implemented in letter and spirit. Improved governance capacities depend upon better data collection, compilation, analysis, and application as well. Efficient local planning and

164  Urban Participatory Governance supervision of inclusive urban development programmes require the availability of territorial area-based disaggregation besides the dissemination and processing of information and key indicators categorized by age and sex disaggregation. Urban governance must integrate the facilitation of data development, management, and security into its planning processes. This signifies that efforts be put willingly to forge developmental partnerships, empowered citizen engagements specifically in informal areas, and connecting them with institutions in the city, instrumenting social cohesion, and laying ground for social and economic mobility. 5.8 Concluding Remarks Marginalization and socio-economic injustice prove to be profoundly corrosive to public legitimacy in ensuring equal service access to all urban inhabitants. Besides, as tax collection systems are not properly designed to promote efficiency and equity, they jeopardize municipal financial sustainability. Informality in urban areas in terms of space, employment, and economies generated locally has grown to an unavoidable size, parallel to the intricacy in the formal sector. The collaboration between formal and informal sectors needs to be improved by adopting newer ways such as implementing local policies (street vendors, waste pickers, etc.) which are inclusive and relying on cooperatives and organized civil society. Local governments should utilize regulation, supervision, and targeted support, including joint production of public services in an attempt to assimilate the informal sector into the urban fabric. As the world urbanizes, local governments find themselves inadequate in single-handedly managing urban finance needs and service delivery. Hence, they need to partner and collaborate with stakeholders at all levels such as the private sector, communities, the central and the state governments, women’s organizations, and civil society. Local government should also ensure adequate provision of public goods and safeguard universal access to key public services. Empowered by mechanisms of participatory governance, cities, owing to their contiguity, density, and size characteristics, carry a great potential for facilitating the emergence of institutions which are inclusive and capable of managing political conflict. They may be assisted to facilitate new modes of political representation and lay down platforms for institutionalized political debates. Various stakeholders engaged in city-making are driven by public participation, transparency, and access to information. As the grassroots communities live and work in the locality, it is important to ensure their participation in city management and policy formulation. Empowerment of women is a prerequisite for public participation and local leadership to be sensitive to and inclusive of gender. In the global scenario, women tend to be mostly under-represented in local government establishments and mayoral positions. The number of women mayors in each region of the world amounts to less than 15 percent of the total number of mayors (United Nations 2009). Although, there is critical unavailability of data, the

Urban Participatory Governance  165 existing sources suggest that priorities of women, families, ethnic minorities, and racial minorities are increasingly put forward when there is representation of women in positions of decision-making. Participation of minorities as well as youth is also facilitated by efficient urban governance. In certain urban areas and sub-national enclaves, where formal practices like institutional checks and balances, elections etc. have proved ineffective in enhancing social policies, accountability and citizen participation, urban youth activism, and utilization of social media have catalysed popular reforms. Collaboration between public and private actors to form balanced partnerships is crucial to ensure the involvement of the public sector in driving local policies, given the fact that the private sector is increasingly becoming a crucial actor in facilitating urban governance. To regulate power dynamics in these collaborations, public–private– people–partnerships have been emerging. In order to improve mobilization of resources, foster strategic and participatory urban planning, as well as ensure sustainable urban development, it is crucial to have strong, equipped, accountable, and empowered local governments which uphold proper institutional and organizational structures, facilitate efficient financial systems, and strengthen overall urban governance. Favourable policies can build the foundation for extensive partnerships within local governance, which includes coproduction of public goods and services, incorporate the informal sector in urban arena, encourage the involvement of the private sector and ensure participation of local communities, and collectively bridge gaps in resources and institutional access. Such policies consist of innovative public management by the use of ‘smart’ technology, roust accountability, and participation measures to lessen impacts of urban environmental conditions, data disaggregation to support urban development planning and regulation at the local level, and overall mechanisms to increase accountability and participation of citizens. Urban decision-making, which ensures participation and active citizenship through platforms engaging youth, minorities, urban poor groups, women, and all citizens, meaningful deliberations, consistent and organized dialogues, and other constructive practices involving local institutions as well as non-state stakeholders have the potential to ensure longterm empowerment and inclusiveness needed to attain the Sustainable Development Goals.

6

Policy Issues in Inclusive Urbanization An Empirical Study of Select Cities in Telangana State

6.1 Introduction The theoretical and empirical relationships between cities and economic growth suggest that at the current stage of India’s evolution, the country has a historic opportunity to reduce poverty by developing cities and harnessing the power of external economies of agglomeration and networking as drivers of economic growth. These external economies are shaped by local and regional contexts and significantly influenced by city government policies and programmes. They create both positive and negative effects and suggest that the design of inclusive policies in cities must take into account regional-, city- and locality-specific factors. In particular, policies for income generation and poverty alleviation in cities must take into account local conditions such as where the poor live, work, and vend and their access to land, housing, and basic services, including public transports. Location factors such as where a slum is located have important implications for the design of inclusionary policies. The ‘context’ matters, and this chapter explores the contexts of poverty in slums of four cities of Telangana State: Metropolitan (Hyderabad), large (Warangal), medium (Siddipet), and small (Bhongir). The purpose of this chapter is to understand the determinants of urban poverty, impact of implementation of slum development, and poverty alleviation programmes and draw lessons for inclusionary urbanization. The empirical study starts with the question: Why is it that cities in India, being locomotives of growth with vibrant agglomeration externalities, are subject to exclusionary urbanization and why the urban poor and slum dwellers are left out of the mainstream urban development process despite many policies and programmes? It is based on a primary survey of the largest slums of four selected cities of Telangana State. An econometric analysis is conducted on the data collected to examine the different characteristics of slums in terms of their income, asset holding, occupation, commuting pattern, housing, education, state of civic services, implementation of government schemes, type of land tenure, distance from workplace, and level of poverty and to ascertain the determinants of poverty and how they relate to. Especially, the objectives of this study are fourfold: DOI: 10.4324/9781003452171-6

Policy Issues in Inclusive Urbanization  167 (1) To understand and analyse the magnitude of the problems in slum settlements such as the housing status of the slum dwellers and their living conditions, access to basic services such as drinking water, electricity, road within slums, latrine facility, drainage facility, garbage disposal, approach road, banking service, type of land on which the slum is situated, location of slum, slum improvement programmes, and assets possessed by slum dwellers such as radio/transistor, computer/laptop, telephone, and other assets. (2) To empirically examine the impact of infrastructure, socio-economic security (SES), and government programmes on the type of the land tenure of all the slum dwellers. (3) To empirically model the monthly income of slum dwellers by considering the potential non-economic factors like gender, type of labour (whether he/she is a government employee or not), level of education (whether his/ her qualification is above graduation or not), and location (whether he/she is living in the core city or not). (4) To find out the determinant of total monthly family income in slums for three different categories separately: ‘lower income group’, ‘middle income group’, and ‘higher income group’. The rest of the chapter is organized as follows. Section 6.2 furnishes information on the questionnaire used in the study. Section 6.3 describes the details of field survey and the preliminary data analysis such as sampling information, descriptive statistics, and cross-tabulation analysis and reports some direct observations from the field study. Section 6.4 deals with the empirical model, which describes the factors that determine the monthly income of the slum dwellers in three categories – lower income, middle income, and higher income – and discusses the results derived from the empirical model. Section 6.5 presents the key findings, and Section 6.5 concludes. 6.2 The Questionnaire The questionnaire for field study takes into account the guidelines provided by the National Buildings Organization (NBO) and the then Ministry of Housing and Urban Poverty Alleviation (MoHUPA) in the context of Government of India schemes. The questionnaire is designed to understand and analyse the dimensions of urban poverty in the field, especially implications of slums from the standpoint of non-economic aspects. To survey various aspects of the slum and poverty, details of slum characteristics such as type, ownership of land, total number of households, number of BPL households, physical locations, type of house, type of land tenure, services in slums, civic facilities, availability of government services within slum, distance from workplace, slum covered under any government programme, the questionnaire includes 24 questions. The variables covered under the questionnaire include beneficiary personal characteristics, slum characteristics, distance from workplace and perception

168  Policy Issues in Inclusive Urbanization of slum dwellers towards government programmes implemented in last one to five years. The personal characteristics of the respondents of slums includes sex, caste, education, occupation, mode of commuting, commuting costs, housing rent, duration of stay in the city slums, and the type of stay such as native or migrant. The details of slum characteristics include type of slums, ownership of slum land, physical location of slums, type of house, and types of land tenures. The services of slum characteristics include materials of house, distance to nearby road, sources of drinking water, latrine facility, sanitation, garbage collection, electricity, transport services, street lights, government schools, private schools, trust schools, other schools, primary healthcares, government hospitals, maternity centres, private hospitals, community hall, vocational training centre, night shelters, and solid waste management. The other slum characteristics include distance from working place, commuting mode, mobile access, access to telephone, television, internet connections, electric fans, and refrigerator. The impact assessment of the government programme characteristics include impact of better infrastructure, impact of SES, impact of skill development centres, impact of health centres, impact of better opportunities, and perception of slum dwellers towards government programmes in slums since last one to five years including impact of Pavala Vaddi, Kalayanalaxmi, Arogyashri, Self-Help Group loans, SC/ST special loans, 2 BHK, LED street lights, Swachh Bharat, Life Insurance, Pensions, Sadimubarak, SC/ST development fund, and roads. 6.3 Descriptions of the Field and Preliminary Data Analysis This section attempts to analyse why basic service access is poor in slums of the four selected cities of the Telangana State. These are Bhongir, Siddipet, Warangal, and Hyderabad. These four cities are selected depending upon the size of households and population as per the Census 2011. A brief sketch of these four cities is presented in Table 6.1. Five hundred cross-sectional sample units of slum details have been collected from these four different districts. Out of 500 sample units, only 7 data points are missing, and hence the analysis is based on a sample size of 493. The information collected during the survey Table 6.1  Bhongir, Siddipet, Warangal, and Hyderabad: Census 2011 UA Name

No. of Households

Population

Hyderabad – GHMC (M Corp.+ Out Growth) Hyderabad – GHMC (M Corp.) Bhongir (M) Siddipet (M+ Out Growth) Siddipet (M) Warangal (M Corp.+ Out Growth) Warangal (M Corp.)

1,583,908 1,524,392 12,196 14,879 14,500 171,429 149,801

6,993,262 6,731,790 53,339 66,737 65,158 704,570 615,998

Source: http://www.censusindia.gov.in/DigitalLibrary/MFTableSeries.aspx.

Policy Issues in Inclusive Urbanization  169 covers not only the status of physical and social infrastructure in the slum but also the individual household information like literacy, BPL status, livelihood means, reasons for migration, etc. The exhaustive data collected during the survey is analysed to make decisions about the slum development strategies, an assessment of their needs and plan for the slum improvement. The survey was carried out to gather data about several important parameters like landownership pattern (patta or encroachment), land use, and adequacy of physical infrastructure facilities like water supply, sewerage, drainage, roads, electricity poles, etc. and the social infrastructure facilities like education, health, banking, community hall, livelihood centres, etc. A brief sketch of the selected slums in Bhongir, Siddipet, Warngal, and Hyderabad cities of the State of Telangana is presented in Table 6.1. Bhongir is a town and district headquarter of Yadadri Bhuvanagiri District of the Indian state of Telangana. It is under Hyderabad Metropolitan Development Authority, located on National Highway 163. The municipal area covers 9.63 square kilometres. As of 2011 India census, Bhongir had a population of 53,339. Males constitute 51 percent of the population and females 49 percent. Bhongir has an average literacy rate of 70 percent, less than the national average of 74.04 percent; with male literacy of 78 percent and female literacy of 61 percent. About 12 percent of the population is under six years of age. In the Bhongir District, Subash Nagar slum has been considered for analysis. This is a non-notified slum consisting of 8,000 square metres. There are in total 75 households in that slum, and each of the house is around 100 yards in size. The type of houses is pucca, and the type of the land tenure is patta based. The slum is covered under different government programmes such as Pavala Vaddi, Kalyana Laksmi, Aarogyasri, SC, ST Special Loan, 2BHK, LED Street Lighting, Swachh Bharat, and Life Insurance, which have been implemented in the last five years. The major issues highlighted by the respondents of this slum are open drains, which need to be closed; road designs must be improved for safety on bypass road; employment drives may be conducted; 2BHK Scheme is desired as multiple couples of similar age group live together; drainage during monsoon remains an issue; special focus is required for youth and working-age women; pension amount may be improved and Akshayapatra Scheme may be initiated; Aarogyasri card may be given to the many new ration card beneficiaries, etc. Siddipet District is carved out of erstwhile Medak District with annexation of some parts of Karimnagar and Warangal Districts. The district shares boundaries with Karimnagar, Sircilla, Medak, Medchal, Hanamkonda, Yadadri, Kamareddy, Jangoan Districts. The district comprises of 22 mandals and 2 revenue divisions. The district headquarters is located at Siddipet town. The total geographical area of this district is around 384,233 hectares. The total population of this district as per Census 2011 was 1,065,127, out of which male population was 530,639 and female population was 534,488. The district is consisting of an urban population of 38.50 percent, and the percentage of rural population is around 61.50 percent. A total of 251,868 households are in

170  Policy Issues in Inclusive Urbanization this district, and the density of the population is 277. Ambedkar Nagar slum is studied in the Siddipet District because this slum is selected for in situ redevelopment. It is a notified slum, and the ownership of the land is private. The slum is spread around 50,000 square metres. The total number of households in the slums is 439, and the size of the housing structure is around 35 yards. A new district, ‘Warangal (Rural)’, was formed after bifurcation from the Warangal District as a result of reorganization of districts by the Government of Telangana Vide G.O.Ms.No.232 Revenue (DA-CMRF) Department and came into existence wef 11.10.2016. This is a place with a great historic past. It is the seat of the Vishnukundins and Kakatiya dynasties, who ruled the region during the pre-Buddhist period. The Warangal Fort, the thousand-pillar Temple, the Ramappa Temple, and the Kali Temple are the fine remnants of the glorious bygone era. The district is bounded by Khammam District in the East, Karimnagar district in the North, Nalgonda on the South and Medak on the West. The geographical area is 12,834 square kilometres. The topography of the district consists of isolated hills, rain-fed tanks, lakes, and shrubby forests. The district consisted of 2 revenue divisions and 15 revenue mandals. The total population of the district is around 718,537, consisting of 360,315 males and 358,222 female as per Census 2011. The percentage of rural and urban population to total population is 95.7 percent and 4.3 percent, respectively. The total household numbers of the district stand at 187,525, and the density of population is 350 per square kilometres. Nagendra Nagar (Bandam Tank) slum is studied in the Warangal District, which spreads around the 70,000 square kilometre geographical area. The total number of households in this slum is 215, out of which 168 fall under the BPL households. The size of the houses is around 80 yards. Hyderabad is the largest city and capital of Telangana State. Hyderabad is located on the banks of the Musi River. In 2014, the estimated population of Hyderabad was 8.7 million with a population density of 18,480 people per square kilometres (47,000/ square miles), which makes it the fourth most populous city in India. Hyderabad includes a part of the metropolitan capital city area of Hyderabad. It is the smallest in terms of area, among all the districts in the state, but has the highest human density. Hyderabad District was formed initially in the year 1948 followed by Police Action by merging the Atraf-a-Balda District and Baghat District. In the year 1978, Hyderabad District was split into Hyderabad Urban District and Hyderabad Rural. Currently, Hyderabad Urban District is known as the Hyderabad District. Hyderabad District occupies an area of approximately 217 square kilometres. Hyderabad is known as the City of Pearls, as it had once flourished as a global centre for trade of rare diamonds, emeralds as well as natural pearls. The Greater Hyderabad Municipal Corporation (GHMC) was created in 2007 to oversee the civic infrastructure of the 18 ‘circles’ of the city. This increased the area of Hyderabad from 175 square kilometres to 650 square kilometres, and the population grew by 87 percent. The GHMC has a population of ten million, which makes it the sixth most populous urban

Policy Issues in Inclusive Urbanization  171 agglomeration in India. There has been a steep increase in Hyderabad’s slum population, which is attributed to ineffective urban planning and greater rural-to-urban migration. There has been a 264 percent increase in the slum population in and around the city in the last decade, with 30 percent of the city’s population believed to be living in slums in 2014. In the context of Hyderabad, we have considered Bansilalpet non-notified slum for our study. The slum is spread around 20,000 square metres consisting of 219 households, out of which 168 fall under the BPL households. The number of sample units from Bhongir and Hyderabad are 91 and 199, respectively. Similarly, 103 and 100 are the respective number of samples collected from Siddipet and Warangal. Out of 493 families, there are 215 lower-income group families, which is approximately 43.61 percent of total families. There are 140 middle-income group families, comprising around 28.40 percent of total families. Similarly, only 138 families belong to higher-income groups, comprising 27.99 percent of total families. This implies that the distribution of income group is normally distributed with respect to total sample size. Table 6.2 shows the details of the sampling information. The descriptive statistics along with the frequency distribution of various qualitative variables related to the personal information of the respondents, details of the slums, services provided in slum, etc. for all the four cities are analysed, which will further help to interpret the quantitative technique-based results in the latter part of the analysis. Table 6.3 depicts the parameters associated with the personal information of respondents like caste, education level, occupation, commuting cost, etc. with their respective percentages among four different cities (Bhongir, Siddipet, Warangal, and Hyderabad). Out of 493 samples, majority of our respondents during the survey are found to be males. Table 6.3 shows some intuitions after the analysis these parameters. From Table 6.3, it is observed that the majority of slums are occupied by scheduled castes (SCs) and other backward classes (OBCs). A very few members are from the general category. OBCs dominate the slums of Bhongir and Hyderabad, while SCs are a majority in Siddipet and Warangal. Interestingly, there are no scheduled tribes (STs) respondents in Bhongir, while Siddipet has more than 17 percent of respondents. Similarly, there are no general category Table 6.2  Details of Sampling Information Area

Sample Size

Lower Group

Middle Group

Higher Group

Bhongir Hyderabad Siddipet Warangal Total

91 199 103 100 493

58 60 55 42 215 43.61

20 52 33 35 140 28.40

13 87 15 23 138 27.99

Percentage of Sample Size Source: Author’s compilation.

172  Policy Issues in Inclusive Urbanization Table 6.3  Personal Information of Respondents Variables

Bhongir

Siddipet

Warangal

Hyderabad

37.36 62.64

48.54 51.46

28.00 72.00

21.11 78.89

3.30 2.20 52.75 41.76 0.00

8.74 6.80 27.18 39.81 17.48

0.00 13.00 32.00 50.00 5.00

3.02 16.08 36.68 35.68 8.54

16.48 27.47 3.30 19.78 26.37 6.59

12.62 34.95 0.97 20.39 21.36 9.71

14.00 28.00 2.00 27.00 14.00 15.00

18.09 17.59 3.02 26.63 25.63 9.05

31.87 1.10 2.20 19.78 28.57 13.19 3.30

19.42 0.97 6.80 0.97 33.98 36.89 0.97

30.00 1.00 6.00 23.00 18.00 22.00 0.00

20.6 2.51 4.52 27.14 23.12 21.61 0.50

19.78 0.00 41.76 1.10 10.99 26.37

14.56 0.97 69.90 0.00 4.85 9.71

9.00 0.00 35.00 0.00 29.00 27.00

6.53 0.00 44.22 0.00 22.61 26.63

82.42 8.79 8.79

92.23 7.77 0.00

88.00 11.00 1.00

87.94 12.06 0.00

78.02 13.19 8.79

82.52 14.56 2.91

89.00 11.00 0.00

77.89 15.58 6.53

0.00 0.00 13.19 86.81

2.91 4.85 8.74 83.50

2.00 6.00 4.00 88.00

1.51 5.03 5.53 87.94

14.29 85.71

16.50 83.50

13.00 87.00

12.06 87.94

Percentage 1. Sex Female Male 2. Caste General Minority OBC SC ST 3. Education Higher secondary Illiterate Postgraduation Primary Secondary Undergraduation 4. Occupation Casual labour Domestic help Government Private Self-employed Wage earners Others 5. Mode of commuting Auto Company vehicle Cycle/walk MMTS RTC Bus Two-wheeler 6.Commuting cost (% of income) (0–10) % (10–20) % >20% 7. Housing rent (% of income) (0–10) % (10–20) % >20% 8. Living in city (years) (0–5) years (5–10) years >10 years Native 9. Native/migrant Migrant Native Source: Author’s compilation.

