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CHAPTER 6.1

URBAN DEVELOPMENT

URBAN DEVELOPMENT

The Status Of Urban Local Bodies

6.1.1 The Constitution (74th) Amendment Act,1992 was intended to give a more focussed thrustto decentralisation and the creation of a democraticgovernance structure with local responsibilitiesbeing assumed and managed at the local level. Itwas to address the inadequacies of the existingsystem of municipalities, redefine the relationshipbetween the states and municipal bodies and laythe foundations of a new approach to urbanmanagement and governance that could fulfill theneeds and aspirations of urban residents fordevelopment. Article 243W of the Act mandated thesetting up of elected municipalities – urban localbodies (ULBs) - as the ‘institutions of self-government’. The important features of the Act arewell-known but bear repetition since all of them havenot been acted upon. These are :

l Regular elections under the supervision ofthe state Election Commission;

l a clear tenure of five years for the electedbody;

l protection for the elected body againstarbitrary dissolution;

l constitution of Wards Committees forgreater proximity to the citizens;

l mandate to state legislature to endow theULBs with such powers and authority asmay be necessary to enable them tofunction as ‘institutions of self-government’;

l the Twelfth Schedule which illustrates therange of responsibilities to be given to theULBs;

l the constitution of State FinanceCommissions (SFCs) to review municipal

finances and make recommendationsregarding distribution of the proceeds ofstate-level taxes between the stategovernments and the ULBs, criteria forgrants-in-aid, measures needed to improvethe financial position of the municipalbodies, etc.;

l setting up District Planning Committeesand Metropolitan Planning Committees forintegrated as well as coordinated planningfor urban and rural areas by the variousagencies involved in providing civic,transport, economic and social services.

6.1.2 It is significant that apart from the traditionalmunicipal functions, Article 243W allocates to ULBsthe function of ‘preparation of plans for economicdevelopment and social justice’, and the TwelfthSchedule contains `urban poverty alleviation’ as amunicipal responsibility. These take municipalbodies from being mere providers of civic amenitiesto a much wider arena of action encompassingeconomic and social planning. The Constitutionalamendment has designed the ULBs ascomprehensive institutions of urban self-government, and has left the details to be workedout by the state legislatures.

6.1.3 The state governments have carried outthe required amendments to the municipal laws inaccordance with their own requirements and somestates have even enacted fresh legislation. Electionsunder the new dispensation have been held in moststates, more than once in many. The enthusiasmamong urban residents for the ULBs has beenamply demonstrated by the fact that voter turnoutin elections has been in the range of 65 to 70 percent, much higher than the participation in electionsto Parliament and state legislature. There arearound 73,000 elected representatives in the ULBsall over the country. It has, therefore, rightly beenobserved that ‘the democratic structure of the

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country is no longer limited only to the Parliamentand the state legislatures’. Now there is no denyingthe fact that the elected ULBs are full-fledgedinstitutions of local self-government, a key part ofdemocratic decentralisation in the country.

6.1.4 The challenge to be met in the Tenth Planperiod is to assist these elected bodies to groworganically to fulfill the demands of urban residentsfor a quality of life in line with world standards. Thereis no doubt that the urban governance willprogressively be managed at the local level ensuringbetter opportunities for people to express theirneeds and expectations, and with professionalcompetence and capacity supplementing thedemocratic nature of the ULBs. The credit for thisgoes to the 74th Constitutional amendment, thoughit has been the subject of much debate from theoutset.

The Urbanisation Scenario in India

6.1.5 The Provisional Census Data of the 2001Census reveals several significant facets ofurbanisation over the last decade. Of the 1.02 billionpopulation, 285 million or 27.8 per cent live in theurban areas which comprise 5,161 towns, anincrease of 2.1 per cent over the proportion of urbanpopulation in the 1991 Census. Table 6.1.1 givesthe proportion of urban population to total populationbetween 1961 and 2001:

Gujarat with 37.4 per cent. Among the larger states,Bihar has the lowest proportion of urban population(10.5 per cent), below Assam (12.7 per cent) andOrissa (14.9 per cent).

6.1.7 In terms of absolute number of personsliving in urban areas, Maharashtra leads with 41million persons. Uttar Pradesh comes next with 35million followed by Tamil Nadu with 27 million.

