Cities and Public Policy: An Urban Agenda for India
Publication Year: 2014
The twenty-first century will witness a rapid urban expansion in the developing world. India, it is believed, will be at the forefront of such a phenomenon. This book acknowledges the role of agglomeration externalities as the cornerstone of urban public policy in India.
Arguing that hypotheses of over-urbanization and urban bias theory—which articulated a negative view of urbanization—are based on fragile theoretical as well as empirical foundations, this book calls for proactive public policy to harness planned urbanization as resource. India requires agglomeration-augmenting, congestion-mitigating, and resource-generating cities as engines of economic growth, including rural development.
The book provides a large number of practical examples from India and abroad to enable policy-makers undertake reforms in urban and regional planning, financing, and governance to meet the challenges of urbanization ...
- Front Matter
- Back Matter
- Subject Index
- Chapter 1: Cities and Agglomeration Economies
- Chapter 2: Fallacy of Over-Urbanization
- Chapter 3: Spatial Planning, Transportation, and Land Use
- Chapter 4: Right to the City: Making Urbanization Inclusive
- Chapter 5: Financing City Development and Services
- Chapter 6: Using Urban Land as a Resource
- Chapter 7: Institutional Framework for Good Urban Governance
- Chapter 8: Cities and Public Policy: An Urban Agenda for India
Copyright © Prasanna K. Mohanty, 2014
All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher.
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List of Illustrations[Page ix]Tables
- 1.1 Empirical Assessment of Agglomeration Economies 32
- 2.1 Per Capita GNP and Levels of Urbanization 1800–1980: Developed Countries and Third World 49
- 2.2 Percentage of Industrial Employment and Levels of Urbanization (1800–1980) 50
- 2.3 A Comparative Assessment of Urbanization Levels in Europe 54
- 2.4 Urban Population (in million) and Level of Urbanization (in percentage) 1800–1910 55
- 2.5 Components of Urban Population Growth in India: 1961–71 to 1991–2001 (percentage) 56
- 3.1 Committee on Urban Land Policy (1965): Major Recommendations 99
- 4.1 Poverty Line (₹ per capita per month), Number (in million), and Percentage of Population below Poverty Line (BPL) in Urban and Rural Areas (1973–74 to 2004–5) (Lakdawala methodology) 114
- 4.2 Poverty Line (₹ per capita per month), Number (in million), and Percentage of Population below Poverty Line (BPL) in Urban and Rural Areas (2004–5 to 2009–10) (Tendulkar Methodology) 117
- 4.3 Distribution of Slums in India by Access to Housing and Basic Amenities (percentage of slums) 121
- 4.4 State of Health of the Urban Poor in India (2005–6) 125
- 4.5 Formal and Informal Employment in Unorganized and Organized Sectors (1999–2000, 2004–5, and 2009–10), in million (%) 127 [Page x]
- 4.6 Employment by Unorganized and Organized Sectors (1999–2000, 2004–5, and 2009–10), in million (%) 129
- 4.7 Delhi Master Plan 2021: Planning Norms for Informal Shops/Units 141
- 5.1 Status of Municipal Finances of all States: 2002–3 and 2007–8 153
- 5.2 Typology of Twelfth Schedule Municipal Functions 159
- 5.3 Greater Bengaluru Water and Sanitation Project—Scales of Beneficiary Capital Contribution 175
- 6.1 United Kingdom: Evolution of Taxation of Planning/Development Gain (1909–2008) 195
- 6.2 Land Monetization: Select Projects of Developing Countries 209
- 6.3 Andhra Pradesh: Land-based Financing Instruments 212
- 7.1 Service Level Benchmarks at a Glance 246
- 8.1 Share (in percentage) of Employment and Gross Value Added (1999–2000 and 2009–10) 252
- 8.2 Total Employment by Sector (1999–2000, 2004–5, and 2009–10) 253
- 8.3 Economic Importance of Urban Areas in Developing Countries 257
- 8.4 Gross Domestic Product by Economic Activity in India at Constant 1999–2000 Prices (percentage share) 261
- 8.5 Sectoral Contributions to Gross Domestic Product in OECD Countries: 1997–2007 262
- 8.6 Conventional Revenue Sources and New Options for Financing City Development and Services 274