Policy Issues in Inclusive Urbanization  173 respondents in Warangal, while almost 9 percent of respondents in Siddipet are from the general category. The least level of education is recorded in the slums of Siddipet, where almost 35 percent of the respondents are illiterate and not even 1 percent of the members are postgraduates. Around 30 percent of the respondents in the remaining three slums have at least completed their higher secondary education. The highest percentage of casual labour (31.87 percent) is found in Bhongir, whereas the lowest percentage of casual labour (19.42 percent) is found in Siddipet. In Warangal, most of the respondents are casual labour (around 30 percent), but in Hyderabad most of the labour belonged to private labour category (around 27.14 percent). It is also observed that majority of the people in all the regions either use cycle or walk to their workplaces. More than 25 percent of people use two wheelers to commute to work except in Siddipet, where the ratio remains less than 10 percent. It is interesting to note that none of the respondents used Multi-Modal Transport System (MMTS) to commute. The cost of commuting as a percentage of income is less than 10 percent for most people in all the regions. There are no respondents for whom the cost of commuting was more than 20 percent of income in Siddipet and Hyderabad, but almost 9 percent of the respondents in Bhongir have to face high costs. All the respondents in Bhongir have been living in the slum area for at least ten years. Almost 85 percent of respondents in all the regions are native residents of the region. Table 6.4 analyses the slum characteristics in terms of type, ownership of slum land, location, type of house, and type of land tenure. The analysis surmised that Bhongir has the highest number of notified slums, i.e., close to 77 percent. On the other hand, only 40 percent of the slums in Siddipet and Warangal are notified. In Hyderabad, almost 50 percent of the slums are notified. Bhongir is the only slum region which has a fraction of land under public ownership. Around 37.36 percent of land in Bhongir and almost 50 percent of land in Hyderabad is owned by local bodies. Interestingly, most of the land (80 percent) in Warangal is owned by the state government and the remaining is under private ownership. Maximum private ownership is observed in Siddipet, where almost 40 percent of the land is with private owners. The entire slum region in Hyderabad is a part of the core city, while that in Siddipet is located on the fringe areas. The majority of slums in Bhongir are located in the fringe areas, while almost 80 percent of the slums in Warangal are a part of the core city region. Furthermore, 75 percent of slums in Bhongir are located along the major transport alignment. The entire slum region in Siddipet is located in a non-hazardous and non-objectionable region. Interestingly, a very few numbers of houses in the slum regions are kutcha. Warangal did not have any kutcha house in the slum region. Almost 70 percent of houses in Warangal are semi-pucca, and the remaining is pucca. The maximum percentage of kutcha houses is in the Bhongir slums. Also, the maximum percentage of pucca houses is in Siddipet where more than 60 percent of houses are pucca. No area other than 7.5 percent of slum land in Hyderabad comes under the encroached

174  Policy Issues in Inclusive Urbanization Table 6.4  Details of Slum Variables

Bhongir

Siddipet

Warangal

Hyderabad

Percentage 1. Type of Slum Non-notified Notified 2. Ownership of slum land Public Local body Private State government 3. Location of slum Core city Fringe area 4. Physical location of slum Along major transport alignment Along river/water body bank Along drain Near railway line On river/water body bed Other (non-hazardous/ non-objectionable) Others (hazardous or objectionable) 5. Type of house Kutcha Pucca Semi-pucca 6. Types of land tenure Encroached land Patta Possession certificate Rented

23.08 76.92

60.19 39.81

60.00 40.00

49.74 50.25

13.19 37.36 34.07 15.38

0.00 0.00 39.81 60.19

0.00 0.00 20.00 80.00

0.00 50.25 19.6 30.15

37.36 62.64

0.00 100.00

80.00 20.00

100.00 0.00

74.73 0.00 0.00 13.19 0.00

0.00 0.00 0.00 0.00 0.00

0.00 20.00 0.00 0.00 20.00

0.00 0.00 10.05 35.18 9.55

12.09

100.00

40.00

45.23

0.00

0.00

20.00

0.00

3.30 59.34 37.36

2.91 61.17 35.92

0.00 31.00 69.00

2.51 51.76 45.73

0.00 68.13 6.59 25.27

0.00 77.67 0.00 22.33

0.00 80.00 0.00 20.00

7.54 67.34 0.00 25.13

Source: Author’s compilation.

land category. The maximum type of land tenure observed in all the regions is patta. No respondents other than 6.5 percent of those in Bhongir have a possession certificate. Almost 20–25 percent of land in all the slum regions is rented. The basic services in slums are analysed in Table 6.5. The results reported in this table reveal that no slum except a few in Hyderabad used mud walls, tarpaulin, and/or asbestos to build their house. Thatched roofs are only observed in a small fraction of houses in Siddipet slum region. RCC posh and RCC shed are the material used by all the slum houses in Bhongir and Warangal and also by almost 97 percent slums in Siddipet. None of the houses in the slums of Siddipet and Warangal have private taps. All the slum regions have individual taps except 2.2 percent in Bhongir and 1.5 percent in Hyderabad. More than 90 percent of houses in the slums of all the regions have their own latrine. Open

Policy Issues in Inclusive Urbanization  175 Table 6.5  Details of the Services in Slums Variables

Bhongir

Siddipet

Warangal

Hyderabad

Percentage 1. Material of house Asbestos Mud wall RCC posh RCC shed Tarpaulin Thatched roof 2. Distance to nearby road (In km) (0.25–0.5) Less than 0.25 More than 0.5 3. Source of drinking water Individual taps Private taps 4. Latrine facility Open defecation Own latrine Shared latrine 5. Sanitation Closed drain No drain Open drain 6. Garbage collection Daily Day by day Weekly 7. Electricity Yes No 8. Transport services Private Public 9. Street lights Yes No 10. Government schools No Yes 11. Private schools No Yes 12. Trust schools No Yes 13. Other schools No

0.00 0.00 59.34 40.66 0.00 0.00

0.00 0.00 66.99 30.10 0.00 2.91

0.00 0.00 33.00 67.00 0.00 0.00

17.59 2.01 52.26 27.64 0.50 0.00

31.87 24.18 43.96

60.19 35.92 3.88

54.00 28.00 18.00

17.59 57.29 25.13

97.8 2.20

100.00 0.00

100.00 0.00

98.49 1.51

1.10 92.31 6.59

4.85 93.2 1.94

1.00 96.00 3.00

1.51 95.98 2.51

24.18 3.30 72.53

0.97 0.97 98.06

7.00 0.00 93.00

43.72 11.06 45.23

82.42 17.58 0.00

100.00 0.00 0.00

60.00 40.00 0.00

35.18 49.75 15.08

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

89.95 10.05

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

0.00 100.00

0.00 100.00

0.00 100.00

35.18 64.82

15.38 84.62

20.39 79.61

0.00 100.00

43.22 56.78

100.00 0.00

100.00 0.00

80.00 20.00

89.95 10.05

100.00

100.00

100.00

100.00 (Continued)

176  Policy Issues in Inclusive Urbanization Table 6.5  (Continued) Variables

Bhongir

Siddipet

Warangal

Hyderabad

Percentage 14. Primary healthcare No Yes 15. Government hospital No Yes 16. Maternity centre No Yes 17. Private hospital No Yes 18. Community hall No Yes 19. Vocational training centre No Yes 20. Night shelters Daily Day by day No Weekly 21. Solid waste management Daily Day by day Weekly Weekly once

15.38 84.62

41.75 58.25

0.00 100.00

60.30 39.70

15.38 84.62

41.75 58.25

20.00 80.00

75.38 24.62

15.38 84.62

63.11 36.89

60.00 40.00

0.00 100.00

24.18 75.82

20.39 79.61

0.00 100.00

20.10 79.90

3.30 96.7

63.11 36.89

40.00 60.00

100.00 0.00

79.12 20.88

100.00 0.00

80.00 20.00

100.00 0.00

0.00 0.00 100.00 0.00

0.00 0.00 100.00 0.00

0.00 0.00 100.00 0.00

34.67 55.28 0.00 10.05

46.15 25.27 0.00 28.57

79.6 20.39 0.00 0.00

60.00 40.00 0.00 0.00

34.67 55.28 10.05 0.00

Source: Author’s compilation.

defecation is practiced by around 1 percent of residents in the slums of Bhongir, Warangal, and Hyderabad, and it is almost 5 percent in Siddipet. Hyderabad has the maximum proportion of closed drains as compared to the other regions. The maximum proportion of open drains is found in Siddipet where 98 percent of the drains are open. Siddipet is the only region where garbage is collected daily from the houses in the slums. Hyderabad is the only region where a few respondents (15 percent) dispose of the garbage on a weekly basis. Around 100 percent coverage of electricity in all the houses of the slums in all the regions was observed. Hyderabad is the only region where 10 percent of the respondents use public transport. All the other regions are dependent only on private transport. All the respondents in every region claimed to have complete street light facility. However, except 35 percent respondents in Hyderabad, all the respondents in every region said that they have government schools in their area.

Policy Issues in Inclusive Urbanization  177 Warangal is the only area where the slum residents do not have access to any private school. The highest number of respondents having access to a private school was found in Hyderabad where almost 43 percent respondents had a private school in their area. None of the respondents in Bhongir and Siddipet have access to any trust schools, while 20 percent and 10 percent of respondents in Warangal and Hyderabad, respectively, have access to such schools. There are no other schools in these regions. Primary healthcare facilities are available to all the respondents from the slum region of Warangal. These services are least accessible to the people from Hyderabad region where 60 percent people do not have access to primary healthcare. More than 80 percent of respondents in Bhongir have access to government hospital, while only 25 percent from the slums of Hyderabad could avail of such services. All the slum regions of Hyderabad have access to a maternity centre, while, on the other hand, more than 63 percent of respondents from Siddipet do not have access to maternity centres. Private hospitals are accessible to people in all the regions. More than 75 percent of people in all the regions have access to a private hospital. Interestingly, all the respondents from the slums of Warangal found private hospitals to be accessible. There are no community halls for the people living in the slums of Hyderabad region, while almost 97 percent of people in the slums of Bhongir have access to a community centre. None of the respondents in Siddipet and Hyderabad have access to a vocational training centre in their region, while 20 percent respondents in Bhongir and Warangal have access to such training centres. The slums of Bhongir, Siddipet, and Warangal do not have any facilities for night shelters in the region. The slums of Hyderabad provided night shelters to 55 percent of people on a day-by-day basis and 35 percent on a daily basis. Table 6.6 presents the analysis of other services of slum such as distance from working place, mode of commuting, accesses to internet, telephone, television, mobile, electric fan, refrigerator, and the various government schemes. The distance (more than 10 kilometres) from working place is recorded highest around 20 percent in Warangal, and it is least in the case of Hyderabad (8.54 percent). Around 30.15 percent of slum residents commute to their workplaces in Hyderabad with a distance range from 2 to 5 kilometres from their home. However, from the same distance in Siddipet, only 8.74 percent of slum residents have access to their workplace. Around 4.5 percent of respondents in slums of Hyderabad and 3.88 percent and 1.1 percent in Siddipet and Bhongir, respectively, are the owners of a four-wheeler. No respondent from Warangal had a four-wheeler. Interestingly, Warangal had the highest proportion of people owning a two-wheeler. The least proportion (47 percent) was in the slums of Bhongir. All the respondents from Warangal owned a mobile phone, followed by 98.5 percent in Hyderabad, 96.7 percent in Bhongir, and 92.3 percent in Siddipet. A reverse trend is observed in the ownership of a telephone connection. No respondent in Siddipet has a telephone connection, while only 0.5 percent in Hyderabad, 1 percent in Warangal, and 2.2 percent in Bhongir has one. More than 90 percent of the respondents in all the regions have a television

178  Policy Issues in Inclusive Urbanization Table 6.6  Other Services of Slum Variables

Bhongir

Siddipet

Warangal

Hyderabad

14.29 15.38 16.48 23.08 17.58 13.19

19.42 17.48 26.21 8.74 14.56 13.59

2.00 0.00 25.00 19.00 34.00 20.00

7.54 9.05 21.61 30.15 23.12 8.54

98.90 1.10

96.12 3.88

100.00 0.00

95.48 4.52

47.25 52.75

51.46 48.54

65.00 35.00

57.79 42.21

3.30 96.70

7.77 92.23

0.00 100.00

1.51 98.49

97.80 2.20

100.00 0.00

99.00 1.00

99.50 0.50

9.89 90.11

9.71 90.29

4.00 96.00

5.03 94.97

95.60 4.40

100.00 0.00

97.00 3.00

92.46 7.54

3.30 96.70

1.94 98.06

0.00 100.00

2.01 97.99

87.91 12.09

93.20 6.80

87.00 13.00

74.87 25.13

0.00 100.00

0.00 100.00

20.00 80.00

15.08 84.92

Percentage 1. Distance from working place 0–0.5 km 0.5–1 km 1–2 km 2–5 km 5–10 km More than 10 km 2. Four-wheeler No Yes 3. Two-wheeler No Yes 4. Mobile No Yes 5. Telephone No Yes 6. Television No Yes 7. Internet connection No Yes 8. Electric fan No Yes 9. Refrigerator No Yes 10. Covered under government scheme No Yes Source: Author’s compilation.

with the highest percentage being in Warangal. None of the respondents has an internet connection in the slums of Siddipet. Maximum internet connectivity is found in the slums of Hyderabad, where more than 7 percent could access the internet. All the respondents in the slums of Warangal used an electric fan, while almost 2 percent of respondents in Hyderabad and Siddipet and 3.3 percent in Bhongir did not have an electric fan in their house. Around 25 percent of respondents in Hyderabad owned a refrigerator, while only 6 percent of respondents in Siddipet did so.

Policy Issues in Inclusive Urbanization  179 Table 6.7  Impact Assessment of the Government Programme Variables

Bhongir

Siddipet

Warangal

Hyderabad

0.00 100.00

0.00 100.00

0.00 100.00

89.95 10.05

0.00 100.00

100.00 0.00

40.00 60.00

89.95 10.05

100.00 0.00

21.36 78.64

100.00 0.00

100.00 0.00

100.00 0.00

78.64 21.36

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

69.85 30.15

Percentage 1. Impact of No Yes 2. Impact of No Yes 3. Impact of No Yes 4. Impact of No Yes 5. Impact of No Yes

better infrastructure socio-economic security skill development centres health centres better opportunities

Source: Author’s compilation.

Table 6.7 analyses the impact assessment of the government programmes on the slums of these four regions. All the respondents in the slums of Bhongir, Siddipet, and Warangal think that the programmes have a positive impact on better infrastructure and that the infrastructure facilities have improved. However, 10 percent of people in the slums of Hyderabad are against this view. All the respondents in Bhongir think that the programmes have a better impact on SES, but all the respondents in Siddipet are against this view. Ninety percent of the people supported the view in Hyderabad. There was a mixed response in the slums of Warangal. None of the respondents in Bhongir, Warangal, and Hyderabad have experienced any impact of programmes on the skill development centres. However, 78 percent of respondents in Siddipet are against this view. None of the respondents in Bhongir, Warangal, and Hyderabad feel that there is any impact of programmes on the health centres. However, 21 percent of respondents in Siddipet are against this view. None of the respondents in Bhongir, Siddipet, and Warangal believe that these programmes are successful in creating better opportunities for the people in the slums. However, more than 30 percent of respondents in Hyderabad think that the programmes are successful in creating better opportunities. Table 6.8 reports the development of the government programmes in the last one and five years, respectively, in the slums of all the four districts of the Telangana. All the respondents of Bhongir, Siddipet, and Warangal were satisfied with the Pavala Vaddi programme and are receiving its benefits. However, people from the slums of Hyderabad are not getting the facilities of this programme. All the respondents of Bhongir, Siddipet, and Warangal are satisfied with Kalayanalaxmi and are receiving its benefits. However, the facilities of this programme are

180  Policy Issues in Inclusive Urbanization Table 6.8  Programmes Undertaken during Last Five Years/One Year Variables

Bhongir

Siddipet

Warangal

Hyderabad

0.00 100.00

0.00 100.00

0.00 100.00

100.00 0.00

0.00 100.00

0.00 100.00

0.00 100.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

49.75 50.25

0.00 100.00

0.00 100.00

0.00 100.00

49.75 50.25

0.00 100.00

0.00 100.00

0.00 100.00

100.00 0.00

0.00 100.00

0.00 100.00

40.00 60.00

40.20 59.80

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

0.00 100.00

57.28 42.72

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

100.00 0.00

0.00 100.00

100.00 0.00

100.00 0.00

100.00 0.00

39.70 60.30

100.00 0.00

100.00 0.00

100.00 0.00

59.80 40.20

100.00 0.00

100.00 0.00

100.00 0.00

40.20 59.80

Percentage 1. Impact Pavala Vaddi (last 5 years) No Yes 2. Kalayanalaxmi (last 5 years) No Yes 3. Arogyashri (Health Insurance) (last 5 years) Yes No 4. SHG loans (last 5 years) No Yes 5. SC/ST special loans (last 5 years) No Yes 6. 2 BHK (last 1 year) No Yes 7. LED street light (last 1 year) No Yes 8.Swachh Bharat (last 1 year) Yes No 9. Life insurance (last 1 year) No Yes 10. Pensions (last 1 year) No Yes 11. Sadimubarak/Kalyanlaxmi (last 1 year) No Yes 12. SC/ST Development Fund (last 1 year) No Yes 13. Roads (last 1 year) No Yes Source: Author’s compilation.

Policy Issues in Inclusive Urbanization  181 not reaching the people from the slums of Hyderabad. The respondents of all the regions are happy with the Arogyashri (Health Insurance) programme and are receiving its benefits. All the respondents of Bhongir, Siddipet, and Warangal are found to be aware of Self-Help Group Loans facility and are able to get these loans when needed. However, 49.75 percent of the respondents from the slums of Hyderabad are against this facility and are not using it. All the respondents of Bhongir, Siddipet, and Warangal are found to be aware of SC/ST special loans and 2 Bedroom, Hall, and Kitchen (BHK) schemes of the government. However, 49.75 percent of the respondents from the slums of Hyderabad are against this viewpoint and are not using this facility. All the residents from Bhongir and Siddipet said that their region has been provided with LED street light facilities in the last one year. However, 40 percent respondents each from Warangal and Hyderabad said that there were no visible changes in the street lights in their slum region in last one year. All the respondents in all the regions agreed that there have been visible changes in last one year in their slums due to the Swachh Bharat mission. Bhongir is the only region where all the respondents have taken the life insurance facilities. None of the respondents from Warangal and Hyderabad are using life insurance. However, there was a mixed response from Siddipet. None of the respondents from Bhongir, Siddipet, and Warangal are receiving the pension facilities. On the other hand, all the respondents from the slums of Hyderabad are being benefitted from this facility. Sadimubarak/Kalyanlaxmi programme is a complete failure in Bhongir, Siddipet, and Warangal. However, 60 percent of respondents from the slums of Hyderabad are being benefitted from this programme. None of the respondents from Bhongir, Siddipet, and Warangal have benefitted by the creation of SC/ST development fund. However, almost 40 percent of respondents from the slums of Hyderabad were aware of this fund and were benefitted by it. According to the respondents from Bhongir, Siddipet, and Warangal, there is absolutely no improvement in the condition of roads in their region in last one year, and no construction work has started for the improvement of the roads. However, 60 percent of respondents from the slums of Hyderabad are satisfied with the improvement in the condition of roads in their region. 6.4 Non-economic Aspects of Urban Slums: A Cross-Tabulation Analysis A cross-tabulation analysis has been performed to understand the dimensions of urban poverty in the field specially to examine the implications of slums from the standpoint of non-economic aspects. This is because urban poverty is a multidimensional concept which is beyond being income based. Therefore, location, access to education, health, living standard, employment, and basic civic services such as cooking fuel, safe drinking water, electricity, flooring, and amenities also matter. Tables 6.9–6.19 show chi-square contingency tests between groups.