6.1.8 There are 27 cities with more than onemillion population, while the Urban Agglomerations(UAs)/Cities with population of more than one millionnumber 35. About 37 per cent of the total urbanpopulation live in these Million Plus UAs/Cities. InMaharashtra, West Bengal and Gujarat, more thanhalf of the urban populations live in the Million PlusUAs/Cities.

6.1.9 The decadal growth of population in ruraland urban areas during 1991-2001 is 17.9 per centand 31.2 per cent respectively, indicating a relativelyhigher growth in urban populations. However, it hasbeen observed that the degree of urbanisation inIndia is among the lowest in the world. UnitedNations estimates for 2000 show that 47 per centof total population of the world live in urban areas.While the proportion of urban population indeveloped countries range between 75 and 80 percent, it is 36.7 per cent in Asia. Within Asia, countrieslike China and Indonesia, starting from lower levelsof urbanisation in 1950, have now overtaken Indiawith urbanisation of 32.1 per cent and 40.9 per centrespectively.

6.1.10 This is partly explained by onedemographic fact : In India the decadal growth ofurban population has been declining, from 46.1 percent in 1971-81 to 36.4 per cent in 1981-91 to 31.2per cent in 1991-2001. Correspondingly, theaverage annual exponential growth in UAs/Townshas also dropped from 3.8 per cent to 3.1 per centand 2.7 per cent respectively. While this, to someextent, reflects a declining trend in total populationgrowth, the fact still remains that urbanisation inIndia is proceeding at a fairly modest pace, thoughsome states and cities are reporting exponentialgrowth.

6.1.11 The moderate growth rate gives somebreathing space to set the house of urban

6.1.6 There is wide variation among states inurbanisation. At one end of the spectrum is theNational Capital Territory of Delhi, with 93 per centof its population living in urban areas. At the otherend, Himachal Pradesh is the least urbanised statewith only 9.8 per cent of its population in urbanareas. Tamil Nadu is the most urbanised amongthe larger states with 43.9 per cent urban population,followed by Maharashtra with 42.4 per cent and

Table 6.1.1Proportion of Urban Population & total Population

Year Per cent

1961 17.97

1971 19.91

1981 23.34

1991 25.71

2001 27.78

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governance in order. However, there are citieswhere there is no time to lose.

Major Issues In Urbanisation for The Tenth Plan

6.1.12 Attitudes to urban growth within the countrytend to swing between two extremes. Cities are seeneither as an unavoidable evil or in a more positiveway as ‘engines of growth’. The former view is heldby those who focus on the growth of slums andsquatter colonies, the congestion on the roads andenvironmental degradation. The others, in contrast,focus on the bustling formal and informal sectors inurban areas and their contribution to the economy,the diversification of occupations away fromtraditional land-based ones to newer forms ofproduction and services, and the lower levels ofpoverty as compared to rural areas.

6.1.13 There is, in fact, evidence to show thaturbanisation is likely to have been a key determinantof economic growth in the 1980s and 1990s,boosted by economic liberalisation. From this pointof view, the moderate pace of urbanisation in thecountry has been a cause of disappointment. Thereis, however, no rural vs. urban conflict either in termsof national growth, or in development priorities. Infact, perhaps because of the success of ruraldevelopment programmes along with the limitedavailability of land for squatting in central urbanareas, there seems to be no runaway migration fromrural to urban areas.

Impact Of Growth

6.1.14 The impact of the growth of population onurban infrastructure and services has mostly beenadverse. Cities with high rates of growth would beexpected to have more resources for investment inthe cities, but the fact is that much of this potentialhas remained untapped. On the other hand, smallercities with less economic growth face inadequaciesof financial and other resources to cope withincreasing demands on services, and this may callfor supplemental support from the budget. Are theexisting institutional arrangements adequate toensure that the cities can cater to present demandas well as future needs? How far have the provisionsof the 74th Constitutional amendment beenimplemented and how have the new institutional

arrangements helped? The institutionalarrangements for urban management and thequality of services are closely linked. Strengtheningthe decentralised ULB structure to cope with thedemand for civic services, is identified as the prioritytask of the Tenth Plan.