- 8.7 Using Urban Land as a Resource to Finance Urban Development 276
List of Abbreviations[Page xi]
ARC Administrative Reforms Commission BPL Below Poverty Line BRT Bus Rapid Transit BRTS Bus Rapid Transit System C&AG Comptroller and Auditor General CBD Central Business District CBO Community-based Organization CDP City Development Plan CDS City Development Strategy CIL Community Infrastructure Levy CUV Current Use Value DDA Delhi Development Authority DGT Development Gains Tax DPC District Planning Committee DPR Detailed Project Report DMIC Delhi Mumbai Industrial Corridor DMRC Delhi Metro Rail Corporation ERP Electronic Road Pricing EWS Economically Weaker Section FAO Food and Agriculture Organization FAR Floor Area Ratio FHH Female-headed Household FSI Floor Space Index GDP Gross Domestic Products GIS Geographic Information System GLA Greater London Authority GNP Gross National Product GPS Global Positioning System GVA Gross Value Added [Page xii]HCR Head Count Ratio HDFC Housing Development Finance Corporation HDI Human Development Index HPEC High Powered Expert Committee IA Industrial Area ID Institution Development IL&FS Infrastructure Leasing and Financial Services IMR Infant Mortality Rate IR Investment Region JDM Joint Development Management JLE Jubilee Line Extension JNNURM Jawaharlal Nehru National Urban Renewal Mission KUIDFC Karnataka Urban Infrastructure Development and Finance Corporation LDD Local Development Documents LGT Land Gains Tax LIG Low Income Group LTA Land Transportation Authority LTT Land Transfer Tax LVC Land Value Capture LVIT Land Value Increment Tax LVT Land Value Tax MAR Marshall-Arrow-Romer MMR Maternal Mortality Rate MMRDA Mumbai Metropolitan Region Development Authority MPAC Municipal Property Assessment Corporation MPC Metropolitan Planning Committee MRIT Metropolitan Region Improvement Tax MRP Mixed Recall Period MRTS Mass Rapid Transit System MTRC Mass Transit Railway Corporation NCEUS National Commission on Enterprises in the Unorganized Sector NFHS National Family Health Survey NGO Non-Government Organization NLTT National Land Transfer Tax NSS National Sample Survey [Page xiii]NSSO National Sample Survey Organisation/Office NTC National Textiles Corporation NTUS Nomenclature of Territorial Units for Statistics OD Organization Development ODC Orestad Development Corporation ODV Official Declared Value OECD Organisation for Economic Cooperation and Development ORR Outer Ring Road PLB Poverty Line Basket PMS Performance Management System PPP Purchasing Power Parity R&D Research and Development RAY Rajiv Awas Yojana RTI Right to Information RSS Regional Spatial Strategies SFC State Finance Commission SLB Service Level Benchmark TDR Transferable Development Right TfL Transportation for London TFR Total Fertility Rate TIF Tax Increment Financing TNUDF Tamil Nadu Urban Development Fund TNUIFSL Tamil Nadu Urban Infrastructure Financial Services Limited TOD Transit Oriented Development TPS Town Planning Scheme ULB Urban Local Body UMTA Urban Mass Transportation Authority URP Uniform Recall Period VIF Value Increment Financing VLT Vacant Land Tax WSPF Water and Sanitation Pool Fund
Theory guides practice, and practice enriches theory. When combined, they provide powerful insights for effective policy-making. This book draws lessons from economic theory of cities, international and national best practices in urban management to develop an urban agenda for India. It recognizes the central role of cities in catalysing growth and generating public finance for economic development.
Historically, cities have been at the forefront of civilization. They drove economic growth and innovation in developed countries during their urban transition. In India, till the launch of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in 2005, national policy did not pay much attention to the development of cities. Not only policy-making but also research neglected the role of agglomeration externalities in cities as an untappped resource for economic development, including urban and rural development.