Income Group

Lower Middle Higher

Parameter

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value Source: Author’s compilation.

Sanitation

Latrine Facility

Transport Services

Open defecation

Own Latrine

Shared Latrine

Closed Drain

No Drain

Open Drain

Private

Public

8.00 3.72 80.00 1.00 0.71 10.00 1.00 0.72

197.00 91.63 42.18 134.00 95.71 28.69 136.00 98.55 29.12

10.00 4.65 62.50 5.00 3.57 31.25 1.00 0.72 6.25

39.00 18.14 33.33 29.00 20.71 24.79 49.00 35.51

7.00 3.26 26.92 12.00 8.57 46.15 7.00 5.07 26.92

169.0 78.60 48.29 99.00 70.71 28.29 82.00 59.42 23.43

207.00 96.28 43.76 138.00 98.57 29.18 128.00 92.75

8.00 3.72 40.00 2.00 1.43 10.00 10.00 7.25 50.00

10.00 0.042

41.88 0.000

27.06 0.046

182  Policy Issues in Inclusive Urbanization

Table 6.9  Chi-Square Test between Income Group and Amenities

Policy Issues in Inclusive Urbanization  183 Table 6.9 explains the access of the latrine facility, sanitation, and transport services among the different income groups such as lower-income, middle-income, and higher-income groups among all the slum regions. As the Chi-Square P-value is less than 0.05, there is said to be a significant relation between latrine facility and income group. It can be seen from the table that 80 percent of the respondents who still prefer open defecation are from the lower-income group. However, taking each group individually, we have seen that more than 90 percent of respondents from all three groups have their own latrine. Interestingly, the percentage of respondents in every income group with own latrine move positively with the income level, i.e., 91.63 percent in lower-income group and 95.71 percent and 98.55 percent in middle- and higher-income groups, respectively. The Chi-Square P-value suggests that there is a significant relation between sanitation and income group. The maximum respondents with closed drains are from the high-income group, maximum respondents with no drain are from the middle-income group, and those with open drain are from the lower-income group. Comparing the variables income-wise, we can see that maximum people in each income group individually still have open drains. The trends show that private vehicles are used more by lower-income group respondents. Table 6.10 analyses the type of houses such as kutcha, pucca, semi-pucca, and the location of slum such as core city area and fringe area among the lower-, middle-, and higher-income groups of all the slum regions. As the results of our analysis suggest, income has a significant role in determining the type of house a person lives in. More than 72 percent of the kutcha houses are occupied by the lower-income group and remaining by the middle-income

Table 6.10  Chi-Square Test between Income Group and Type of House and Location of Slum Income Group

Lower Middle Higher

Parameters

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value

Type of House

Location of Slum

Kutcha

Pucca

SemiPucca

Core City

Fringe Area

8.00 3.72 72.73 3.00 2.14 27.27 0.00 0.00 0.00

85.00 39.53 33.86 55.00 39.29 21.91 111.00 80.43 44.22

122.00 56.74 52.81 82.00 58.57 35.50 27.00 19.57 11.69

104.00 48.37 33.23 92.00 65.71 29.39 117.00 84.78 37.38

111.00 51.63 61.67 48.00 34.29 26.67 21.00 15.22 11.67

0.000

Source: Author’s compilation.

0.000

184  Policy Issues in Inclusive Urbanization group. No respondent from the higher-income group lives in the kutcha houses. Most of the pucca houses are owned by those from the higher-income groups. More than 80 percent of the higher-income respondents lived in the pucca houses. Looking at the lower-income group, majority of these respondents live in the semi-pucca houses. More than 60 percent of the respondents living in the slums of fringe areas are from lower-income group, and only 11 percent are from the higher-income group. However, more than 37 percent people in the core city are from the higher-income group. Looking at all the groups individually, we see that almost 85 percent of the higher-income group respondents and more than 65 percent of respondents from middle-income group live in the core city. Table 6.11 presents the results of income group and the services such as access to government schools, primary healthcare, maternity centre, and internet connections across the slum regions considered in the study. As expected, there is an inverse relation between income and the students going to government school, i.e., the higher the income of the family, lower is the probability that their children will go to government school. As we can see, more than 90 percent of students from lower-income group families go to the government school, while 83.57 percent of students from middle-income group and 79 percent from higher-income group go to the government school. Out of all the students going to the government school, more than 46 percent are from lower-income group and only 25 percent are from higher-income group. The analysis also found an inverse relation between the income of the person and the person using primary healthcare facilities. Among those using the primary healthcare facility, 50 percent are from the lower-income group and only 21 percent are from the higher-income group. However, looking at each income group separately, we see that 50 percent of the respondents from the higher-income group and 63 percent of respondents from the middle-income group use the primary healthcare facilities. As per the data received from the respondents in the slums, 68.84 percent of the people from the lower-income group use the facilities provided by the maternity centre, whereas 66 percent from the middle-income group and more than 80 percent from the higher-income group have also used the same facility. None of the respondents from the lower-income group have internet connection. Although only 25 percent of the higher-income group respondents have the internet connection, but this group has 95 percent share in the total number of internet connections. Table 6.12 summarizes the results between the income group and the services such as better infrastructure facilities, impact of SES security, impact of development centre, and the impact of the government scheme of ‘Kalyana Laksmi Yojana’ among all the slum regions. Out of all the respondents who believe that the government programmes have improved the condition of the infrastructure, more than 50 percent are from the lower-income group, 30 percent are from the middle-income group, and only 18 percent are from the higher-income group. The result might also

Table 6.11  Chi-Square Test between Income Group and Services Parameters

Lower

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Middle Higher

Chi-Square P-value Source: Author’s compilation.

Government School

Primary Healthcare

Maternity Centre

Internet Connection

No

Yes

No

Yes

No

Yes

No

Yes

18 8.37 25.71 23 16.43 32.86 29 21.01 41.43

197 91.63 46.57 117 83.57 27.66 109 78.99 25.77

57 26.51 32.20 51 36.43 28.81 69 50.00 38.98

158 73.49 50.00 89 63.57 28.16 69 50.00 21.84

67 31.16 48.20 47 33.57 33.81 25 18.12 17.99

148 68.84 41.81 93 66.43 26.27 113 81.88 31.92

215 100.00 45.65 139 99.29 29.51 117 84.78 24.84

0 0.00 0.00 1 0.71 4.55 21 15.22 95.45

0.003

0.000

0.007

0.000

Policy Issues in Inclusive Urbanization  185

Income Group

Income Group

Lower Middle Higher

Parameter

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value Source: Author’s compilation.

Better Infrastructure

Impact Socio-Economic Security

Impact Development Centres

Kalyana: LaksmiYojana (Last Five Years)

No

Yes

No

Yes

No

Yes

No

Yes

50 23.26 27.93 47 33.57 26.26 82 59.42 45.81

165 76.74 52.55 93 66.43 29.62 56 40.58 17.83

124 57.67 38.51 91 65.00 28.26 107 77.54 33.23

91 42.33 53.22 49 35.00 28.65 31 22.46 18.13

171 79.53 41.50 114 81.43 27.67 127 92.03 30.83

44 20.47 54.32 26 18.57 32.10 11 7.97 13.58

60 27.91 30.15 52 37.14 26.13 87 63.04 43.72

155 72.09 52.72 88 62.86 29.93 51 36.96 17.35

0.000

0.001

0.006

0.000

186  Policy Issues in Inclusive Urbanization

Table 6.12  Chi-Square Test between Income Group and Services

Policy Issues in Inclusive Urbanization  187 mean that the higher-income group has higher standards of infrastructure and thus are not happy with the current improvements. In the higher-income group, almost 60 percent people are not satisfied with the improvements in infrastructure, while more than 75 percent people in the lower-income group are happy with the improvements. As the government programmes have been continuously working to improve the socio-economic conditions of the people living in the slums, data are collected from the slum dwellers to check if the programmes are actually successful to provide SES to the people. The result shows that according to 57 percent respondents from the lower-income group, 65 percent from the middle-income group, and 77 percent from the higher-income group, the programmes have not been successful. Among those respondents who thought that the programmes are successful, more than 50 percent are from the lower-income group and only 18 percent are from the higher-income group. While inspecting the impact of programmes on development centres, we found that more than 80 percent of respondents from both lower- and middle-income groups and more than 90 percent from the higher-income group are not satisfied with the programmes. However, majority of those satisfied with the programme are from the lower-income group. As observed from the data received, there is a mixed response towards the scheme. That is, 72 percent respondents from the lower-income group and 62 percent from the middle-income group are satisfied with the benefits received from this scheme. However, only 36 percent from the higher-income group believed that the scheme is beneficial. Among those satisfied with the scheme, more than 50 percent are from the lower-income group. Table 6.13 presents the impact of SC/ST loan facility, life insurance schemes, Self-Help Group (SHG) loans, and better opportunities among the income groups of all the slum regions. According to the trends revealed in the above table, of all the loans granted to the SC/STs in these slums, 50 percent are given to those belonging to the lower-income group, and the percentage decreased with the increase in income size. Looking at the values individually, more than 90 percent from the lower-income group and almost 80 percent from the middle-income group availed the special loans facility. Contrary to our expectations, life insurance facilities are used more by the lower-income group. In fact, the number of people with life insurance decreased with increase in income size. Of all the people who took life insurance policy in last 1 year, 58 percent are from the lower-income group, 23 percent from middle-income group, and only 17 percent from the higher-income group. Interestingly, more than 80 percent of the respondents in the higher-income group do not have a life insurance policy at all. SHG Loans are not much beneficial to the people of these slum regions. Less than 20 percent from the lower-income group, 15 percent from the middle-income group, and around 25 percent from the higher-income group found these SHG loans to be helpful. However, of all the people who availed the SHG loans, the maximum numbers of people are from the lower-income group.

Income Group

Parameter

Lower

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Middle Higher

Chi-Square P-value Source: Author’s compilation.

SC/ST Special Loan (5Y)

Life Insurance Last(1Y)

SHG Loans Last(5Y)

Better Opportunities

No

Yes

No

Yes

No

Yes

No

Yes

18 8.37 18.18 30 21.43 30.30 51 36.96 51.52

197 91.63 50.00 110 78.57 27.92 87 63.04 22.08

136 63.26 37.99 108 77.14 30.17 114 82.61 31.84

79 36.74 58.52 32 22.86 23.70 24 17.39 17.78

173 80.47 44.02 118 84.29 30.03 102 73.91 25.95

42 19.53 42.00 22 15.71 22.00 36 26.09 36.00

192 89.30 44.34 127 90.71 29.33 114 82.61 26.33

23 10.70 38.33 13 9.29 21.67 24 17.39 40.00

0.000

0.000

0.093

0.08

188  Policy Issues in Inclusive Urbanization

Table 6.13  Chi-Square Test between Income Group and Services

Policy Issues in Inclusive Urbanization  189 Table 6.14  Chi-Square Test between Land Tenure and Services Type of Land Tenure

Encroached land Patta Possession certificate Rented

Parameters

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value

Impact of Infrastructure

Impact of SocioEconomic Security

No

Yes

No

Yes

15 100 8.38 116 32.58 64.8 0 0 0 48 41.38 26.82 0.000

0 0 0 240 67.42 76.43 6 100 1.91 68 58.62 21.66

15 100 4.66 229 64.33 71.12 0 0 0 78 67.24 24.22 0.000

0 0 0 127 35.67 74.27 6 100 3.51 38 32.76 22.22

Source: Author’s compilation.

As per the observations to verify whether all the programmes are successful in building better opportunities for the people living in slums, we saw that people from middle-income group are predominantly unhappy. More than 90 percent of the respondents from the middle-income group feel that the programmes are not successful in creating better opportunities. Among all those who feel that better opportunities are created, 40 percent come from the higher-income group and 38 percent from the lower-income group. Table 6.14 attempts to examine the impact of infrastructure and SES on the type of the land tenure of all the slum dwellers. The slum dwellers have been categorized on the basis of type of land tenure such as encroached land, patta, possession certificate, and rented. We observe significant difference between perceptions on whether infrastructure has had impact on an individual’s betterment if we control for type of land tenure an individual lives on. It is found that about 58.62 percent of individuals living in rented units are of the opinion that infrastructure has improved, and it has had a positive impact upon them. However, 41.38 percent of people don’t agree with the above opinion. The magnitude of difference between the people keeping the opinion that infrastructure has improved and has positive impact upon them is more glaring in the case of slum dwellers residing in pattas. While the majority, i.e., about 67.42 percent, of slum dwellers residing in pattas agree that infrastructure has improved, about 32.58 percent don’t keep the same opinion. In our survey, we also endeavoured to find out the impact of SES schemes upon individuals living in slums. We found that majority, i.e., about 67.24 percent and 64.33 percent in case of rented and patta holders, respectively, do not benefit from social security schemes floated by government agencies. Among

190  Policy Issues in Inclusive Urbanization Table 6.15  Chi-Square Test between Land Tenure and Services Type of land tenure

Encroached land Patta Possession certificate Rented

Parameters

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value

Kalyana Lakshmi Yojana

Life Insurance

No

Yes

No

Yes

15 100.00 7.54 134 37.64 67.34 0 0.00 0.00 50 43.10 25.13

0 0.00 0.00 222 62.36 75.51 6 100.00 2.04 66 56.90 22.45

15 100.00 4.19 257 72.19 71.79 0 0.00 0.00 86 74.14 24.02

0 0.00 0.00 99 27.81 73.33 6 100.00 4.44 30 25.86 22.22

0.000

0.000

Source: Author’s compilation.

all the residents living in slum, individuals living on encroached land seem to be worse impacted. The penetration of social security seems to be lowest for them. A more intensive and focused approach needs to be adopted to improve the coverage in general for slum and particularly for individuals residing on the encroached land. Table 6.15 aims to enumerate and analyse the reach of Kalyana Lakshmi scheme amongst the slum inhabitants. In this table, we have again classified the slums on the basis of land tenure. The broad overview of table reveals that the scheme has been successful in percolating to lowest strata of society. Once we control for type of slum, we observe that there exists significant difference between individuals who have benefitted and who do not receive any benefit. About 43 percent of people living in rented units responded by saying that they do not receive any benefit, while about only 38 percent of people living in patta said that they do not receive the benefit from the scheme. Once again, we observe that individuals living in encroached land have been worst affected. The scheme needs to be made more accessible to them. The above table also seeks to evaluate another important question with regard to the availability and accessibility of any formal life insurance scheme to slum dwellers. The finding brings forth the issue of accessibility of formal life insurance only to a limited section of society and highlights the need for concerted efforts in order to bring a vast chunk of society under the protective umbrella of life insurance. The mean proportion of people covered under the scheme is almost similar in the case of patta holders and individuals residing in rented units. A little more than a quarter of citizens living in slums have their life covered under a formal insurance scheme.

Policy Issues in Inclusive Urbanization  191 Table 6.16  Chi-Square Test between Slum Type and Services Type of slum

Non-notified Notified

Parameters

Frequency Row % Column % Frequency Row % Column %

Chi-Square P-value

Primary Healthcare

Maternity care

No

Yes

No

Yes

103 42.56 58.19 74 29.48 41.81

139 57.44 43.99 177 70.52 56.01

83 34.30 59.71 56 22.31 40.29

159 65.70 44.92 195 77.69 55.08

0.000

0.000

Source: Author’s compilation.

Table 6.16 summarizes the survey findings with respect to accessibility of basic healthcare services in the slums. It highlights only the two major parameters of evaluation of accessibility of healthcare in slums: (a) Accessibility to primary healthcare facilities and (b) accessibility to maternity care facilities. We found that among the slums, the situation remains grave for the non-notified category of slums. More than 42 percent of people surveyed from non-notified slum reported that they don’t have access to healthcare facilities in their vicinity, whereas a little more than 29 percent from notified slums reported that they don’t have access to primary healthcare facilities in their vicinity. The above finding points out that the notified slum dwellers are marginally better off in comparison to the slum dwellers residing in non-notified slums. However, it also alludes towards the fact that a lot of ground needs to be covered if the universal access to healthcare has to be attained. About one out of three individuals from a notified slum doesn’t have access to healthcare facilities, and about one out of two from a non-notified slum finds himself/herself vulnerable. Maternity healthcare facilities are of critical importance for the well-being of present as well as future of the society. In our survey, we also evaluated the accessibility to maternity healthcare facilities because of its critical importance. We observe that accessibility to maternity care is relatively better than general primary health for both non-notified slums and notified slums. One can also decipher a similar pattern with regard to coverage of maternity healthcare as with general primary healthcare. Respondents reported better coverage of maternity care facilities in notified slums vis-à-vis non-notified slums. Table 6.17 analyses the distance a slum dweller has to commute daily in order to earn a living. We have categorized the slum dwellers on the basis of type of land tenure an individual has. The finding from the data is as follows. The mean proportion of individuals living within the vicinity of their workplace, i.e., within half kilometre is highest for Patta holders vis-à-vis individuals residing in rented house and encroached land. The survey finding as can be observed in the above table also corroborates the fact that individuals living on

192  Policy Issues in Inclusive Urbanization Table 6.17  Chi-Square Test between Land Tenure and Distance from Working Place Type of land Tenure

Parameters

Encroached land

Frequency Row % Column % Frequency Row % Column % Frequency Row % Column % Frequency Row % Column %

Patta Possession certificate Rented

Chi-Square P-value

Distance from Working Place 0–0.5 km

0.5–1 km

1–2 km

2–5 km

5–10 km

More than 10 km

1 6.67 2.08 33 9.27 68.75 0 0.00 0.00 14 12.07 29.17

2 13.33 3.85 35 9.83 67.31 1 16.67 1.92 14 12.07 26.92

5 33.33 4.55 92 25.84 83.64 4 66.67 3.64 9 7.76 8.18

3 20.00 2.75 86 24.16 78.90 0 0.00 0.00 20 17.24 18.53

4 26.67 3.60 74 20.79 66.67 1 16.67 0.90 32 27.59 28.83

0 0.00 0.00 36 10.11 57.14 0 0.00 0.00 27 23.28 42.86

0.000

Source: Author’s compilation.

encroached land tend to cluster towards their workplace. The mean proportion of individuals living on encroached land which is within half kilometre from their workplace is 6.67, those living within 0.5 to 1 kilometres from their workplace is 13.33, and those living within 1 to 2 kilometres from their workplace is about 33.33. It is worthy of note that a majority of individuals residing on encroached land with a mean proportion of more than 70 live within 5 kilometres of their workplace. Among the slum inhabitants residing in rented units, the mean proportion of people residing within 0–0.5 kilometres, 0.5–1 kilometres, 1–2 kilometres, 2–5 kilometres, 5–10 kilometres, and more than 10 kilometres are 12.07, 12.07, 7.76, 17.24, 27.59, and 23.28, respectively. It can be observed from the above data that more than 51 percent mean proportion of people travel more than 5 kilometres daily to work, which is highest across the different type of land tenures. Table 6.18 draws a comparative analysis of reach of government primary healthcare facilities and private clinics. We observe that private clinics have been filling in crevices left by the unavailability of primary healthcare. We see that in case of non-notified slums where the reach of primary healthcare is dismal, the private clinics have been able to cash in the opportunity and have been serving the slum dwellers. However, over-reliance on private clinics has its own share of perils such as non-reliable quality of healthcare. Secondly, the affordability of services provided by these private clinics is also another challenge. The recent reports on quacks providing ill diagnosis to gullible rural folks further strengthens our apprehension against the private clinics. The above findings also emphasize the need to strengthen the government primary healthcare and expedite the process of opening new clinics.