Urban Governance

6.1.15 Urban governance today is characterisedby fragmentation of responsibility, incompletedevolution of functions and funds to the electedbodies and ULBs, unwillingness to progress towardsmunicipal autonomy, adherence to outmodedmethods of property tax and reluctance to levy usercharges. State governments continue to takedecisions on such matters as rates of user charges,property tax, octroi, role of parastatals in watersupply and sanitation services, etc., with littlereference to the ULBs that are affected by thesedecisions. Far from strengthening the constitutionalrole of the elected ULBs, such developments onlyreinforce the perception that ULBs are subordinateentities under the day-to-day control of the stategovernments, beholden to them not only for thedevelopment of the cities but often for their verysurvival. There appears to be a lack of confidencethat many of the ULBs are capable of meeting theirobligations as institutions of local self-governance.In the present set up, initiatives for localdevelopmental activities rarely come from the ULBs.Experience shows that functional autonomybecomes a reality only when it is accompanied byfinancial independence. State governments,therefore, need to strengthen the autonomousfunctioning of the ULBs through positive measures,and in particular, ensure their financial self-reliance.

6.1.16 The role of the ULBs in the immediatefuture will be:

l To be responsive and accountable to thecommunity;

l to develop cities with standards of servicecomparable to the best in that particularcategory;

l to constantly improve their capabilities soas to equip themselves to undertake theirtasks in resource-raising, service provision,and poverty alleviation,

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6.1.17 Good urban governance calls for adequatepolicy and legal frameworks, the existence ofregulatory and planning authorities, human skills,a sound revenue base, accounting andaccountability. Substantial work has already beendone to upgrade the urban infrastructure andseveral parastatals and urban developmentauthorities have acquired considerable skills inplanning and executing projects. Programmes suchas the Mega City project for five selected cities, theIntegrated Development of Small and MediumTowns (IDSMT), and the Accelerated Urban WaterSupply Programme (AUWSP)have shown varyingdegrees of success in meeting some of the urbanneeds. In particular, parastatal agencies and bodiessuch as development authorities, need to play asupportive role to the elected bodies rather thantaking over functions which properly belong to theULBs. The objective of devolution anddecentralisation should be carried forward bymaking parastatals and authorities partners andagencies of the democratically elected ULBs, thusmaking a gradual transition to local managementwhile continuing to use the expertise of theorganisations set up and supervised by the StateGovernments. Initiating the necessary processesfor partnerships between the State and its agencieson the one hand, and the ULBs on the other, is apart of the exercise of ‘capacity building’ in the ULBs.

The Importance of Transparency and Right toInformation

6.1.18 Since ULBs are closer to the tax-payerswho depend on and are affected by the standardsof services and infrastructure, there is need for agreater accountability in matters relating tomunicipal management and transparency in theirfunctioning. The urban development sector isrequired to develop processes whereby informationon all important decisions impinging on the life ofurban residents are made available to them. Citizensmust be kept informed about the application of fundsand other assets and resources of local bodies,decisions relating to land use, construction andother development activities in the cities, taxation/user charge policy and performance and facts offinancial health of the city. The people can be keptin the picture through the media, the Internet, andby the participation of municipal councilors and other

personnel in meetings of residents’ associations,as well as through more formal means of publicinformation to be laid down in municipal rules.

Sources of Urban Finances

6.1.19 The system of a smooth sharing ofresources between the State Governments and theULBs on the one hand, and between differentmunicipal bodies on the other, which is one of theobjectives of the institution of the SFCs must ensurethat the transfer of funds to the municipalities is bothadequate and stable. The second round of SFCsare in place in most states and, hopefully, as thesystem evolves, there will be greater simplicity andtransparency in the process of devolution ofresources to local bodies, without undue transactioncosts.

6.1.20 The objective of the system of SFCs wouldbe fulfilled if an adequate level of resource transfersto ULBs takes place. It would, however, beunrealistic to expect ULBs’ finances to be healthywhen State Governments themselves face acutefiscal and resource constraints. Further, theallocations by SFCs may well tilt towards areas likerural development, irrigation, etc., and may notadequately meet the needs of the cities. TheFinance Commissions at the Centre are nowincreasingly alive to the growing needs of urbanareas. The effectiveness of the system of SFCs willdepend on adoption of certain healthy conventionsby the State Governments. The conventions relatefirstly to the choice of persons with adequateknowledge and expertise for appointment to theCommissions, and secondly to the practice ofwillingly adopting and fully implementing therecommendations. The different approachesadopted by the SFCs in various States to the tasksof assessing the critical needs of urban areas andmaking recommendations, and the policy of statesin regard to acceptance and implementation of theserecommendations, would be an area for study. Sucha study would also show how far the objective ofautonomy of the ULBs is being fulfilled.