Urban economic theory emphasizes that cities form and grow to reap the benefits of agglomeration economies. These economies are returns to density arising from the co-location of firms, households, and institutions. Agglomeration externalities, in conjunction with knowledge externalities, establish the pivotal importance of cities in the structural transformation of nations. Cities and their externalities provide a unique opportunity for accelerating growth and poverty reduction in India at the current stage of evolution. The country should not miss the opportunities offered by agglomerating cities and city regions. India needs to invest in resource-generating cities to propel a self-financed process of economic growth, powered by the forces of externalities.
JNNURM is currently in an extended period after the completion of Phase I (2005–12). Phase II of the Mission is being planned. For the first time, India adopted a demand-driven and reform-linked approach to [Page xvi]develop cities as catalysts of economic growth through JNNURM I. The Mission has brought urban issues to the fore at both national and state levels. It has also emphasized a strong reform agenda to be pursued by states and municipalities to enable cities discharge their fundamental role as engines of growth and places of living. This agenda includes city-wide framework for planning and governance, robust financial management systems for civic services, equitable access of the urban poor to land, housing, and basic amenities, adoption of major revenue instruments to finance urban infrastructure and services, conduct of governance in a transparent and accountable manner, etc. The reforms envisaged under JNNURM I have succeeded only partially. However, the fact that JNNURM I has triggered urban projects worth more than ₹105,000 crores is laudable. While catalysing the much-needed investment flows into the urban sector, a new phase of urban sector reform must be planned under JNNURM II. In this context, the present book aims at guiding Indian urban policy-makers, planners, and administrators. It also targets at meeting the needs of researchers and students in urban economics, planning, management, and finance.
While writing this book, I have relied on my own experiences as Commissioner of Municipal Corporations of Visakhapatnam and Hyderabad and Vice-Chairman of Hyderabad Urban Development Authority in the Government of Andhra Pradesh, and Mission Director of JNNURM in the Government of India. These responsibilities gave me insights into many apparently intractable urban issues. My academic background also helped me in applying theory and best practices to address the practical problems of cities. I owe gratitude to my postdoctoral adviser, Prof. Jeffrey Williamson at Harvard University and my doctorate advisers, Prof. Jerry Rothenberg at Massachusetts Institute of Technology, and Prof. John Harris and Prof. Kevin Lang at Boston University. They taught me the importance of theory and empirical research in the design of coherent policies.
This book would not have been possible without the guidance and contribution by Dr Isher Judge Ahluwalia, who chaired the High Powered Expert Committee on Urban Infrastructure and Services set up by the Ministry of Urban Development, Government of India. I thank Prof. O.P. Mathur, Prof. Sivanand Swamy, and Prof. Chetan Vaidya for their [Page xvii]inputs. I also thank Shri D.S. Negi, Ms Kimberly Norhona, and other well-wishers for their support. Last but not the least, I express my sincere thanks to Smita, my wife, for her candid comments on the drafts of several chapters in the book.[Page xviii]
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About the Author[Page 334]
Prasanna K. Mohanty, an officer of the Indian Administrative Service of 1979 batch, is the Chief Secretary to Government of Andhra Pradesh. His academic qualifications include MA in economics, Delhi School of Economics, MA in political economy, and PhD in urban economics from Boston University. He was also a Post-doctoral Fellow at Harvard University.
Dr Mohanty has held several key positions as an Administrator, including Commissioner of Visakhapatnam and Hyderabad municipal corporations, District Collector and Magistrate, Guntur, Vice-Chairman, Hyderabad Urban Development Authority, Director General, Centre for Good Governance, Hyderabad and Chief Commissioner, Land Administration in Government of Andhra Pradesh and Director, Urban Development, and Mission Director, Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Government of India.
Combining long research and administrative expertise in the fields of urban economics and city management, Dr Mohanty is known for his contributions to reforms in urban governance and finance in India. He has published several papers which include a seminal study on municipal finances in India sponsored by the Reserve Bank of India.