Policy Issues in Inclusive Urbanization  193 Table 6.18  Chi-Square Test between Slum Type and Services Type of slum

Non-notified Notified

Parameters

Frequency Row % Column % Frequency Row % Column %

Chi-Square Values

Primary Healthcare

Private Clinics

No

Yes

No

Yes

103 42.56 58.19 74.00 29.48 41.81

139 57.44 43.99 177.00 70.52 56.01

21 8.68 25.30 62.00 24.70 74.70

221 91.32 53.90 189.00 75.30 46.10

0.000

0.000

Source: Author’s compilation.

In Table 6.19, we aim at evaluating the perception of people residing in slums regarding the impact of socio-economic security (SES) in improving the economic as well as living condition of individuals. We found a significant difference in perception of an individual with regard to whether SES has impacted in improving the condition, when we control for type of slum. A majority, i.e., about 83 percent of people living in non-notified slums has the opinion that SES has no impact in improving the condition, whereas only about 48 percent of people living in notified slums are of opinion that SES scheme do not help in improving the condition. We also evaluated if infrastructure has improved and if it has positive impact upon individuals residing in slums. We found that a majority of individuals residing in slum across the type of slums are of the opinion that infrastructure has improved and that it has positive impact upon them. However, the proportion of people who have shared this opinion varied. About 68 percent of respondents living in notified slum agreed, whereas only 59 percent living in non-notified slum held the same opinion. In our survey, we tried to enumerate the proportion of people who have access to loan facilities from SHGs in last five years. We found that a miniscule 8 percent of people living in non-notified slum have access to loan from selfhelp group, while about 32 percent of people living in notified slums have availed loan facilities from SHGs. The above data reveals the fact that concerted effort needs to be made in order to spread awareness about the role of SHGs as well as various benefits one can derive from it. The survey also spells out if people living in slums have access to skill development centres. We found that, in general, a very small proportion of individuals residing in slums have skill development centres in their vicinity. Specifically, only about 7 percent of people have skill development centre in their vicinity. In the case of notified slums, it is about 25 percent. The above facts point out that in order to improve the skill sets more skill development centres should be opened in areas closer to slums so that they are more accessible for targeted people.

Type of slum

Non-notified Notified

Parameters

Frequency Row % Column % Frequency Row % Column %

Chi-Square Values Source: Author’s compilation.

Socio-Economic Security

Better Infrastructure

SHG Loans_last5Y

Skill Development Centres

No

Yes

No

Yes

No

Yes

No

Yes

201 83.06 62.42 121 48.21 37.58

41 16.94 23.98 130 51.79 76.02

99 40.91 55.31 80 31.87 44.69

143 59.09 45.54 171 68.13 54.46

222 91.74 56.49 171 68.13 43.51

20 8.26 20 80 31.87 80.00

180 74.38 43.69 232 92.43 56.31

62 25.62 76.54 19 7.57 23.46

0.000

0.000

0.000

0.000

194  Policy Issues in Inclusive Urbanization

Table 6.19  Chi-Square Test between Slum Type and Services

Policy Issues in Inclusive Urbanization  195 6.5 Empirical Analysis: Ordinary Least Square Model Ordinary Least Square (OLS) model has been employed in order to model the monthly income of slum individuals. This model assumes that the monthly income of individual depends on various qualitative factors, such as gender, type of labour (whether he/she is a government employee or not), level of education (whether his/her qualification is above graduation or not), location (whether he/she is living in the core city or not), etc. The model is presented as follows:



Yi   0  1X1i   2X 2i  3X 3i   4X 4i  5X 5i  6X 6i  7X 7i  8X 8i  9X 9ii   i Where, Yi = Monthly total income of ith individual in Rs β0 = Intercept of the regression model X1i = 1 if ith individual is male, otherwise 0 X2i = 1 if ith individual is a government employee, otherwise 0 X3i = 1 if education level of ith individual is above graduation, otherwise 0 X4i = 1 if ith individual is living in core city, otherwise 0 X5i = 1 if ith individual is having pucca house, otherwise 0 X6i = 1 if ith individual is illiterate, otherwise 0 X7i = 1 if ith individual lives in a notified slum, otherwise 0 X8i = 1 if ith individual is casual labour, otherwise 0 X9i = 1 if ith individual is having patta (Own land), otherwise 0 εi = Random disturbance error term having mean zero and constant variance

Table 6.20 depicts that the summary of the regression model of monthly total income of slum dwellers depends on several qualitative factors, such as education level, gender, whether he/she belongs to notified slum group or not, whether he/she is living in core city or not, etc. We have applied OLS using robust standard error in order to avoid the problem of heteroscedasticity. Similarly, the other assumptions of the regression model are satisfied along with the expected sign of the coefficients. The value of adjusted R-Square indicates that about 63.54 percent variation in the monthly total income is being explained by all the independent variables together. Other things being constant, the mean family income of slums is approximately Rs 3,260.94 per month. In addition to this, by using the estimated coefficients of the corresponding qualitative variables in the above regression model, the following conclusions can be drawn. Other things being equal, the average income of individuals living in core city is Rs 6,396.15, which is approximately 96.14 percent more than the average income of individuals not living in core city. The average income of illiterate individuals is Rs 2,441.51, which is approximately 25.13 percent less than the

196  Policy Issues in Inclusive Urbanization Table 6.20  Summary Result of Robust OLS Model Type

Ordinary Least Square (Using Robust SE)

Dependent variable

Monthly Total Income (INR)

Parameters

Coefficients

Robust SE

P-value

VIF

Gender Government employee Above graduation Living in core city Pucca house Illiterate Notified slum Casual labour Having patta of land Intercept Adjusted-R-Square 63.54%

4,120.39 12,612.93 5,064.65 3,135.22 1,573.03 −819.42 −896.99 −784.99 1,221.05 3,260.94 AIC 9,532.81

361.78 1367.33 849.28 358.71 363.51 333.19 330.90 336.25 399.90 552.60 F (9,148) 52.28

0.000 0.000 0.000 0.000 0.000 0.010 0.010 0.020 0.000 0.000 P>F 0.000

1.18 1.09 1.18 1.07 1.14 1.27 1.03 1.31 1.03 DW-STAT 1.61

Source: Author’s estimation.

average income of individuals who are not illiterate. The average income of illiterate individuals living in core city is Rs 5,576.72, which is approximately 71.02 percent more than the average income of illiterate individuals not living in core city. The average income of individuals having qualification above graduation is Rs 8,325.59, which is approximately 155.31 percent more than the average income of individuals not having qualification above graduation. The average income of individuals living in core city and having educational qualification above graduation is Rs 11,460.80, which is approximately 105.5 percent more than the average income of illiterate individuals living in core city. The average income of notified slum dwellers living in core city is Rs 5,499.16, which is approximately 132.6 percent more than the average income of notified slum dwellers not living in core city. The average income of casual labour living in core city is Rs 5,611.16, which is approximately 126.6 percent more than the average income of casual labour not living in core city. The average income of individuals living in core city and having land patta is Rs 7,617.19, which is approximately 69.95 percent more than the average income of individuals not living in core city and having land patta. The average income of government labour is Rs 15,873.86, which is approximately 541.1 percent more than the average income of casual labour. The average income of a government employee living in core city is Rs 19,009.08, which is approximately 19.75 percent more than the average income of a government employee not living in core city. Finally, the average income of government employee living in core city is Rs 19,009.08, which is approximately 667.8 percent more than the average income of casual labour is living in core city. In toto, on an average, the monthly total income of the slum dwellers is expected to increase if a slum dweller is a male, absorbed in the government

Policy Issues in Inclusive Urbanization  197 job, having the education level above graduation, living in core city, staying in a pucca house, and having the patta land. However, the total monthly income of the slum dwellers is expected to fall if a slum dweller is illiterate, stays in the notified slum, and is a daily wage earner. This result is obvious in the sense that the notified slum not necessarily assures job security for the slum dwellers, and because of their low education level, they are not absorbed in the skilled city labour force participation. As a result of which they end up with non-skilled informal sector employment in anticipation of better access to city life such as access to healthcare, education, sanitation facility, access to better education for their children, and other available amenities. Thus, the non-economic factors have got important implications to define the level of income of urban poor. Hence, urban poverty has to be thought differently.

6.5.1 Summary Result of Binary Logistic Model

In this section, binary logistic regression model has been employed to find out the determinant of total monthly family income of slums for three different categories separately. The three different income group categories are (1) lower-income group, (2) middle-income group, and (3) higher-income group. The above three income groups are decided on the basis of the percentile of the total family income of 493 families. Three different binary logistic regression models are established for the above three groups of income separately. The following are the details of these logistic regression models. 6.5.1.1 Logistic Regression Model: Higher-Income Group



Yi   0  1X1i   2X 2i  3X 3i   4X 4i  5X 5i   i

Where, Yi = 1 if monthly total family income is more than lower 75 percentile of income, otherwise 0 β0 = Intercept of the binary regression model X1i = 1 if ith family is in a notified slum, otherwise 0 X2i = 1 if ith family is living in core city, otherwise 0 X3i = 1 if ith family has pucca house, otherwise 0 X4i = 1 if ith family is living more than 10 KM from its working place, otherwise 0 εi = Random disturbance error term having mean zero and constant variance Table 6.21 summarizes the binary logistic regression model of monthly total family income of slums (higher-income category), which is dependent on several qualitative factors, such as whether it is notified or not, whether it has any

198  Policy Issues in Inclusive Urbanization Table 6.21  Summary of Binary Logistic Regression for Higher-Income Group Model

Binary Logistic Regression Using Maximum Likelihood Estimation

Dependent variable

Higher-income group = 1, otherwise 0

Parameters

Coefficients

Standard error

P-value

Notified slum Living in core city Pucca house Distance > 10 km Socio-economic security Constant

−0.43 2.02 2.11 0.97 −0.71 −3.36

0.25 0.29 0.27 0.35 0.28 0.36

Prob > Chi2 0.000

Pseudo R2 0.26

LL −216.43

0.090 0.000 0.000 0.005 0.012 0.000 Area under ROC curve 0.83

Source: Author’s estimation.

SES or not, whether it is in core city or not, etc. The above logistic model satisfied all the necessary assumptions. The estimated coefficients imply that the families in notified slums are less likely to fall under higher-income group and the families living in the core city are more likely to fall under higher-income group. The families having SES are less likely to fall under higher-income category. Similarly, the families having pucca house are more likely to fall under higher-income category. In addition to this, by using the estimated coefficients of the above binary logistic regression model, the following conclusions can be drawn keeping in mind that other things are remaining constant. If the family is in a notified slum, then the probability that it will fall under higher-income group is 0.02 and the probability that it will not fall under higher-income group is 0.98. However, if the family living is in core city, then the probability that it will fall under higher-income group is 0.21 and the probability that it will not fall under higher-income group is 0.79. The probability that it will fall under higher-income group is 0.22 and the probability that it will not fall under higher-income group is 0.78, if the family is having a pucca house. If the family is having SES, then the probability that it will fall under higher-income group is 0.02 and the probability that it will not fall under higher-income group is 0.98. Similarly, if the family is in a notified slum and living in core city, then the probability that it will fall under higher-income group is 0.15 and the probability that it will not fall under higher-income group is 0.85. The probability that it will fall under higher-income group is 0.68 and the probability that it will not fall under higher-income group is 0.32, if the family has pucca house and living in core city. In the similar fashion, it is found that if the family has pucca house and SES, then the probability that it will fall under higher-income group is 0.12 and the probability that it will not fall under higher-income group is 0.88. The likelihood that it will

Policy Issues in Inclusive Urbanization  199 fall under higher-income group is 0.51 and the probability that it will not fall under higher-income group is 0.49, if the family has pucca house and SES and also living in core city. Similarly, if the family is in a notified slum having pucca house and SES and also living in core city, then the probability that it will fall under higher-income group is 0.41 and the probability that it will not fall under higher-income group is 0.59. 6.5.1.2 Logistic Regression Model: Middle-Income Group



Yi   0  1X1i   2X 2i  3X 3i   4X 4i  5X 5i   i

Where, Yi = 1 if monthly total family income is more than 25 and less than 75 percentile of income, otherwise 0 β0 = Intercept of the binary regression model X1i = 1 if ith family is native, otherwise 0 X2i = 1 if ith family is living in core city, otherwise 0 X3i = 1 if ith family has pucca house, otherwise 0 X4i = 1 if ith family has PATTA of his land, otherwise 0 X4i = 1 if ith family has taken SHG loan, otherwise 0 εi = Random disturbance error term having mean zero and constant variance Table 6.22 depicts the summary of the binary logistic regression model of monthly total family income of slums (middle-income category), which is dependent on several qualitative factors, such as whether it is native or not, Table 6.22  Summary of Binary Logistic Regression for Middle-Income Group Model

Binary Logistic Regression Using Maximum Likelihood Estimation

Dependent variable

Middle-income group = 1, otherwise 0

Parameters

Coefficients

Standard Error

P-Value

Native Living in core city Pucca house Patta SHG loans Constants

−0.61 0.25 −0.68 0.45 −0.51 −0.48

0.31 0.23 0.21 0.26 0.29 0.34

Prob > Chi2 0.001

Pseudo R2 0.034

LL −284.257

0.053 0.273 0.001 0.090 0.079 0.160 Area under ROC curve 0.631

Source: Author’s estimation.

200  Policy Issues in Inclusive Urbanization whether it has taken SHG loan or not, whether it is living in core city or not etc. The above logistic model satisfied all the necessary assumptions. Except the intercept and ‘living in core city’, all other coefficients are statistically significant. In addition to this, probability of Chi-Square value (0.001) indicates the overall significance of the model. The estimated coefficients imply that the native families are less likely to fall under middle-income group and the families living in the core city are more likely to fall under middle-income group. The families having SHG loans are less likely to fall under middle-income category. Similarly, the families having pucca house are less likely to fall under middle-income category. The families having patta of their land are more likely to fall under middle-income category. In addition to this, by using the estimated coefficients of the above binary logistic regression model, the following conclusions can be drawn. Other things being constant, if the family is a native and has patta of its land and pucca house and also has taken SHG loan, then the probability that it will fall under middle-income group is 0.14 and the probability that it will not fall under middle-income group is 0.86. 6.5.1.3 Logistic Regression Model: Lower-Income Group



Yi   0  1X1i   2X 2i  3X 3i   4X 4i  5X 5i  6X 6i  7X 7i   i

Where, Yi = 1 if monthly total family income is less than lower 25 percentile of income, otherwise 0 β0 = Intercept of the binary regression model X1i = 1 if ith family is native, otherwise 0 X2i = 1 if ith family is living in core city, otherwise 0 X3i = 1 if ith family has pucca house, otherwise 0 X4i = 1 if ith family has patta of its land, otherwise 0 X5i = 1 if ith family is living more than 10 km away from its working place, otherwise 0 X6i = 1 if ith family has socio economic security, otherwise 0 X7i = 1 if ith family has got SHG loan, otherwise 0 εi = Random disturbance error term having mean zero and constant variance Table 6.23 summarizes the binary logistic regression model of monthly total family income of slums (lower-income category), which is dependent on several qualitative factors, such as whether it is native or not, whether he/she has any SES or not, whether it is in core city or not, etc. The above logistic model satisfied all the necessary assumption. The estimated coefficients imply that the families which are living in their native place are more likely to fall under lower-income group and the families living in the core city are less likely to fall

Policy Issues in Inclusive Urbanization  201 Table 6.23  Summary of Binary Logistic Regression for Lower-Income Group Model

Binary Logistic Regression Using Maximum Likelihood Estimation

Dependent variable

Lower-income group = 1, otherwise 0

Parameters

Coefficients

Standard Error

P-Value

Native Living in core city Pucca house Patta Distance > 10 km Socio-economic security SHG loan Constants

0.96 −1.83 −1.02 −0.59 −0.70 0.83 0.74 0.61

0.33 0.25 0.21 0.25 0.33 0.22 0.28 0.37

Prob> Chi2 0.000

Pseudo R2 0.15

LL −286.57

0.004 0.000 0.000 0.020 0.032 0.000 0.009 0.098 Area under ROC curve 0.75

Source: Author’s estimation.

under lower-income group. The families having SES and which have taken SHG loan are more likely to fall under lower-income category. Similarly, the families having pucca house and patta of their land are less likely to fall under lower-income category. In addition to this, by using the estimated coefficients of the above binary logistic regression model, the following conclusions can be drawn. Other things being constant, if the family is native and living in the core city, then the probability that it will fall under lower-income group is 0.43 and the probability that it will not fall under lower-income group is 0.57. If the family has patta (title) of its land and lives in the core city, then the probability that it will fall under lower-income group is 0.14 and the probability that it will not fall under lower-income group is 0.86. However, if the family has SES and lives in the core city, then the probability that it will fall under lower-income group is 0.40 and the probability that it will not fall under lower-income group is 0.60. Finally, if the family has SES and has taken SHG loan, then the probability that it will fall under lower-income group is 0.38 and the probability that it will not fall under lower-income group is 0.62. 6.6 Conclusions The main aim of this chapter has been to understand and analyse the magnitude and dimensions of urban poverty in slums, learn how they interact with various individual, local, and citywide factors, including implementation of government policies and programmes and derive implications for undertaking inclusionary policies, planning, and other interventions. Urban poverty finds expression in multiple vulnerabilities of the poor which are most conspicuous in slums. These vulnerabilities transcend income-based definitions of poverty.