6.1.21 Striking a balance between own resourcesof the ULBs and transfers from the state, is of criticalimportance. The system of transfer from the StateGovernment should not lead to dilution of the

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seriousness and adequacy of the ULBs’ own effortto raise resources. Misguided ‘populism’ is a gamethat the ULBs can also play, and inefficiency incollection, leakage of funds, and violations offundamental financial principles, are dangers whichhave been experienced in our municipal entities.There is, therefore, every need to link the transfersunder SFC formulations to the degree of efficiencyULBs exhibit in raising resources which the lawallows them to generate, and in conforming toproper accounting and financial principles.

6.1.22 In order to help ULBs raise their ownresources, the reform of the property tax systemshould be completed during the Tenth Plan period.The coverage of the property tax net is far fromadequate, and this calls for serious attention.Alternatives to the ‘annual rateable value’, frozenin fiscal terms and discredited in implementation,are available in the form of area-based assessment,and capital value-based assessment. Theseinitiatives should be further refined to developtransparent and buoyant systems of assessmentwith total coverage of all properties in a city, for whichself-assessment by the property owner can be auseful instrument. The levying of user charges,increasing non-tax revenues, control of costs andin particular of establishment costs, and betterutilisation of municipal assets are essentialmeasures to make ULBs financially stronger.Municipal accounting systems should be overhauledand made acceptable to lending agencies andfinancial markets by making it accrual-based. Thisis especially important for those ULBs wanting toaccess debt funds.

Plan Assistance For Infrastructure

6.1.23 Assistance from the Centre is animportant addition to ULBs resources, thoughthus far it has been visibly less effective inbringing about reforms in the urban sector. Alarger degree of central assistance, includingexternal assistance routed through the Centre,as well as institutional finance from agencies likethe Housing and Urban Development Corporation(HUDCO) would be necessary during the TenthPlan in order to take up a vigorous programmeof upgrading infrastructure and services. It is alsonecessary that these forms of assistance

strengthen the elected ULBs as the legitimateinstitutions of governance at the local level. Theassistance must be made conditional on sectorreforms, in particular, better standards of serviceand the collection of user charges.

6.1.24 The coverage of central assistance in thepast has been uneven and inadequate, bothbecause of procedural issues as well as limitedbudgetary allocations. The number of cities/townswhich received central assistance under IDSMT,AUWSP, and Mega City scheme up to the end ofthe Ninth Plan are:

l AUWSP : Between 1993-94, when it wasinitiated, and 2001-02, 654 schemes havebeen sanctioned with central assistanceworth Rs. 337.37 crore;

l IDSMT : Since it was launched in 1979-80, 1,172 towns have been assisted andcentral assistance worth Rs. 531.62 crorereleased;

l Mega City Scheme : Initiated in 1993-94,the scheme covers only Mumbai, Kolkata,Chennai, Hyderabad and Bangalore.Central assistance to the tune of Rs.714.75 crore has been released.

6.1.25 Other programmes through which theCentre channels funds for urban improvement are:

l NCR PLAN : Rs 360.92 crore have beenreleased as Central contribution towardsprovision of infrastructure in the NationalCapital Region.

l HUDCO, which received substantialinjection of fresh equity during the NinthPlan and has been used to leverage fundsfrom market sources, is the other sourceof loan assistance to urban infrastructureprojects.

l The Tax-Free Bonds scheme wasintroduced in February 2001, rather late inthe Ninth Plan period. Since then, twoULBs (the Ahmedabad MunicipalCorporation and the Hyderabad Municipal

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Corporation) have got approval to raise Rs100 crore and Rs. 82.5 crore respectively.

l External assistance for the urban sectorhas continued to flow in from multilaterallending agencies like the AsianDevelopment Bank (ADB), World Bankand bilateral agencies.