202  Policy Issues in Inclusive Urbanization Non-economic factors, which also impact income poverty directly and indirectly, include housing status of the slum dwellers, including location of housing; living conditions in slums, access to basic services such as drinking water, electricity, roads within slum, latrine, drainage and garbage disposal facilities, approach road, availability of banking service, etc.; tenure security-related factors such as status with respect to land tenure and location of slum – notified or non-notified; assets possessed by slum dwellers such as radio/transistor, computer/laptop, telephone, other assets, etc.; and state of slum improvement programme, amenities made available in slum by the municipality, etc. have important implications for the strategy of inclusive urbanization at city, state, and national levels. Accordingly, to study the determinants of multidimensional poverty in slums for guiding policymaking and action planning, four cities of the new state of Telangana were selected. They belong to four different population groups and include Bhongir, Siddipet, Warangal, and Hyderabad. Major findings of the study reveal that the monthly total income of a person in slum is expected to be higher if the slum dweller is a male, is working in a government job, has education level above graduation, is living in core city, is residing in a pucca house, and has patta land or enjoying tenure security. However, the total monthly income of a slum dweller is expected to be lower, if the slum dweller is illiterate, staying in a notified slum and working as a daily wage earner. Location in the core city means access to better-paying jobs in central areas. Having tenure security means that vulnerability is significantly reduced, paving way for investment in human capital and greater capacity to contribute to productivity in employment – even working for longer hours. The result that notified slum status is not linked to lower-income poverty is explained by interviews in the field indicating that the status does not necessarily assure a job with security for the slum dweller when education level is low, or skill set is missing. Human capital development is crucially important. Moreover, investigation reveals that notification of slum is often driven by political considerations. Central areas in cities which facilitate access to remunerative jobs may not be notified as they may be in litigation and as city politicians find it easy to include peripheral areas with low land values under the list of notified slums and get new electors. Residing in a notified slum does not mean absorption in skilled and modern city jobs or higher labour force participation. The role of education and skilling is singularly important for accessing higher-income jobs. Most rural–urban migrants end up with unskilled or semi-skilled informal sector employment in quest of better city life such as access to healthcare, education, sanitation, higher-quality education for children, and other city amenities like recreation. The interplay between access to civic infrastructure, SES, benefits from government programmes, and type of land tenure of slum dwellers were studied by categorizing them into three groups: ‘higher income’, ‘middle income’, and ‘lower income’. The study reveals that there is a high probability that a family belongs to higher-income group if it is from a notified slum, is living in a pucca house, has access to SES, and is living in the core city. There is a high chance

Policy Issues in Inclusive Urbanization  203 of a family belonging to the middle-income group if the family is a native of that slum, has patta (title) of its land and pucca house and has also accessed SHG loans. However, the low-income group slum families are less likely to have a pucca house and patta for their land, though they have accessed SHG loans. These families are most likely to be travelling to workplace far from their residential areas. These conclusions highlight the importance of ‘location, location, location’ in urban poverty, having access to ‘tenure security’ reflected in patta and notified status of slum. They are in consonance with predictions from urban economics that space matters. The field study found that a majority, i.e., about 67.24 percent in the case of slum dwellers living on rents and 64.33 percent in the case of individuals with patta, have not accessed benefits of social security schemes floated by government departments. Among all the residents living in slum, individuals living on encroached land seem to be worst impacted. The penetration of social security benefits seems to be the lowest for them. A majority, i.e., about 83 percent of people living in non-notified slums expressed the opinion that SES has no impact on improving their living conditions, whereas only about 48 percent of people living in notified slums are of similar opinion. The finding supports the conclusion that the ‘notification’ status of slum is critical for access to social security. Contrary to expectations, life insurance facilities are used more by the lower-income groups. In fact, the empirical study shows that the number of people with life insurance decreased with an increase in income size. The study reports that a majority of individuals residing in slum across the type of slums are of the opinion that infrastructure has improved as well as it has positive impact upon them. It is found that about 58.62 percent of individuals living in rented units are of the opinion that infrastructure has improved, and it has had a positive impact upon them. However, 41.38 percent of people do not agree with the above opinion. The magnitude of difference between the people with the opinion that infrastructure has improved and positively impacted them is more glaring in the case of slum dwellers residing on patta lands. On the implementation of government programmes to improve the socio-economic conditions of the people living in the slums, the study finds that according to 57 percent respondents from the lower-income group, 65 percent from the middle-income group, and 77 percent from the higher-income group, the programmes are not successful. Also, 72 percent respondents from the lower-income group and 62 percent from the middle-income group are satisfied with the benefits received from ‘Kalyana Laksmi Yojna’ scheme. However, only 36 percent from the higher-income group believed that the scheme is beneficial. The respondents of all the cities are happy with the Arogyashri (Health Insurance) programme and are receiving benefits. All the respondents of Bhongir, Siddipet, and Warangal are found to be aware of SHG loans facility and are able to get these loans when needed. They are satisfied with the interest subsidy ‘pavala vaddi programme’ and are availing the benefits from it. However, people from the slums of Hyderabad are not getting the facilities of this programme.

204  Policy Issues in Inclusive Urbanization None of the respondents from the lower-income group has internet connection, indicating poor penetration of digitalization. The proportion of individuals living within the vicinity of their workplace, i.e., within half kilometre is highest for patta holders vis-à-vis individuals residing in rented house and encroached land. The distance (more than 10 kilometres) from working place is recorded highest at around 20 percent in Warangal, and it is least in the case of Hyderabad (8.54 percent). Around 30.15 percent of slum residents are commuting to workplace in Hyderabad with the distance range from 2 to 5 kilometres from home. However, from the same distance in Siddipet, only 8.74 percent of slum residents have access to their workplace. It is also observed that the majority of the people in all the cities use either cycle or walk to their workplaces. The findings support the importance of public transport, walking, and bicycling to work in reducing commuting cost and thereby freeing resources for food, schooling of children, etc. Bhongir has the highest number of notified slums, i.e., close to 77 percent. On the other hand, only 40 percent of the slums in Siddipet and Warangal are notified. In Hyderabad, almost 50 percent of the slums are notified. Bhongir is the only town which has a fraction of land under hybrid (public–private) ownership. It was also observed that the majority of slums are inhabited by SCs and OBCs. OBCs dominated the slums of Bhongir and Hyderabad, while SCs constitute the majority in Siddipet and Warangal. No slum dwellers except a few in Hyderabad used mud walls, tarpaulin, and/or asbestos to build their house. Thatched roofs are only observed in a small fraction of houses in Siddipet slums. RCC posh and RCC shed constitute the type of materials used by all the slum houses in Bhongir and Warangal and also by almost 97 percent slums in Siddipet. None of the houses in the slums of Siddipet and Warangal have private taps. The highest percentage of casual labour (31.87 percent) is found in Bhongir, whereas the lowest percentage of casual labour (19.42 percent) is found in Siddipet. In Warangal, most of the respondents are casual labourers (around 30 percent) but in Hyderabad most of the labour belonged to the private labour category (around 27.14 percent). The data reflect differing contexts of poverty, diverging needs and differential access to services. No generalization is possible. While the issues of slum policy may be addressed at national or state level, every slum needs an action plan to address affordable housing, basic services, employment, and other local issues with or without city slumfree action plan or policy. The findings from field study endorse ‘think globally, act locally’. The surveys observe that in case of non-notified slums where the reach of primary healthcare is dismal, private clinics have been able to cash in on the opportunity and have been serving the slum dwellers. However, over-reliance on private clinics has its own share of perils such as non-reliable quality of healthcare. Secondly, the affordability of services provided by these private clinics is also another challenge. About 68.84 percent of the people from the lower-income group use the facilities provided by the maternity centre. A major observation is that accessibility to maternity care is relatively better than

Policy Issues in Inclusive Urbanization  205 general primary healthcare for non-notified slums as well as notified slums. Among those using the primary healthcare facility, 50 percent are from the lower-income group and only 21 percent are from the higher-income category. We find that among the slums, the situation remains grave for the non-notified categories. More than 42 percent of people surveyed from non-notified slum reported that they do not have access to healthcare facilities in their vicinity, whereas a little more than 29 percent from notified slums reported that they do not have access to primary healthcare facilities in their locality. The above finding points out that the notified slum dwellers are better off in access to healthcare in comparison with the slum dwellers residing in non-notified slums. The study reveals that more than 90 percent of students from lower-income group families go to government schools, while 83.57 percent of students from middle-income group and 79 percent from higher-income group attend government school. However, there seems to be an inverse relation between income and the number of students going to government school, i.e., the higher the income of the family, the lower is the probability that their children will go to a government school. Warangal is the only city where the slum residents do not have access to any private school. The highest number of respondents having access to a private school was found in Hyderabad where almost 43 percent respondents had a private school in their area. None of the respondents in Bhongir and Siddipet have access to any mission/trust schools while 20 percent and 10 percent of respondents in Warangal and Hyderabad respectively reported having access to such schools. The study highlights the need for investing in improvement of government schools as most of the slum children are going to them. The empirical study suggests that non-economic factors, often neglected in government policies and programmes, have important implications for the level of income of the urban poor. Location in a central area, living in a notified slum, access to civic services, especially health and education, having patta, land tenure security, affordable housing, social security, etc. all affect their income directly or indirectly. Hence, urban poverty has to be thought of differently from rural poverty. It is in this context, the government programmes for slum development, rehabilitation, and poverty reduction should focus on the principle of ‘think globally, act locally’ – combining inclusive policies at state and city levels and targeting the needs at slum or field levels. Especially, land tenure issues need to be addressed at higher level and the issues of education, skill, and capacity may be tackled based on needs survey. Therefore, we suggest that city-specific urban poverty reduction plans need to be prepared by the urban local bodies in conjunction with city master plans and development plans and in integration with state agenda for inclusionary urbanization. These should cover all notified, non-notified, and other under-serviced settlements. The demands for funds from the state and centre made by these local authorities should correspond to these plans instead of allocation and releases of funds being made in an ad hoc manner. In order to address urban poverty alleviation in a systematic, scientific, and a time-bound manner, the approach

206  Policy Issues in Inclusive Urbanization has to be outcome-oriented with special focus on the primary issues of the urban poor such as tenure security, basic services, affordable shelter, skill upgradation, entrepreneurship development, self-employment, wage employment, community empowerment, participation in governance, etc. Convergence of physical and social services to the urban poor through various central, state, and municipal government programmes targeted at the urban poor needs to be ensured. The focus has to be on definite outcomes in the field.

7

An Agenda for Slum-Free and Poverty-Free Cities in India

7.1 Towards Sustainable Urban Development As engines of growth and catalysts of structural transformation, cities present the most straightforward path to prosperity in developing countries like India. The Smart Cities Mission document of the Government of India projects that the contribution of cities and towns to the country’s GDP will reach 75 percent by 2031. However, urbanization will not lead to sustainable development unless accompanied by inclusionary policies. It could result in a transfer of rural poverty to cities – leading to the ‘urbanization of poverty’. The rationale for and directions of such policies are discussed in this chapter. Based on the understanding that subsidizing the rural and urban areas simultaneously is not possible, it is imperative that the cities have to position themselves as agents of both urban and rural development, including poverty alleviation. In this context, the design of urban policy to address issues such as urban planning and infrastructure, disaster preparedness and management, provision of essential services and affordable housing to the poor, and upgradation and redevelopment of slums and skill development requires to take into account the following considerations: (i) Comprehending the characteristics of urbanization, specifically the spatial distribution of population and the significance of agglomeration externalities; (ii) undertaking investments to provide regional and urban infrastructure and services to stimulate economies of agglomeration, productivity, and growth while fostering inclusivity; (iii) resolving issues pertaining to backlog, current and growth needs of land, housing, and public services, particularly in the area of public transit and public health, through systematic planning and sustained investments, including those aimed at building the foundation of public health and promoting disaster resilience; and (iv) implementing deliberate policies to make urbanization inclusive – addressing the problems of slums and informal settlements, and urban poverty by ensuring improved accessibility to essential services, secure land tenure and affordable housing, and implementing inclusionary housing/zoning policies with due attention to productive livelihoods to the marginalized sections and ensuring their participation in urban governance.

DOI: 10.4324/9781003452171-7

208  An Agenda for Slum-Free and Poverty-Free Cities in India Inclusionary public policies are essential for equitable and sustainable urbanization and attaining the goals of slum-free and poverty-free cities. Poverty, with multiple dimensions – spatial, economic, social, occupational, etc. – is one of the biggest problems faced by India. Though declining in relative terms, it is still significant in both rural and urban areas. Persistent rural poverty spills over boundaries and translates to urban poverty, which has residential access to lifeline public services, including healthcare and conditions of work dimensions. As measured by the poverty line developed by the Lakdawala Committee, the proportion of urban poor decreased from 31.8 percent in 1993–1994 to 25.7 percent in 2004–2005. The total population of the country living in poverty fell from 45.3 percent to 37.2 percent over the same period. According to the Rangarajan Committee, the poverty ratio was 26.4 percent in urban areas and 29.5 percent in India in 2011–2012. In absolute terms, 363 million people in India lived below the poverty line in 2011–2012, out of which 102.5 million resided in urban areas. Despite a fall in the poverty ratio in urban areas from 35.1 percent in 2009–2010 to 26.4 percent in 2011–2012 (Rangarajan Committee), the urban poverty ratio remains unacceptable, and the number of urban poor is still relatively large. A massive growth in urban population due to natural increase, rural–urban migration, and annexation of rural areas into urban ones is adding to urban poverty in the face of the inability of the poor to source accommodation and the compulsion to settle in the only space they find – slums and informal settlements. In doing so, the section fuels the worst manifestation of urban poverty, which is not limited to deprivations in income alone. The slum residents are exposed to a lack of education in the basic requirements to lead a dignified life and encounter issues such as the absence of civic amenities, including drinking water, sanitation, solid waste disposal and treatment, road connectivity, streetlights, and healthcare. They are pushed to live in the margins in an unhygienic environment and in informal settlements with precarious tenurial status, often residing in areas prone to the worst disasters, threatening their life, property, health, and well-being at periodic intervals. COVID-19 has vividly exposed the vulnerabilities of the urban poor, especially slum dwellers, due to utterly congested shelters, shared services, and precarious employment conditions. They were exposed to the heavy burden of out-of-pocket expenditure on health due to the pandemic. Prior comorbidity conditions, deficient nutrition and exposure to environmental pollution, congestion, particulate matters, and communicable diseases made the urban poor most vulnerable to the pandemic. The absence of essential primary healthcare outreach services and the high cost of medical care left the poor, including slum dwellers helpless. COVID-19 has reinforced the need for a concerted focus on comprehensive policies to promote slum-free and poverty-free cities as part of India’s urban reform agenda to make cities economically productive, socially equitable, environmentally sustainable, financially viable, and disaster-resilient. Globally, more than one billion people live in slums; a considerable portion of this is in India. With Mumbai accounting for 54 percent of the total slum

An Agenda for Slum-Free and Poverty-Free Cities in India  209 population, India had around 75 million people living in slums in 2001. While the report submitted by a 2010 committee headed by Dr Pranob Sen (the then chief statistician and secretary, Ministry of Statistics and Programme Implementation) projected the slum population of India to reach 93 million by 2011and increase further to 95 million by 2012, 97 million by 2013, 98.8 million by 2014, 100.7 million by 2015, and 102.7 million by 2016, it was estimated to be 65.49 million by the Census 2011 due to a restricted definition of slums. Although lower than the projections, the absolute number of slum inhabitants reported in 2613 cities and towns of the country was significant. Even more alarming was that the slum dwellers constituted 17.4 percent of the total urban population and 22.4 percent of the total population of urban areas reporting slums in 2011. Some cities even had more than 25 percent of their population residing in slums, which included Raipur (39 percent), Greater Mumbai (42 percent), Meerut (42 percent), and Jabalpur (45 percent) – all figures for 2011. In lieu of its effects on the population, growth, and prosperity, one of the critical themes of the planning process in India has been the alleviation of poverty. An analysis of the trends in urban poverty indicates that although cities facilitate local economic development, generate resources for economic growth, and function as the reservoirs of skill, capital, and agglomeration economies, a significant portion of the urban population is a victim of exclusionary urbanization. There has been an informalization of the formal sector, not to mention the informalization of the entire economy. This has ensured that workers in the informal sector, who contribute significantly to creating wealth and infrastructure and add to the equality of life of the urban population, are left to fend for themselves. They continue to work for subsistence wages in insecure positions, in unhygienic and unsafe working conditions, and without social security benefits. They have been deprived of appropriate housing, basic essential services, and a respectable life. It is high time that the issues of urban poverty are mainstreamed into national, state, and municipal policies and programmes. Otherwise, the increasing number of urban poor will lead to an ‘urbanization of poverty’, indicating the failure of the growth process to incorporate ‘inclusiveness’. Some of the critical issues of urban poverty are unemployment, poor quality of employment, a large and growing informal sector, lack of provision of adequate and quality infrastructure, affordable housing and civic services to the marginalized sections of the urban population, mushrooming of slums, lack of voice of the poor in civic governance, etc. Globally, the Millennium Development Goals (MDGs) provided a robust framework for development while aiming at inclusivity and sustainability. Although substantial progress was made in several slums and centres of urban poverty across the world, the success of the MDGs was inconsistent, and some remained unachieved. The global development agenda changed tracks after 2015 and made way for the United Nations’ Sustainable Development Goals (SDGs) – a set of 17 goals to be achieved by meeting 169 targets in 15 years, i.e., by 2030. By encouraging action in crucial aspects encompassing human life and the environment, these goals are expected to put the world on a

210  An Agenda for Slum-Free and Poverty-Free Cities in India sustainable and robust course. Goal 1 aims at ‘end(ing) poverty in all its forms everywhere’, and Goal 11 intends to ‘make cities and human settlements inclusive, safe, resilient and sustainable’. The UN SDG agenda aims to improve and redevelop the slums and ensure all access to essential services and affordable housing by 2030. India is a signatory to UN-SDGs. The notable initiatives launched by the Indian government in the first decade of the 21st century to promote inclusive and sustainable city development with a focus on slums and urban poverty include the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), with Basic Services to the Urban Poor (BSUP) and Integrated Housing and Slum Development Programme (IHSDP) as its components, Interest Subsidy Scheme for Housing the Urban Poor (ISHUP), Affordable Housing in Partnership and Rajiv Awas Yojana (RAY). These programmes have been replaced by new missions: Smart City Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and the Urban Mission of Housing for All – Pradhan Mantri Awas Yojana (PMAY). It is too early to assess the new schemes. However, an assessment of the global and national approaches towards urban poverty and slums indicates that India needs a more holistic approach to address the multiple dimensions of urban poverty, including residential, occupational, and social, manifested in the worst shape in slums. Based on research findings, the research undertaken as part of the study and empirical work in four cities of Telangana State, we suggest key elements of strategies for slum-free and poverty-free cities in India. Our empirical study, covering four cities of Telangana State – Bhongir, Siddipet, Warangal, and Hyderabad – suggests integrating both top-down and bottom-up approaches. A field study of several slums finds that non-economic factors have important implications for the urban poor’s income level. Location in a central area, living in a notified slum, access to civic services like water supply, drainage, and electricity, having a land patta or title deed, land tenure security, affordable housing, social security, etc., all affect the income of slum dwellers directly or indirectly. Hence, urban poverty has to be thought of differently from rural poverty. In this context, the government programmes for slum development, rehabilitation, and poverty reduction need to focus on the principle of ‘think globally, act locally’ – combining inclusive policies at state and city levels and targeting the needs at the slum or the field level. Mainly, issues like land tenure and the right to the city need to be addressed at a higher level. The problems of education, skill development, access to lifeline services, and capacity of the local body and the community may be tackled based on needs survey. Subject to this, city-specific poverty alleviation programmes must be undertaken by the urban local bodies (ULBs) in conjunction with city master plans and development plans and integration with the state agenda for inclusionary urbanization. These should cover all notified, non-notified and other under-serviced settlements. Instead of allocating and releasing cash haphazardly, the local authorities’ requests for funding from the state and the centre should be aligned with the goals. If urban poverty is to be addressed and, more importantly, alleviated, the strategy must be output-outcome specific

An Agenda for Slum-Free and Poverty-Free Cities in India  211 with a special focus on the fundamental challenges faced by the urban poor, including tenure security, basic services, affordable shelter, skill upgradation, entrepreneurship development, self-employment, wage employment, community empowerment, participation in governance, etc. It must be carried out methodically, scientifically, and in a time-bound manner. Convergence of physical and social services provided by various central, state and local government programmes targeted at the poor sections of the urban population has to be ensured with a focus on tangible human development outcomes at the city and local levels, including slums. 7.2 Adopting a Holistic Approach The issues of urban poverty are rooted in the broader issues of the economy, including carrying capacity of agriculture, determinants of urbanization, rural–urban migration, economic growth, governance, and policies at national, state, and local levels. They call for a mission-mode approach to the development of slums and alleviation of urban poverty. JNNURM referred to a 7-Point Charter, which focused on seven critical areas for the upliftment of the poor: Land tenure, safe water, sanitation, education, healthcare, affordable housing, and social security. However, it did not adopt a holistic/mission-mode approach for implementation of crucial reforms. A mission-mode approach, as adopted in Kerala through the Kudumbashree Model or in Andhra Pradesh/ Telangana State through the Mission for Elimination of Poverty in Municipal Areas (MEPMA), can be promising for addressing the issue of poverty in urban areas in a systematic, scientific, and a time-bound manner. The flow of funds from higher authorities to local governments should be demand-driven based on the poverty alleviation policies and programmes designed to be city- and slum-specific and must seek partnerships between slum dwellers, municipalities, and state and central governments. The role of central and state governments is crucial as most buoyant sources of revenue, such as income tax, customs and excise duties, stamp duty, motor vehicles tax, goods and services tax (GST), etc., are not with local bodies that have just one primary source: Property tax in the post-GST scenario with octroi and entry tax abolished. The preparation of city and slum-specific urban poverty alleviation strategy should be participatory and include ward-/slum-level action plans within a broad city-level strategic framework. Some suggestions regarding formulation and implementation of urban poverty alleviation strategy are as follows: (1) Identification of Urban Poor and Needs Analysis To identify the sections of the population living in abject poverty and to ascertain the specific problems encountered by the slum dwellers, comprehensive slum and poverty surveys need to be conducted in the cities and towns. The National Buildings Organization (NBO) has prescribed valuable formats. It is essential for civil society and the organizations that serve the