6.1.26 Infrastructure assistance through theIDSMT and Mega City schemes should aim atovercoming the worst features of neglect of urbanrequirements, take care of unmet needs in watersupply, sanitation, solid waste management, urbantransport, and the development of new extensionslike residential colonies and satellite towns to relievecongestion. There is a wide variation in theavailability of infrastructure and services, betweencities and within the cities. The bigger cities tend tohave better institutional arrangements and qualityof service. In the hierarchy of cities, capital citiestend to get more attention, followed by other citieswith greater economic activity, while the very smalltowns with extremely limited resources rarely seeany improvement. The larger cities often have thecapacity to raise resources from the market andfrom domestic as well as international fundingagencies. Planning and financial support will needto be targeted at reducing the notable disparities ofurban centres with significant limitations inresources and glaring lack of civic amenities.

6.1.27 During the Tenth Plan, it is necessary toachieve a substantially higher, if not, total coverageof cities in need of infrastructural upgradation. Asubstantial step up in Central allocation to the urbansector is, therefore, required. This assistance shouldbe contingent on the achievement of certainreforms, and an overall improvement in the ULBs’own efficiency in resource mobilisation, both throughtaxes and user charges, as well as service delivery.Municipal bodies need to be motivated to reduceexpenditure, and improve the productivity ofemployees. A review of the working of on-goingschemes, in particular IDSMT, Mega City, AUWSP,and Tax-Free Bonds schemes, will be undertakenin order to improve their working. The existingschemes for assistance for infrastructure such asthe IDSMT and the Mega City Project, leave asignificant number of cities between them without

any Central support. During the Tenth Plan, theseschemes will be extended to cover the cities whichhave been outside their purview.

6.1.28 Urban infrastructure cannot be funded bybudgetary support alone. While market borrowingsare not yet a viable source of financing for urbaninfrastructure in most instances, a beginning hasto be made for building up creditworthiness in ULBs.If this cannot be done for ULBs as a whole, then itshould be attempted at least for individual sectorssuch as water supply, and wherever else usercharges and the general resource position makesfor it feasible to use debt funds to supplement grantsor own resources. Assistance should be providedfrom budgetary sources as well as from externalfunding agencies, to defray the costs ofimplementing reform measures. This will enable theutilities to improve their performance and theirfinances. A City Challenge Fund was announced inthe Union Budget 2002-03 and is in the process ofbeing designed.

Broad-Based Reforms in the Urban Sector

6.1.29 The objective of reforms in land andhousing policy, and of pricing of utilities, should beto augment the resources of the ULBs, provide foradequate maintenance of civic services, andundertake expansion of infrastructure to meetgrowing needs.

6.1.30 Cities everywhere are recognised ascontributing substantially to economic, social,educational and infrastructural needs of the country.While they offer a higher standard of amenities tocity-dwellers, they also have an important role inproviding a range of services to the rural hinterlandcreating demand for rural output and providinginputs. Towns and cities act as nodal centres forproviding services in marketing, health-care,education, and providing a window to the widerworld, serving people other than their permanentresidents.

6.1.31 In the past, the approach to urban growth,and in particular urban land issues, has beenrestrictive, based on the rigid comprehensivedevelopment plans, zoning and regulation of landuse, with a predominant role in land assembly and

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development for urban development authorities.The role of the private sector was extremely limited.The inability of the urban development authoritiesto meet the total housing needs of the urbanresidents has driven large numbers of people inneed of housing in every city, to seek housing inunauthorised colonies. These colonies are nowposing a serious problem in urban management.Slums are only the most extreme form of thisproblem.

6.1.32 It is necessary to set in motion a virtuouscircle of urban growth leading to better resourceswhich are then used for improving infrastructure,which, in turn, will lead to further growth of the cities,resulting in enhanced economic activity and growth.Meeting the needs of the urban poor alsonecessitates ULBs having more resources at theircommand. The impediments to urban growth, aswell as the necessary policy reforms, have beenbroadly identified.

LAND POLICY AND HOUSING

6.1.33 The repeal of the Urban Land (Ceiling andRegulation) Act, 1976 has been a significant steptowards reform in the urban land market. Followingthe repeal of the central legislation, a number of stategovernments have also repealed the state-level law.However, the Act still exists in some states, whileseveral other state laws like the Land Revenue Act,Land Reforms Act, Stamp Duty Act, and UrbanDevelopment Authorities Acts/Town Planning Actscontinue to hamper the availability of land for housingand other construction, pushing up land prices.

6.1.34 There is a need to take measures to easethe availability of land so that growth can take placethrough increased construction and housing activity,and land prices can be brought down to moderatelevels making affordable shelter available to thelower income groups. This will also help preventthe proliferation of unauthorised colonies. This isby no means a measure to dilute urban planning,where enforcement has often been the weakest link.On the contrary, it will make urban planning morein tune with the changing nature of cities.

6.1.35 More flexible zoning regulations to permitchange of land use where justified, easier

subdivision regulations, and extension of trunkservices to new areas/new townships will help toreduce congestion and develop the cities in anorderly fashion. Innovative measures for landassembly, land pooling, and use of land as aresource to build up infrastructure will need to becontinued and their administration made moreefficient and transparent.

6.1.36 Since 2001, 100 per cent foreign directinvestment (FDI) has been permitted in thedevelopment of integrated townships. However,investments may not materialise unless theconditions relating to land procurement are madesimple. In urban areas, especially those with MasterPlans, the needs of urbanisation should haveprecedence over land revenue and land reformslegislations in which restrictions on land ownership,transfers, and land use are incorporated in order toprevent the conversion of agricultural land. Otherproblems relate to the lack of clear titles, old,protected tenancies and rent control. All theseproblems, working together, have made it impossiblefor land to be procured for development in citycentres, barring in small quantities. In prime areas,much of the land is used well below its potential.

6.1.37 The system of maintenance of land recordsand registration of property transactions areoutmoded and need to be modernised throughcomputerisation so as to speed up the process.There is need to develop and implement a systemof authentication of property titles on the lines ofthe Torrens system now in vogue in many countries.This will make it easier for interested parties to enterinto land transactions confidently. Together with therationalisation of stamp duty, these measures willhelp in the development of a genuine propertymarket, which ultimately will prove beneficial for theassessment of taxes where property values are thebasis.

6.1.38 Rent control and tenancy laws also preventthe development of rental housing, thus contractinghousing stock. Reform of these laws is a politicallysensitive issue, as as evidenced by the history ofrecent efforts to amend the Delhi Rent Act. However,there is some awareness that rent control atabsurdly low levels with virtually no relation tomarket rates and extraordinary protection to tenants

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over generations not only hinder the developmentof rental housing but also act as barriers to thegrowth of cities. Dilapidated structures cannot berenovated because of the difficulty in evictingtenants, with the result that rejuvenation of innercity areas is not taking place. Transitoryarrangements can be made to help those who willface hardships, but zoning regulations should takeinto account the changing nature of inner city areasand permit their redevelopment.

FISCAL BALANCE

6.1.39 Poor management of assessment andcollection has ensured that the yield from propertiesin the form of property tax is a fraction of thepotential. In many cities, either property tax is notlevied at all, or the rates are extremely negligible,as a result of which the resource position of themunicipal bodies is extremely poor. On the otherhand, stamp duty levied on transactions in land at8 to –10 per cent is too high, in comparison withother countries. This has resulted in the use of ‘blackmoney’ in property transactions and the practice of‘power of attorney ’prevent the emergence of agenuine property market, with resultant losses tothe exchequer. A further fall-out is the unreliabilityof information on property values.

6.1.40 Another cause of the fiscal imbalance ofULBs is the highly subsidised supply of services, inparticular, water and sewerage. Insufficient revenueincome prevents civic authorities from investing inservices, leaving existing and future needsunfulfilled and this, in turn, hinders growth. Duringthe Tenth Plan, emphasis will have to be placed oninitiating and furthering broad-based reforms toovercome the impediments to urban growth. Thereform agenda, initially mooted through the newprogramme of Urban Reforms Incentive Fund, will,in order to make a serious impact, need to leverageall schemes in the urban sector. Therfore theconformity to an agreed reform programme will bemade obligatory for Central assistance to the sectorduring the Tenth Plan.

Capacity Building

6.1.41 Capacity building in urban institutions isone area which is much talked about but has been

relatively neglected in terms of action. Therestructuring of the roles of the elected ULBs hasto initially come about in the form of partnershipswith the parastatals which have been handling avariety of services. The public service elementneeds to be made more professional andaccountable to the people. As resources are thebiggest problem of ULBs, measures forcomprehensive and rational levy of property taxesand user charges are needed urgently. Adoption ofmodern accounting systems, improved practices ofbudgeting and planning, effective use of wardscommittees and other means of peoples’participation, and programme assistance under theschemes such as the SJSRY, should be put to usefor improving urban governance.