212  An Agenda for Slum-Free and Poverty-Free Cities in India urban poor to be actively involved in the identification process to ensure transparency and successful design of schemes. The information should be available on the ULBs’ website. Once the slums and poverty (below poverty line – BPL) surveys are carried out successfully, those sections identified as poor and marginalized should be provided with identification proof, preferably biometrics (including Aadhaar link), that records their salient profiles. Additionally, they should be informed of the benefits of various central, state, and urban local government programmes. The definition of BPL should also be rationalized and consider economic and non-economic parameters, including land tenure, housing conditions, asset-holding position, education level, skills learnt, employment, access to social security measures, etc. (2) Centrality of Security of Land Tenure: Right to the City Land tenure is one of the most critical issues in urban poverty. Often this issue is either neglected or ignored in projects. Without tenure rights, poor people cannot access essential services and affordable housing that acts as place for home-based work. Land/housing right is a central issue for providing affordable shelter to the poor and making a city slum-free and poverty-free. Lack of tenure security, threat of forced eviction in the name of city beautification, and events like national games and poor access to essential services adversely affect the socio-economic conditions and vulnerability of the poor. Further, tenure insecurity deters households from investing in home-based enterprises to alleviate poverty. Taking these considerations into account, Brazil enacted a right to the city law in 2001 – called the City Statute. It amended the Constitution of the country. This is worth adopting in India to address the issues of legal and institutional frameworks for elimination of poverty. Urban areas broadly have three types of land, i.e., government or municipal land, private land, and public space. It is necessary to identify these sub-categories and the exact domain of each government/private agency concerning a particular piece of land to deal with concerns such as relocation, redevelopment, provision of services, and according of land tenure. After tenure is mapped, the local authority needs to prepare a roadmap that ultimately leads to ownership of the poor over their places of residence and work. A graduated process may be adopted covering aspects such as security from eviction, extension of basic amenities, land acquisition, or partnership with private landowners/developers in case private land is occupied by slum dwellers. Further actions include settlement-level spatial and socio-economic development planning, provision of groupbased tenurial rights with associated responsibilities, upgradation of housing, gradual transfer of ownership to sub-groups fulfilling specific criteria with an agreed moratorium on transfer of tenure, property tax mapping and collection, permitting beneficiaries to have access to mortgage finance with an agreed moratorium on outright sale, right to transfer dwelling unit or land occupied individually, etc. Addressing all these aspects would

An Agenda for Slum-Free and Poverty-Free Cities in India  213 require reforming the current legal and regulatory framework in cities and towns, with the required changes undertaken by state governments. In particular, laws relating to urban planning, land use and conversion, occupation of public lands, land tenure, land acquisition in slums, resettlement and rehabilitation, etc. need to be reviewed to make them pro-poor. Given the impact of the location of a person’s home on the family’s ability to support members with home-based activities or wage-based employment, in situ slum upgrading, and redevelopment need to be prioritized. Moreover, the problems of slums have been due to an exclusionary urban planning model, borrowed from the West, including Town and Country Planning Act 1947 in the United Kingdom. Indian master plans failed to provide space for the poor to live, work, and vend. Relocation should only be the choice in extreme cases. Furthermore, in case of relocation, provisions must be made to equip the poor with adequate funding and skills training to secure alternative sources of income and livelihoods. Their transportation requirements must also be taken into account. Urban planning must take into account the income distribution structure of the city. If 25 percent of the population in the city is poor, they need to be enabled to have space, even with lower norms, under the master planning process. (3) National and State Affordable Housing Strategy The National Urban Housing and Habitat Policy (NUHHP) warrants that the state/UT governments prepare and implement action plans to address the concerns of urban housing shortage, including provision of affordable housing for the poor. These plans are required to cover the following aspects: • The central government should encourage and support the state governments in preparing the State Urban Housing and Habitat Policy and an action plan. • The action plans thus developed should aim to accelerate housing funding, especially for economically weaker sections (EWS) and low-income group (LIG). • The Urban Housing and Habitat Policy at the state or UT level should elaborate on the incentives to be provided to the developers – institutional, financial, and legal. Specific basic standards on the dwelling area should be set by the state and urban local governments while making efforts at formalizing the idea of greater density, and mixed use of land in pre-existing slum regions. These norms and requirements should be defined to accommodate high-density, low-cost housing units with adequate access to civic amenities like ventilation, safety, and privacy. They should also take into account the need for disaster-proofing of houses. • To cater to the specific needs of different people, especially the poor, the plan can include a range of house and plot options.

214  An Agenda for Slum-Free and Poverty-Free Cities in India • The master, zonal, and local area plans should reserve the land to accommodate the poor and allow for the informal sector. Additionally, in each housing project, 10 to 15 percent of the land or 20 to 25 percent of the Floor Area Ratio (FAR) (whichever is higher) is required to be reserved for the EWS and LIGs as per the inclusionary housing/zoning requirements. • The state- and UT-level plans are required to chart out a road map to encourage a participatory approach. • The state governments are required to review the progress of the policy and the action plan at regular intervals. • A perspective plan suggesting strategies and programmes for development in the area, including provisions for affordable housing, should be prepared at the city level in the form of City Development Plans (CDPs). • A high-level monitoring committee should be set up to monitor and review the Housing Policy’s progress at the national and state levels. The committee would also be responsible for implementing modifications and amendments to the policy. The NUHHP 2017 recognizes housing policy to be a continuous process of policy evolution, building consensus and negotiation involving multiple interests and stakeholders such as central and state governments, ULBs, developers, housing institutions, NGOs, Community-based Offices (CBOs), housing associations, etc. In pursuance of the NUHHP 2007, the Ministry of Housing and Urban Affairs (MoHUA), the Government of India, has worked out a comprehensive strategy to cater to the housing shortage problem in urban areas, especially for the poor. (4) Universalization of Water and Sanitation Services A major objective of urban public policy should be to provide all urban residents with direct access to water for drinking and domestic use, a decent toilet, and a drainage and solid waste management system, all of which culminate in a clean and hygienic urban environment and a healthy population. Such a policy should address the following broad measures to achieve the above goal: • The policy should provide minimum levels of safe water and sanitation to every urban dweller – whether a permanent resident or a temporary migrant – notwithstanding the legal status of the dwelling unit and the land. The government body providing the service should not be required to seek a permit from the landowner on which the dwelling unit stands to extend the services above. • Provision of water supply and separate latrines for each household should be considered top. In case temporary settlements or engineering solutions are not possible, community facilities should be provided. • Public service providers should foot the bill for basic services that extend to all groups, including those residing in low-income settlements. Additionally, a combination of self-finance and subsidies should be introduced to procure these services.

An Agenda for Slum-Free and Poverty-Free Cities in India  215 • Contractor/employer should be responsible for providing all the basic amenities to the temporary/seasonal/contractual employees by coordinating with the concerned public authority and paying the necessary amount to ensure the services’ availability at the residence site. If the permanent arrangement is not possible immediately or is not required, mobile toilets, water tankers, and other temporary solutions can be taken up. • In the case of small and medium towns, low-cost technologies for toilets could be adopted. • Community participation in decision-making and planning is necessary for deciding where, how, and what services should be provided. The public authority should be entrusted with the responsibility to develop a mechanism to ensure the participation of the private community and the public bodies. • Shortening of tendering and contracting procedures for fast provisioning of these services must be introduced, and the schedule of rates should be updated regularly to meet the actual costs of provisioning these services. • The water supply and sanitation services provided to the households should be at a lower cost to ensure everyone can afford them. Increasing Block Tariff (IBT) may be appropriate. This requires differential prices related to the size or location of the property or any other indexation of property values. Low prices may be fixed for a lifeline level of water consumption. The recent and temporary/seasonal migrants’ pricing must be specially worked out. Users pay, polluters pay, and beneficiaries pay principles must be considered with cross-subsidization for the poor. (5) Provision of Healthcare Facilities The Ministry of Health and Family Welfare launched a National Urban Health Mission (NUHM) to improve the health of the urban poor, especially the slum residents and other disadvantaged groups. The mission focuses on facilitating equitable access of these groups to quality healthcare by revamping the public health delivery mechanism, promoting public–private–community partnerships, community risk-pooling, and improving access to the insurance system. All of this is to be achieved through increased participation of the urban local government. NUHM envisages regular outreach of health services, directed at the slum population and other vulnerable groups in the urban society to proactively address the problems of low access to health services by these sections. It also acknowledges the need to tackle the ‘homeless’ in urban areas as part of the ‘vulnerable’ population. Further, it recognizes the need for convergence of similar programmes of different Ministries to attain better and more sustainable outcomes. The implementation performance of the NUHM is mixed. The following lessons may be given due attention. • About toto the coverage of the urban poor under the scheme, an Urban Public Health Centre (U-PHC) needs to be established within

216  An Agenda for Slum-Free and Poverty-Free Cities in India

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or near a slum. Under the JNNURM and other initiatives of the Government of India, in addition to in situ redevelopment of slums, there have been cases of resettled populations of untenable slums. It is, therefore, desirable that the coverage of the U-PHC be extended to include such settlements so that the urban poor can also avail of essential health services apart from having access to basic shelter and civic services. Maintenance of public health and sanitation and ensuring a proper system of solid waste management is critical for the health of the urban poor; ULBs handle them. Thus, NUHM must integrally involve ULBs. A clear-cut policy for building up the capacity of differentially sized ULBs be developed under the NUHM to gradually integrate medical services, healthcare, public health, and sanitation, to facilitate the integration of public health, sanitation, healthcare, and medical care. There is a need to create a revolving fund by encouraging the Mahila Arogya Samiti (MAS) to ‘save for a rainy day’. By linking it to insurance, MAS savings may be used for health-based expenditure (micro-health insurance) to cover both basic health expenditure and accident coverage for the urban poor. Convergence with other central government schemes, such as the Rashtriya Swastha Bima Yojana (RSBY) and Aayushman Bharat with NUHM, may be ensured. Slum-level community structures like Community Development Societies, Neighbourhood Groups, and Neighbourhood Committees created under other schemes like National Urban Livelihoods Mission (NULM) may be integrated with NUHM. These structures may closely work with Urban Social Health Activist (USHA).

(6) Improving Access to Education Education is key to human resource development and building capability. The following may be taken into consideration to allow the urban poor to have greater access to education: • Addressing the needs of slum dwellers by promoting access to community infrastructure and health facilities and extending support facilities like a crèche for single and female-headed households so that the girl child does not have to do the household chores at the cost of her education. • Addressing the needs of the urban poor through the security of tenure would facilitate continuous education for all children, eliminating the fear of eviction looming large and creating an environment for home learning. • Improving education service delivery in urban areas by including public– private partnerships. There are many cities in India (e.g., Hyderabad and Delhi) where the private provision of education has mushroomed to take over the public provision of educational services. This could be used where government schools fail to service the need.

An Agenda for Slum-Free and Poverty-Free Cities in India  217 • Each ULB could be mandated to provide a City Education Plan in synergy with the current CDP that requires the location of viable schools in slum clusters or areas at least 1 kilometre from the existing slums. • Schools must be provided in slum vicinities irrespective of the land status, along with toilet and sanitation facilities. (7) Skill Development and Employment Promotion Initiatives for skill development and employment promotion for the urban poor need to be designed taking into consideration the following and taking advantage of Skill India: • The issues of teacher absenteeism and drop-outs need to be addressed through the involvement of Parent Committees, community structures created under NULM and the mayor/ward councillors. • Develop skills based on skill needs assessment to enable the urban poor to access market-based and formal employment prospects or engage in self-employment, thereby improving their living standards. • Target skill development initiatives to cater to the requirements of the skilled and semi-skilled workforce of the industries and services sectors, in line with the evolving opportunities and possibilities at the international, national, and sub-national levels; skills training should be dynamic and demand responsive. • Link skill development/training with broader economic and social development strategies. • Assist the urban poor in starting their business ventures by emphasizing on development of entrepreneurship and promotion of small-scale businesses, small enterprise business advisory services encompassing areas such as community mobilization, demand assessment, cluster development, capacity building, business development, finance and credit, marketing tie-ups, common facilities provided by micro-business development centres, etc. • Lower the unemployment amongst the poor people in urban areas, particularly women, by adopting deliberate steps to encourage labour-intensive production, increase workers’ productivity and real wages, promote inclusive economic growth, and increase the GDP contribution of cities. To close the skill gap in the labour market, vocational training must be expanded promptly from its current annual capacity of just 3 million to at least 15 million. The existing industrial training institutions are not only short in numbers but also outmoded in terms of the skills imparted to the trainees. To modernize these institutions and to ensure that the training material is relevant to the requirements of the employers and the job market, it is essential for the industries and industrial associations to themselves partake in the operation of such institutions. Additionally, strong public– private partnerships, including alliances with social partners, need to be promoted, considering that the needs are enormous and government efforts

218  An Agenda for Slum-Free and Poverty-Free Cities in India alone would not be enough. Appropriate accreditation and certification systems must be instituted by the authorities to ensure that the trainees attending and graduating from the various institutes and colleges have been awarded proper certification and academic credits. Given the importance of vocational training in the education initiative of a country, it is imperative to invite private investment in the vocational training field in addition to earmarked funding from government sources. Most poor urban people who work in the informal sector lack the necessary skills or have obsolete or irrelevant abilities in light of the current situation. They are primarily dependent on their physical prowess. Any skill-building initiative must mainly involve converting people’s social capital to generate financial gain. Reconceptualizing skill training is crucial to break free from its restrictive undertones regarding employment. Training must be viewed as a component of empowerment. It should allow for skill development to give people the freedom to change careers without losing their economic status. Fundamentally, the flexibility to advance, select a job, and nurture it is necessary. The idea of decent work is directly related to the paradigm shift from training for employment to training for empowerment. Particular emphasis should be provided to the skill requirements of women, youth, physically challenged, and members of disadvantaged communities. (8) Social Security to All Urban Poor Social security cannot be meaningfully achieved through any stand-alone measure. It needs to be integrated into planning (socio-economic, financial, and physical), governance framework, and strategy to promote fundamental human rights. The key areas that need to be addressed to promote social security to the urban poor are as follows: • Health security through improvement in living conditions and insurance. • Addressing gender needs through maternal and childcare, maternity benefits, physical safety, provision of crèche, play schools etc. • Old-age security through physical safety and pension benefits; protection for the destitute and physically handicapped through pension schemes. • Life and accident insurance. • Livelihood security through capacity building and diversification and protection against market fluctuations. • Measures to promote saving and investment in asset building through thrift and credit, self-help, and mutual help supported by incentive funds from state government; for example, Andhra Pradesh. The urban poor must be provided with a ‘basic social security floor’ covering access to essential healthcare benefits, income security to children targeted income support to the unemployed and those in abject poverty and income security to the aged and physically challenged. Developing a solid social security mechanism covering the vulnerable sections of society, specifically the elderly, differently abled, single and widowed women, and minority sections, is also essential.

An Agenda for Slum-Free and Poverty-Free Cities in India  219 (9) Ensuring Social Sector Convergence The most vulnerable people in society are the urban poor, especially those living in slums. Most of the urban poor are left without access to health and social security services. Problems are made worse by their lack of access to affordable housing, safe water, sanitation facilities, education and job opportunities, and secure tenure. Therefore, the Government of India missions envisages a convergent approach to provide the urban poor with basic entitlements and services. A programme of concurrent service delivery to the poor in urban areas, combining ‘basic social security floor’, land tenure with no eviction, affordable shelter with a mix of options to the poor, basic physical and social services with connectivity to citywide infrastructure systems, skill development, employability enhancement and employment promotion targeting the poor, covering not just wage employment but also self-employment, is called for. To address the pressing health-related social security challenges, it is imperative to develop a comprehensive package to cover the urban poor’s healthcare needs and provide them with accidental insurance. Other measures such as health insurance, insurance against the risk of disasters, and unemployment allowance can be included in the mix to strengthen this approach. (10) Development of ‘Basic Services to the Urban Poor Fund’ According to JNNURM recommendations, the then Ministry of Housing and Urban Poverty Alleviation had approached state governments to create the BSUP Fund at the local level. It raised the possibility of allocating budgetary funds through the Urban Poverty Sub-Plan for the impoverished in cities. A portion of the revenue generated from the professional tax, vacant land tax, property tax, town planning fees, entertainment tax, stamp duty (surcharge), land use conversion charges, betterment and external development charges; the grants given by the central and state governments; and a minimum of 10 percent of the funds made available to the implementation authority could be used to finance the BSUP Fund as per the provisions of JNNURM. The ministry recommended that at least 25 percent of each city’s budget, including higher-level funds, be allocated towards meeting the needs of the urban poor. The Government of Andhra Pradesh led in the matter by earmarking 40 percent of the budget in every city/town for the poor. (11) Microfinance Access to the Urban Poor Most poor urban people work in the informal economy and thus have limited access to microloans in the established financial system. To ensure that they may meet their housing and consumer needs while avoiding becoming victims of moneylenders, a workable microfinance mechanism must be developed for them. The possession of a land title directly relates to having access to microfinance. The urban poor living in slums will not

220  An Agenda for Slum-Free and Poverty-Free Cities in India be able to obtain microfinance provided by the official banking system if they lack a land title. Therefore, it is necessary to give the poor urban security of tenure over their land to make them bankable in terms of their needs for consumer goods and the construction of new homes. In other words, the title must be mortgageable to serve as security for credit from banks or microfinance organizations. (12) Urban Poverty Reduction Strategy Cities are widely regarded as the engines of economic growth and generators of public finance. McKinsey (2010) suggests that Indian cities will generate 70 percent of all new jobs. Cities are becoming the hubs of both local and foreign investments due to economic liberalization, globalization, and the breakthrough in information and communication technology. They are also the foci for business process outsourcing and export-led growth. Data on foreign domestic investment in India reveal that the bulk of the FDI is directed towards Bangalore, Delhi, NOIDA, Mumbai, Chennai, Hyderabad, and other large urban centres. Cities generate the majority of the resources used by the central and state governments, as well as the economic impetus, through income tax, value-added tax (VAT), registration and stamp duty, motor vehicles tax, goods and service tax, excise duty, etc. McKinsey (2010) projects that Indian cities will generate 80–85 percent of public finance through 2030. However, city governments suffer from the ‘rich city-poor city government’ syndrome. This syndrome needs to be addressed. Sustainable financing systems for urban infrastructure and services need to be designed on the principles of ‘users pay’, ‘polluters pay’, ‘beneficiaries pay’, and ‘growth pays’, with cross-subsidization to the poor. Property tax and land use as a resource have strong revenue potential, which needs to be exploited. Inter-governmental transfer issues should also be addressed. According to the 74th Constitutional Amendment Act, municipalities have been assigned the authority and responsibility to perform ‘redistributive‘ tasks, including alleviating urban poverty, developing and upgrading slums, providing basic services to the poor, and safeguarding the rights of vulnerable groups. Thus, while implementing reforms to improve municipal revenues, it needs to be seen that a part of the improvements is targeted towards the urban poor, including slum dwellers. Further, there is a case for higher levels of government to ensure adequate inter-governmental transfers to meet the demands of redistributive functions. A claim may be made before the State Finance Commissions to recommend a vertical devolution of the states’ resources to ULBs linked to set poverty reduction targets. Central Finance Commission may also be moved to provide recommendations to ensure the expansion of the consolidated funds of state governments to enable ULBs to implement programmes to reduce urban poverty and upgrade slums.

An Agenda for Slum-Free and Poverty-Free Cities in India  221 (13) Community Mobilization and Women Empowerment Community mobilization is critical to the success of urban poverty alleviation programmes. Experience of Self-Help Groups (SHGs) in rural areas in Andhra Pradesh and other states suggests that partnerships between state government, local bodies, and community have made a dent in rural poverty. A core urban community development unit needs to be developed at the local body level to promote such partnerships in cities and towns. A cadre of qualified and trained functionaries may be assigned to work in the community development unit/poverty alleviation cell in each ULB. These individuals should be tasked with ensuring the convergence of all activities related to slum upgradation with the close involvement of community organizations, including SHGs, NGOs, and other civil society actors – facilitated by community organizers. This unit/cell, with supporting inputs from engineering, public health, town planning, finance, accounts, and audit, including social audit and other departments in the local body, can take a lead role in the preparation, implementation, and monitoring of integrated municipal development plans focused on the poor and slums. Women are amongst the most vulnerable segments of the urban poor. Thus, gender-based budgeting and gender audit mechanisms to make the government system and its programmes more responsive to the needs of women are desirable. National programmes already provide gender-responsive norms by prescribing landownership and housing in the name of women. Focus on gender may be promoted across the board through a proactive role played by the community development unit at the local body. Better accessibility to microfinance improves the involvement of women in the formal sector, which must be promoted. Another focus area is championing the cause of changes in inheritance law in favour of daughters and widows to promote gender equality in a private property. There is a need to promote partnerships and to network amongst different stakeholders and actors like local government; other governmental agencies; resource centres on urban poverty, slums, and livelihoods; experts; NGOs; CBOs, including SHGs; industry associations; community structures and networks; forum of inclusive cities, etc., to effectively address the multidimensional aspects of urban poverty and facilitate the exchange practices that work better than the others. Important guiding principles for developing partnerships with community organizations, including self-help groups, include the following: • Expand the base to incorporate a wide range of community-led associations, such as youth associations, Mahila Mandals, credit and thrift societies, SHGs, Neighbourhood Committees, Community Development Societies, etc., and assign the responsibility for various interlinking interests to the community development unit in the local body.

222  An Agenda for Slum-Free and Poverty-Free Cities in India • Encourage financial intermediation in a way that makes it easier to establish community-based financial institutions and support mechanisms that are appropriate for the demands of, and circumstances encountered by the local people. • Enable women to participate in the process of decision-making at the ULB level to ensure the mainstreaming of gender issues into municipal policies and programmes and provide them with the opportunity of being active participants and managers of the CBOs at the local level. • Fund the investment in capacity building for a range of tasks and make sure training is integrated to improve the effectiveness of ongoing activities; this may include additional skill training for the balwadi and anganwadi teachers to enable them to employ creative tools in teaching the students and counselling of parents. • With the support of local bodies, CBOs should be provided with the opportunity to choose from various technical or professional expertise in legal, infrastructure, health, sanitation, education, and other local issues. • Build flexible tools that allow the process of infrastructure projects to be tailored according to changes in demand, tastes, and preferences. (14) Capacity Development to Facilitate Urban Poverty Alleviation Strengthening the capacity of organizations and personnel dealing with urban poverty at various levels in the centre, states, and local bodies is an immediate requirement. Capacity constraints are pervasive, and there is a need to allocate an adequate budget and carefully design training and change management programmes. The representatives of NGOs and CBOs, SHGs, financial institutions, research and skill training institutions, all elected and official representatives of various levels of the government, and any other stakeholders must be included in the process. For long-lasting results, institutional flaws and systemic shortcomings must be addressed synchronously. Community development units/urban poverty alleviation cells may be established at the ULBs /state levels consisting of well-trained individuals to ensure efficient coordination of the poverty alleviation policies and programmes in urban areas. This cell may access expertise from the national network of resource centres and experts on a need basis. (15) Enhanced Focus on Small and Medium Towns Evidence suggests that compared to the poor in the urban areas of large towns/cities, the condition of the urban poor in relatively smaller towns is worse. While the rural areas have access to many rural development and poverty alleviation programmes supported by the central and state governments, larger cities have access to a solid and buoyant resource base. However, small and medium towns/cities are doubly handicapped. They have no access to major governmental schemes, and their finances are precarious. In such a situation, the central government should step up and offer assistance to the smaller towns in their attempts to develop infrastructure,

An Agenda for Slum-Free and Poverty-Free Cities in India  223 upgrade and redevelop the slums, alleviate poverty, improve the chances of employability, and create avenues for skill development of the urban poor. Additionally, entrepreneurship development and other handholding programmes should promote self-employment amongst the poor. The funding available under the AMRUT, Housing for All, and NULM etc. may be availed by ULBs and augmented by the centre and the states. (16) Design and Implementation of Pro-poor Reforms Reforms are the cornerstone of a sustained poverty reduction strategy. They are needed to ensure the long-term sustainability of investments in cities and towns and greater transparency and accountability in urban development. JNNURM proposed three pro-poor initiatives under its two components, BSUP and IHSDP. These include: (1) Reserving a minimum of 20 to 25 percent of the land under all new public and private housing projects for the EWS and LIGs; (2) setting aside a portion of the budget of the ULBs to facilitate the provision of civic amenities to the urban poor and the creation of a Fund for Basic Services to Urban Poor; and (3) creating and implementing a 7-Point Charter, which mandates that basic amenities should be provided to the urban poor, including affordable housing, water supply, sanitation, and security of tenure, all at affordable rates. These were to be achieved within the timeline set up for the mission. These reforms have not succeeded due to the lack of a clearcut strategy for implementation and capacity at the local level. The programme for capacity building under AMRUT needs to focus more on capacity building for reform design and implementation. 7.3 Making Urban Governance Inclusive It is important to effectively implement schemes like Smart City Mission, AMRUT, and Housing for All launched by the Government of India and state schemes that address state-specific issues. But for sustained urban poverty reduction, it is more important to address the key issues plaguing urban governance. The single-most crucial element for reducing poverty and attaining equitable growth goals globally is considered to be good governance. This idea encompasses much more than just the ‘Government‘. The three main governing actors are the government, the corporate sector, and civil society. The government’s job is to provide an atmosphere that promotes the improvement of individuals’ abilities and quality of life and economic growth and allows for the elimination of poverty. While creating jobs and generating opportunities for the population is the private sector’s responsibility, civil society is tasked with mobilizing public support and improving the participation of the citizen’s success to facilitate the successful execution of development programmes. Each of the three actors must be enabled to discharge their legitimate roles. The paradigm of good governance calls for establishing the Rule of Law, strategic vision, outcome orientation and consensus-building in socio-economic and human development. It envisages participatory, accountable, transparent,

224  An Agenda for Slum-Free and Poverty-Free Cities in India economical, efficient, equitable, and effective delivery of public services. Good urban governance also calls for socially acceptable processes. The Right to Information (RTI) Act, 2005, by prescribing mandatory annual disclosure of certain information by all public authorities, provides opportunities for the people to demand information and makes it obligatory on the part of public officials to supply such information subject to the imposition of penalty in the event of default, has emerged as a critical instrument to promote accountability, transparency, and good governance. The guidelines of JNNURM also provided for the enactment of law for public disclosure of all aspects relating to municipal government, including finance and accounts. The RTI and public disclosure mechanisms can be harnessed to empower the poor and effectively implement anti-poverty programmes. In addition, emerging tools of social accountability such as Citizens’ Report Cards implemented in Bengaluru – pioneered by Prof. Samuel Paul and galore – peoples’ planning as in Kerala, peoples’ estimates as in Andhra Pradesh, participatory budgeting in Latin American countries, and expenditure tracking and social audit as in several countries and Indian states can be adopted to enhance the outreach and relevance of development programmes to the poor. In the local government context, good governance calls for effective local self-government with a people-centric approach, based on people’s needs, aspirations, perspectives, and priorities. The three tiers of government, local, state and central, have to play their respective roles in accordance with the functions assigned to them, in harmony and collaboration with the private sector and the civil society partners to ensure that the society’s resources are optimally used for the optimum social good. The Constitution (Amendment) Act, 1992, accorded the responsibility of ensuring the urban peoples’ access to civic amenities to the ULBs and mandates that these authorities function as effective, democratic institutions of local self-government, preparing and implementing plans for economic development and social justice. In this context, democratic decentralization is regarded as a vehicle for good governance and pro-poor public service delivery. Additionally, the 74th Amendment Act, 1992, provided a sound framework for the effective decentralization of democratic powers by providing for the following: (i) Creation of Municipal Corporations, Municipal Councils, and Nagar Panchayats in large cities, relatively small towns/cities, and areas transitioning into urban areas from rural ones respectively, all of which are to be elected bodies; (ii) allowing an independent State Election Commission to facilitate democratic elections to the municipal bodies; (iii) creation of Ward Committees, that allow for a more significant role of people in decision-making and ensuring the delivery of civic amenities; (iv) according the duty of recommending vertical devolution rate from the state government to the rural and urban local governments to the State Finance Commission; (v) mandating the Central Finance Commission to recommend ways to expand the consolidated funds of the state governments to enable them to implement State Finance Commissions’ recommendations; (vi) provisions for the creation of a

An Agenda for Slum-Free and Poverty-Free Cities in India  225 District Planning Committee to facilitate the convergence of spatial and economic development programmes for both urban and rural areas; and (vii) provisions for the formation of Metropolitan planning Committees including the Municipal Corporations, Municipalities, and Nagar Panchayats to aid the planning process in metropolitan urban agglomerations. All these institutional pillars function at the grassroots level of democracy and must be firmly put on the ground if decentralization is to yield the desired results. In particular, functions, finances, and functionaries must be devolved by state governments into municipal entities commensurate with their assigned tasks. Accordingly, as a part of the JNNURM guidelines, implementing the 74th Amendment Act was included as mandatory reform and a precondition for accessing Government of India funds. The goal of the decentralization envisaged in the 74th Amendment needs to be pursued in both letter and spirit to make municipalities function effectively as agents of good and inclusive governance. Overall, the provisions on urban development, town planning, and municipal administration should be amended to ensure better conditions for inclusive planning, zoning, and development, with sufficient reservation of land to provide affordable housing and space for carrying out informal sector activities under the cities’ master plans. Earmarking of the budget for the urban poor presupposes drastic reforms in the structure of municipal finance, including the system of tax assignment and inter-governmental transfers. It also calls for significant efforts on the part of ULBs to exploit their existing sources of revenues like property tax and vacant land tax. Implementing pro-poor and inclusive city reforms calls for pro-poor CDPs, development of citywide and slum-level structure, linking citywide and slum networks and convergence of physical and social sector programmes. Reform incentivization whereby the states and ULBs are rewarded for effective and timely implementation of reforms could be an important tool for faster progress of reforms. Reform implementation should be considered as important as programme execution under Smart City Mission, AMRUT, and Housing for All. 7.4 Agenda for Slum-free, Poverty-free Cities While recognizing the need for governance reforms for long-term sustainability, a mission approach to urban poverty alleviation will require developing and implementing an agenda for slum-free and poverty-free cities. This agenda can be meaningfully implemented only if the different needs of the poor and initiatives for them are integrated into legal–institutional mechanisms of cities and towns and ULBs like the preparation of a perspective plan (20–25 years), the development plan (5 years), annual action plan and budget, as well as the implementation structures and mechanisms. Both spatial and sectoral aspects have to be addressed together. It must be ensured that the concerns of the urban poor, discussed in the preceding paragraphs, are integrally reflected in the master plan and CDP. Box 7.1 exhibits the key ingredients of a poverty-free and slum-free city being implemented in a time-bound manner.

226  An Agenda for Slum-Free and Poverty-Free Cities in India Box 7.1 Developing an Agenda for Slum-Free, Poverty-Free Cities • Adopting a holistic approach – ‘think globally, act locally’ – looking at the urban economy as a whole, including connectivity to growth, rural–urban migration, agglomeration externalities, slums, poverty, public services, city governance, and finance, etc. together. • Creating databases about slums, poverty, and means of subsistence; using GIS to map the details; and profiling urban poverty at slum, city, and state levels; knowing the poor and their needs (formats developed by National Buildings Organization, Government of India, can be adopted with suitable modifications). • Visioning slum-free, poverty-free city; integrating slum infrastructure and housing with citywide infrastructure systems in CDPs; linking master plans and CDPs; preparing Municipal Action Plan for Poverty Reduction (Kudumbashree model in Kerala and MEPMA model in Andhra Pradesh offer promising strategies). • Restructuring the master plans of the cities to incorporate inclusive zoning in them; reservation of land and Floor Space Index (FSI) for housing the poor and informal sector activities in master plans, zonal plans, and local area plans; inclusive and small lot zoning, using urban land as a resource for the poor (inclusionary zoning/housing programmes implemented in developed nations can be used to provide guidance). • Providing affordable and adequate housing to the poor through segmentation of the market for housing through partnerships with developers/industry/employers/community associations; inter-governmental partnerships; sites and services; cooperative housing; beneficiary-led housing; rental housing; tapping the bottom of the pyramid for low-income housing; land use conversion, FSI, Transferable Development Right (TDR), and Interest Rate Subsidy Scheme as resources for making housing accessible to the EWS/LIGs; Housing Bonds, etc. (Housing for All Mission documents various alternatives). • Prioritizing of EWS housing projects in allotment of government/municipal land; Shelter Fund for housing the urban poor – with dedicated revenues (Madhya Pradesh Patta Act provides a good model). • Tapping property tax reforms, vacant land tax, betterment levy, tax increment financing, and instruments based on the principles of users pay, polluters pay, beneficiaries pay, and growth pay to reform municipal finance and allocate budget for the poor (Andhra Pradesh government ordered reservation of 40 percent for the poor in the municipal budget – the P-Budget). • Addressing slum development and basic amenities to the poor in a time-bound manner for 100 percent provision of essential services – security of tenure, clean and safe water, affordable housing, sanitation,

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healthcare, education, and social security benefits (the 7-point Charter) – to the urban poor along with resource allocation. Launching national/state/citywide campaign for the provision of secure tenure to the marginalized sections of urban society – the poor and the slum residents (no eviction guarantee – Brazil’s Right to the City Model). Addressing displacement and rehabilitation issues in urban infrastructure projects (New Land Acquisition Law 2013 provides guidance). Convergence of health, education, social security, etc., with urban development, human development, social development, and empowerment programmes. Making governance inclusive and involving the poor at all stages of city development and service delivery through participatory planning, peoples’ estimates, participatory budgeting, social audit, and other social accountability mechanisms, including report cards. Strengthening institutional and HR capacity to tackle the problem of poverty in urban areas, slums, and housing for the poor systematically; establishing community development unit/urban poverty alleviation and livelihoods cell/Programme Management Unit at the state level/Project Implementation Unit at the ULB level as envisaged under NULM; supporting resource centres on urban poverty, slums, and housing and advocacy forums. Strengthening democratic decentralization and reforming municipal governance – implementing 74th Amendment Act in letter and spirit to enable elected municipalities and wards committee to discharge slum development, poverty alleviation, and provision of essential services to the poor functions effectively. Developing and implementing an agenda for a slum-free, poverty-free, and inclusive city (linked with CDP) on mission mode along with a pro-poor reform agenda and capacity-building action plan to address the constraints of both institutional and human resource capacity.

Source: Author.

State governments need to consider the following action points and ULBs to implement slum-free, poverty-free city agenda, addressing the multiple vulnerabilities faced by the urban poor, especially slum dwellers: • Adoption of a mission-mode approach to Urban Poverty Alleviation at the state level as implemented in Kerala through the Kudumbashree Model or in Andhra Pradesh and Telangana through the Mission for Eradication of Poverty in Municipal Areas (MEPMA); state Urban Poverty Eradication Mission needs to be translated into Municipal Poverty Eradication Mission and Action Plan for Poverty Eradication for each city/town.

228  An Agenda for Slum-Free and Poverty-Free Cities in India • Demarcation of all slums/informal settlements/under-serviced pockets through slum profile surveys and mapping with the use of GIS applications; identification of the urban poor through poverty profile surveys based on both economic and non-economic parameters; assessment of the requirements of the urban poor, including those pertaining to shelter, basic services, skill training, self-employment, and wage employment. • Preparation and implementation of agenda for slum-free, poverty-free city with focus on (a) time-bound provision of essential services/entitlements like secure tenure, affordable shelter, sanitation, safe drinking water, education, healthcare, and social security to the urban poor as well as on (b) enhancement of employability and promotion of employment of the urban poor by imparting skill education and training. • Adoption of regional planning approach and revamping of urban planning laws and procedures to ensure that adequate space is reserved for providing affordable houses and space for carrying out informal sector activities for the EWS/LIGs in master plans, zonal plans, and local area plans – making town and country planning inclusive. • Preparation of a CDP for every city, integrated with the master plan based on consultation with the urban poor along with a special focus on slum upgradation/development, affordable housing and civic amenities to the poor sections of the urban population and connectivity of citywide infrastructure systems to slum-level infrastructure networks – slum-free, poverty-free agenda to form a part of the CDP. • Mapping of tenable and untenable slums and adoption of a process to grant the security of tenure to the urban poor within a precise time frame through the establishment of appropriate legal and regulatory frameworks. • Preparation and implementation of action plans by state/UT governments in pursuance of the NUHHP incorporating a multifaceted approach to resolve the concerns about a shortage of urban housing, with a particular focus on the EWS/LIG sections of society. • Developing and implementing an action plan for each city/town to provide water and sanitation to all the urban poor within a time-bound manner as envisaged under the outcomes of national missions and UN-SDGs. • Addressing urban health issues with a mission approach, focusing the public healthcare delivery system on slum population and vulnerable groups whether living in notified slums, non-notified slums or unauthorized colonies, adopting public–private–community partnerships, communities’ risk-pooling and insurance mechanisms, and actively involving the ULBs through City Health Plans. • Improving the urban poor’s access to education by measures like provision of supporting infrastructure, public–private partnerships, addressing issues such as girl child education, drop-outs, teacher absenteeism, educational quality, and vocational education through City Education Plans. • Providing a ‘social security floor’ to the urban poor, covering access to essential healthcare benefits, income security to children, targeted income

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support to the unemployed and those in abject poverty, and income security to the aged and physically challenged. Ensuring convergence of physical and social development programmes for the urban poor: Smart City Mission, AMRUT, Housing for All, NULM, NUHM, Aayushman Bharat, Right to Education, Skill India, etc. Promoting skill development among the urban poor to make the new employment prospects created by emerging market opportunities accessible to them through the strengthening of vocational training institutions and public–private partnerships and establishment of accreditation and certification processes to ensure quality in skill training. Assisting the urban poor in exploring the avenues of self-employment by promoting entrepreneurship development, common facilities provided by micro-business development centres, and small enterprise business advisory services encompassing areas such as community mobilization, market assessment, cluster development, capacity building, business development, finance and credit, branding and marketing tie-ups, etc. Developing a strategy for financing urban poverty alleviation in ULBs and ensuring that the BSUP Fund is established with suitable earmarking in revenue sources, supplemented by inter-governmental transfers and targeted support programmes by the higher levels of government. Formulating a feasible microfinance system for the urban poor to protect them from becoming the victims of moneylenders, who exploit them by charging exorbitant interest rates to meet their monetary requirements for consumption, livelihood, and housing. Facilitating community mobilization and women empowerment through the strengthening of community structures involving women, community development networks, and the creation of a community development unit/ urban poverty alleviation cell at the local government level along with measures such as gender-based budgeting, gender audit, and promoting the participation of women in urban governance structures. Developing partnerships between different stakeholders and actors like local government, other governmental agencies, NGOs, CBOs, including SHGs, industry associations, community structures and networks, resource centres working on urban poverty, slums and livelihoods, experts, etc. Promoting good urban governance with a focus on the Rule of Law, strategic vision, outcome orientation, consensus-building for socio-economic and human development, and participatory, accountable, transparent, economical, efficient, equitable, and effective delivery of public services; implementation of the RTI Act and other measures ensuring accountability including citizen’s report cards, expenditure tracking, participatory budgeting, peoples’ planning, peoples’ estimates, social audit, etc. Implementing the Constitution 74th Amendment Act 1992 in letter and spirit, establishing the legal–institutional framework for implementing democratic decentralization, including devolution of responsibilities, finances, and officials to the ULBs and building capacity of all stakeholders.

230  An Agenda for Slum-Free and Poverty-Free Cities in India • Enhancing focus on small and medium cities/towns for infrastructural development, slum upgradation/development, provision of affordable housing and civic amenities to the urban poor, skill development, employability enhancement, self-employment, wage employment, etc. • Proper implementation of the pro-poor reforms suggested by the JNNURM (which were unsuccessful at the time due to administrative limitations): (1) Reservation of 20 to 25 percent of the land under all new public and private housing projects for the EWS and LIGs; (2) fixation of a part of the ULBs budget to facilitate the provision of basic amenities to the urban poor; and (3) implementation of the 7-Point Charter, which mandates that basic amenities should be provided to the urban poor, including affordable housing, water supply, sanitation, and security of tenure, all at affordable rates. • Establishing a high-level task force at the state level to guarantee that the appropriate institutional arrangements, legal frameworks, and other steps are in place to systematically implement the agenda for poverty-free, slumfree cities on a mission mode with the asset of milestones and time-bound action plans. 7.5 Concluding Observations The current mission-mode initiatives of the Government of India in the urban sector, such as (i) Smart Cities Mission, (ii) AMRUT, (iii) PMAY: Housing for All, and (iv) NULM, aim at catalysing urban transformation in the country. They intend to assist cities in discharging their fundamental role as engines of inclusive growth and structural transformation. They emphasize that all cities and towns must provide basic amenities to their residents: Sufficient supply of water that is safe for drinking and other domestic uses, guaranteed electricity, sanitation facilities including sewerage, drainage, and solid waste disposal, facilities for public transportation, land tenure, affordable housing with basic amenities (especially for the poor) like healthcare, education, information technology connectivity, a liveable and sustainable habitat, good governance, and security for residents, specifically the vulnerable sections including women, children, the elderly, and the differently abled. The NULM and Skill India Mission focus on addressing the employment and employability concerns of urban residents, especially the poor. All these initiatives intend to make urbanization equitable, inclusive, sustainable, and viable. These objectives, articulated by national schemes, have driven the present research study. The central aim is to guide states, cities, and towns to develop and implement a slum-free and poverty-free city agenda. This agenda has assumed considerable significance in view of the fact that the urban poor, including slum dwellers, have been at the forefront of the adverse impacts of disasters like floods, cyclones, landslides, etc. and pandemics, including COVID-19. The current missions of the Government of India have replaced the demand-driven schemes of JNNURM and the RAY due to under-­performance of the erstwhile programmes. The JNNURM, started in 2005, envisaged an

An Agenda for Slum-Free and Poverty-Free Cities in India  231 investment of more than Rs 100,000 crores in cities and towns, with a committed central grant of Rs 66,084 crores. This investment was expected to leverage local resources, state contribution, and market borrowing. As against the central grant, an allocation of Rs 45,066 crores were made based on demand and Rs 40,584.21 crores, released by 2011–2012. Further, as against 12.5 million dwelling units sanctioned under JNNURM, covering 943 cities and towns, only 10 lakh houses were completed, and 7.9 lakh houses were occupied by 31 March 2016 – taking more than ten years. Performance regarding implementing reforms to promote inclusive cities, such as the reservation of land and FSI in housing projects for the urban poor, is also not satisfactory. The same is the case with a similar reform stipulated under the NUHHP implemented in 2007 to make public and private sector housing projects inclusive. In particular, JNNURM targeted to provide new housing to the poor, whatever be the location of such housing, and adopted a target achievement approach without addressing the basic issues of what the causes of urban housing shortage, poverty, and exclusion are, what the urban poor really want, the multiple dimensions of urban poverty that transcend residential, occupational, and social spheres, and the need for taking a holistic approach, rooted in the economics and political economy of cities. This research hypothesized that the under-performance of JNNURM in achieving the goals of inclusive urbanization is linked to the issues of programme design and implementation, including the neglect of the economics of cities, and the economics of migration, urbanization, poverty, slums, and inclusionary urbanization in totality. Cities need migrants and urban LIGs to be functional, and these groups need space for living, working, and vending to contribute their might to city building. With the above perspective, which JNNURM neglected, this study has suggested directions for addressing the issues of inclusive urbanization in India and proposed the formulation and implementation of slum-free and poverty-free cities agenda. It suggests that the issue of urban exclusion is rooted in urban planning, financing, and governance regimes. Without addressing these, programmes and projects cannot aspire to make sustained impacts. This research suggests that the approach by policymakers and planners in India towards urban poverty and slums warrants a complete change, including mindset towards poverty in cities and towns. Rural and urban poverty must be studied in tandem and recognized as economy-wide problems, and not in isolation. They are organically and integrally linked. In emerging nations, rural poverty has been the predominant manifestation of poverty for a long time. However, it is becoming more widely acknowledged that urban poverty, given the rate of urbanization, can be just as severe and degrading. In the case of India, the issue of urban poverty is expected to increase to mammoth proportions, given the continuous increase in urbanization. The nation is only 34 percent urban. Given the experiences of many countries, Indian policymakers and planners need to pay close attention to the issue of urban poverty to prevent the phenomenon of ‘urbanisation of poverty’. They must be considered in conjunction with the need to promote cities as agents of inclusive socio-economic

232  An Agenda for Slum-Free and Poverty-Free Cities in India development in rural areas and structural change. It is not appropriate to consider urban poverty a result or spillover of rural poverty. The researchers’ belief that urban poverty was a transitory problem that would vanish as cities grew in response to the forces driving employment in the secondary and tertiary sectors and economic growth momentum has been proved to be incorrect. In the past, policymakers kept rural and urban development programmes in separate, watertight compartments, treating them disjointly. They hardly recognized the complementarities between the two, and the positive role that cities can play in rural poverty reduction. Further, income-based approaches adopted to define rural and urban poverty on a similar footing ignored the dimensions of sub-human living (linked to non-economic factors) by the poor in cities. Indian cities are not poor, but as in other developing countries, these cities attract the poor, including rural–urban migrants who come to cities to contribute, collaborate, benefit, and escape poverty. They become important partners in the wealth creation processes of nations. Thus, dominant theoretical constructs in development economics like the Harris–Todaro model, which presented a negative view of rural–urban migration and urbanization, are myopic and not helpful for policy guidance. These models undermined the role of public policies in augmenting the benefits of agglomeration and network externalities in cities, while minimizing congestion diseconomies. Such policies need to be formulated based on a holistic approach under which migration and urbanization are recognized as positive phenomena that drive the fundamental spatial and structural transformation processes in a developing country, leading to economic growth. Inclusive planning and policies focused on addressing the root causes of slums and urban poverty are necessary to make urban economic growth inclusionary, humane, and transformational. They need to combine citywide and community-based approaches. The paradigm ‘think globally and act locally’ needs to be implemented.

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Index

Pages in bold refer to tables. Acquisition 34, 46, 95–100, 103, 104, 129, 212, 213, 227 Adjusted R-Square 195 Affordable housing 3, 4, 7, 12–4, 16–8, 29, 30, 35–9, 41, 43, 53, 58, 61, 67, 68, 70–4, 77–82, 85–90, 92, 94–6, 98–100, 102–5, 107, 108, 112, 117, 120, 127, 134, 161, 204, 205, 209–214, 219, 223, 225, 226, 228, 230 Agglomeration 1–3, 10–2, 31–5, 38, 39, 42–7, 48, 49, 50, 63–9, 71, 75, 78, 104, 111, 123, 125, 128, 133, 134, 161, 163, 166, 171, 207, 209, 225, 226, 232 AMRUT cities 15 Anaemia 54, 55 Assumptions 62, 195, 198, 200 Backward and forward linkages 32, 39, 45, 60 Benchmark 15, 16, 108, 127, 130, 148 Beneficiaries 7, 84–6, 91, 96, 99, 103, 104, 106, 122, 126, 127, 140, 146, 169, 212, 215, 220, 226 Bhagidari scheme 150 Big push 80 Binary logistic regression 197–201 Black Death 2 Blue-collar 37, 59 BPL 167, 169, 170, 212 Capital Improvement Plan 127 Chi-Square value 193, 194, 200 City Statute 40, 75, 76, 77, 212 City’s waste management systems 28 Civic amenities 35, 58, 91–3, 103, 115, 208, 213, 223, 224, 228, 230

Civil society 4, 7, 8, 76, 136, 138, 139, 147, 150, 154, 155, 159, 162, 164, 211, 221, 223, 224 Commensurate financing 162 Communication technology 14, 136, 220 Commuting cost 168, 171, 172, 204 Concentration of employment 50 Congestion-minimizing policies 66 Conspicuous 22, 27, 201 Constellation 1, 33 Convergence 89, 206, 211, 215, 216, 219, 221, 225, 227, 229 Cooperative federalism 31, 86 Corrosive 164 COVID-19 transmission 4 Credit-linked Subsidy Scheme 86 Creditworthiness 123 Cross-subsidization system 84 Cross-subsidized 95 Decentralization 31, 136, 139, 143, 156, 162, 224, 225, 227, 229 Demarcation 93, 133, 228 Democratization 156 Density bonuses 81, 91, 92, 108 Deprivations 26, 78, 208 Diagnosis 4, 192 Diffusion 4, 34, 46 Digitalization 13, 24, 204 Diminishing marginal returns 62 Diminishing or constant returns 33 Disasters 2, 4, 5, 10, 53, 79, 140, 143, 208, 219, 230 Disbursement 116 Diseconomies 33, 47, 63, 232

266 Index District Planning Committee 146, 225 Diversification 46, 218 Drainage 13, 16, 17, 22–4, 36, 37, 47, 53, 122, 123, 127, 131, 132, 167, 169, 202, 210, 214, 230 Ebola 2 Economic growth 1, 7, 12–4, 19, 20, 31, 33–5, 36, 39, 42–7, 50, 60, 69, 72, 84, 109, 110, 114, 123, 125, 132–4, 146, 166, 209, 211, 217, 220, 223, 232 Economic rejuvenation 68 Economically disadvantaged 38, 74, 75 Economically Weaker Sections 23, 43, 61, 68, 72, 93, 213 e-Governance 15 Empowerment 31, 41, 140, 151, 164, 165, 206, 211, 218, 221, 227, 229 Encroached 173, 174, 189–192, 203, 204 Entitlement of property rights 105 Entrepreneurial innovation 44 Environmental degradation 42, 43 Environmental sustainability 7, 8 Equalization 163 Escrowed revenues 119 Eviction 22, 26, 53, 89, 109, 140, 143, 145, 154, 212, 216, 219, 227 Exclusion 1, 6, 19, 20, 26, 32, 34–41, 43, 53, 58, 60, 61, 69, 72, 73, 75, 76, 79, 106, 109, 111, 135, 156, 163, 166, 209, 213, 231 Exclusionary planning 40, 61 Exodus 10 Externalities 1–3, 31, 32, 34, 35, 38, 42–7, 50, 63, 64, 67, 70, 72, 106, 111, 123, 125, 134, 163, 166, 207, 226, 232 Fundamental civic rights 26 Globalization 1, 33, 46, 136, 220 Greenhouse 3 Gujarat Town Planning Scheme 92 Harmonious and inclusive society 72 Harris Todaro model 58 Heterogeneity 91 Heteroscedasticity 195 Hindrance 58 Human capital accumulation 44, 45 ill-conceived 31 Illiterate 172, 173, 195, 196, 197, 202 Imperative 9, 74, 89, 105, 207, 218, 219

Inclusionary housing 53, 68, 73, 80, 83, 207, 214 Inclusionary policies 166, 201, 207 Inclusionary urbanization 19, 35–7, 166, 205, 210, 231 Inclusionary zoning 38, 53, 61, 68, 69, 73, 80, 82, 92, 226 Inclusive economic growth 19, 217 Increasing returns 11, 32, 33, 44, 45, 47, 48 Indispensable 58, 69, 77, 142 Inequality 1, 3, 42, 43, 67, 77, 78, 136, 156 Influenza pandemic 2 Informal employment 26, 27, 24 Informal sector 1, 12, 21, 26–8, 32, 39, 44, 51, 55, 60, 62, 67, 74, 78, 100, 103, 164, 165, 197, 202, 209, 214, 218, 225, 226, 228 Information technology connectivity 13, 230 Infrastructural amenities 51, 91, 99 Inhibition of the development 75 Injustice 164 JNNURM 7, 10, 30, 31, 32, 43, 53, 74, 75, 85, 103, 104, 110, 112, 119, 120, 130, 134, 138, 141, 157, 173, 174, 191, 242, 243, 249, 253, 257–9 Jurisdictions 12, 122, 123 Land-based financing instruments 120, 122 Land-based tools 126, 127 Life insurance 168, 169, 180, 181, 187, 188, 190, 203 Localization 32, 33, 45, 46, 48, 49, 69 Lockdowns 2 Maladies 53 Marginalised 5, 8, 19, 26, 32, 41, 43, 45, 70, 72–4, 79, 85, 135, 163, 207, 209, 212, 227 Market segmentation 91 Maternity care 191, 204 Metropolitan 10, 11, 21, 23, 25, 32, 33, 46, 48, 51, 81, 101, 104, 107, 127, 128, 130, 146, 151, 162, 163, 166, 169, 170, 225 Metropolitan Planning Committee 146, 225 Microfinance 219, 220, 221, 229 Middle income 167, 202

Index  267 Migration 1, 7, 9, 11, 12, 19, 20, 35, 42–4, 49, 50, 55, 58–67, 74, 78, 88, 109, 110, 111, 169, 171, 208, 211, 226, 231, 232 Minorities 67, 137, 165 Mobilization 15, 18, 28, 43, 60, 111, 123, 146, 148, 155, 163, 165, 217, 221, 229 Monetization of land assets 121, 124 Multidimensional poverty 36, 202 Multi-Modal Transport System 173 Multipronged strategy 72 Multivariable Binary Logistic Regression Model 36 Mutually-reinforcing 33, 46 Myopic 1, 232 Networking externalities 1 New Urban Agenda 4–9, 12, 19, 31, 73, 77, 78 Night shelters 100, 168, 176, 177 Non-economic criteria 21 Noneconomic factors 20, 167, 197, 202, 205, 210, 232 Ordinary Least Square 36, 195, 196 Overall significance 200 Pan-city 13, 15, 85 Participative budgeting 117, 136, 137, 160 Participatory budgeting 156, 158–161, 224, 227, 229 Participatory democracy 14, 139, 142 Participatory governance 40, 135–142, 149, 151, 153–5, 161, 162, 164 Participatory Urban Governance 8, 37, 40, 41, 137, 145, 151, 162 Patta Act 99, 100, 105, 226 Penetration 190, 203, 204 Pervaded 31 Planning Commission 26, 42, 43, 51, 52, 110 Planning system 18, 38, 53, 76, 95, 129 PMAY 15, 17, 30, 89, 90, 161, 210, 230 Policymakers 11, 12, 20, 35, 41, 67, 69, 72, 78, 136, 231, 232 Pollution 3, 14, 15, 26, 33, 35, 47, 135, 208 Pragmatic 129 Privatization 152 Property tax reforms 131, 132, 226 Proprietary 26 Quarantine 4 Quasi-formal 162

Redevelopment 14, 16, 17, 26, 39, 61, 74, 78, 85, 86, 88, 96, 98, 100, 101, 103, 128, 170, 207, 212, 213, 216 Redundant rent control system 22 Reflection and corrective action 148 Reform implementation 225 Reform incentivisation 225 Regression model 36, 195, 197–201 Rehabilitation 28, 30, 61, 74, 95, 98, 103, 205, 210, 213, 227 Remittances 67 Rental housing 67, 68, 79, 88–91, 102, 105, 106, 226 Replication 9, 68, 129, 132, 134 Residential exclusion 26, 53 Responsiveness 69, 138, 139, 147, 148, 153, 154 Right to City 73, 75 Ring-fencing 124, 126 Sanitation 3, 13, 16, 18, 22, 26, 29, 30, 53, 67, 68, 71, 72, 74, 77, 90, 109, 114, 115, 127, 134, 139, 146, 147, 149, 158, 168, 175, 182, 183, 197, 202, 208, 211, 214–7, 219, 222, 223, 226, 228, 230 SARS 2 Self-employment 13, 38, 39, 60, 67, 134, 206, 211, 217, 219, 223, 228, 229, 230 Self-financing mechanism 93 Sewerage 13, 15–7, 114, 122, 123, 125, 127, 132, 169, 230 Slum households 17, 21, 22, 51, 52, 53, 77, 148, 149 Slum-dwellers 8, 12, 17, 21, 23, 26, 29, 30, 36, 43, 51, 53, 55, 68, 70, 74, 76, 78, 85, 95, 97, 104, 134, 149, 166–8, 187, 189–192, 195–7, 202–5, 208–212, 216, 220, 227, 230 Slum-free and poverty-free 207–212, 225, 230, 231 Smart Cities Mission 9, 12–4, 29, 30, 89, 116, 125, 162, 207, 230 Smart City Mission 13, 84, 111, 210, 223, 225, 229 Social homogenization 79 Social security mechanism 218 Socially optimal 65, 66 Socio-economic development 29, 35, 41, 70, 77, 135, 137, 152, 212 Socioeconomic development 12, 29, 31, 134 Socio-economic security 167, 179, 186, 193, 194, 198, 201 Solid waste disposal 123, 208, 230

268 Index Spatial concentration 34, 47 Spatial contiguity 32, 45 Spatial planning 11, 13, 35, 38, 53, 69, 72, 74, 93, 121, 122, 123, 126, 128–130, 133 Spillover of rural poverty 20, 232 State of Slums 20, 21, 43 Statutory towns 9, 11 Strategic Densification 108, 127, 128 Stratification in society 37 Structural and spatial transformations 45 Structural transformation 1, 12, 34, 39, 47, 50, 60, 69, 72, 230, 232 Sub-human 20, 68, 232 Subsidized housing 74, 83, 90, 104 Sub-subsistence livelihood 110 Suburban peripheries 10 Sustainable Development 4–6, 13, 42, 72, 85, 141, 149, 165, 207, 209 Sustained investments 35, 207 Swachh Bharat mission 181 Swine Flu 2

Transferable Development Right 17, 85, 121, 128, 226 Transparency 14, 115, 128, 135, 138–140, 146, 160, 164, 212–224 Transportation revolution 1 Traversed 156

Technical progress 44 Tenure security’ 22, 29, 202, 203, 205, 206, 210–2

Waste-pickers 28, 60, 164

U relationship 50 Under-employment 62, 67 Unhygienic and unsafe 209 Universal Credit payments scheme 91 Urban Mobility 13, 14, 24 Urban poverty 9, 18–20, 22, 23, 25, 26, 28, 35–7, 40–3, 51, 53, 55, 59, 60, 75, 109, 110, 111, 114, 116, 117, 134, 139, 140, 143, 161, 166, 167, 181, 197, 201, 203, 205, 207–212, 219–223, 225–7, 229, 231, 232 Vulnerable sections 3, 28, 29, 60, 105, 218, 230

Zika 2