6.1.42 Studies have emphasised that in aprogramme such as Low-Cost Sanitation, provisionof subsidies and loan assistance have to be backedby substantial work on designs and materialsrelevant to each regional context, and by education,training, and propagation in the basic concepts ofsanitation and hygiene. Water supply schemes havebeen transferred to ULBs from parastatals butwithout creating an ownership structure or buildingup the capacity to undertake operations andmaintenance functions. Participatory managementis still a relatively novel concept as bureaucraticapproaches insulate public functionaries from publicscrutiny or accountability. These are all areas thatany programme of capacity building has to tackle.

6.1.43 Water supply and sanitation are the biggestchallenges before ULBs and there is an urgent needto step up investment in this sector during the TenthPlan. The tasks include efficiency improvement,better customer satisfaction, levy and collection ofreasonable user charges, accessing institutionaland market borrowings to provide sufficientinvestment funds, and institutional improvement atall levels. A number of states have shown interestin arranging public-private partnerships in this sectorand these must be pursued prudently to enhanceservice quality and efficiency. The Low CostSanitation programme needs a new thrust as thesanitation problem has defied a solution so far.

6.1.44 While encouraging the entry of the privatesector, the key role of public functionaries should

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not be overlooked as the progress towards privatesector participation is bound to be slow and maynot happen at all in many urban centres. The growthof urban capabilities has to be ensured with thesupport of bodies such as the Central Public Healthand Environmental Engineering Organisation(CPHEEO), HUDCO, National EnvironmentalEngineering and Research Institute (NEERI), NIUA,Regional Centres at Hyderabad, Mumbai andLucknow, the IIPA, and the various traininginstitutions relating to the urban sector. Whereneeded, the institutions need to re-orient theirapproach with a view to strengthening the ULBs inthe performance of their tasks. The leading role ofparastatals has to be scaled down to give theinitiative to the local bodies themselves.

Mapping, Urban Indicators And Data From TheUrban Sector

6.1.45 Two of the most important tools of urbanmanagers are maps and data. There is a need tostep up the availability of both these basicrequirements. While there have been individualefforts, both within and outside the Government todevise and set up a system of collection of urbandata or indicators the Town and Country PlanningOrganisation (TCPO)has been implementing ascheme of urban mapping based on aerialphotography. In the Tenth Plan, there is need to towiden the availability of maps and urban data so asto cover all urban centres. City personnel as wellas policy makers at the Central and State levelsneed basic urban data relating to settlements,slums, population, housing, transport,environmental issues such as disposal of solid andliquid wastes, and network of services such aswater, sanitation, roads, public transport, drainage,streetlights, parks and playgrounds, parking areasetc. on a day-to-day basis. In addition, the status ofmunicipal personnel, resources, assets, etc. arealso required. Currently few maps of any significantscale are available. This could be remedied by usingmaps generated from satellite data, which arereadily available. These maps can be used tosupplement ground-level work on property listingfor taxation purposes, as well as to monitor trendsof urban growth especially in the peri-urban areas.Data on existing service levels are a sine qua nonfor inter-city comparisons, for bench-marking

service standards, for urban planning, and forauthorities such as the SFCs who have to makerecommendations regarding allocation of resourcesfor the augmentation and maintenance of theseservices.

6.1.46 Efforts to secure data at the national orstate level are unlikely to succeed unless data aresystematically collected, validated and updated atthe local level. In order to be comprehensive, datashould emerge from a process of diagnosis at themunicipal level, out of a felt need of municipalfunctionaries to get to know the requirements andstatus of various urban services. A scheme togenerate city-level data and city maps derived fromsatellite imagery will be implemented during theTenth Plan.

SUMMING UP

6.1.47 The approach to urban managementissues in the Tenth Plan has to revolve around thestrengthening of the democratic structure, with theassistance of the very agencies –stategovernments, parastatals and the urbandevelopment authorities – who have continued totake over the functions that rightly belong to theULBs. The task is not easy, not the least becausethe ULBs do not have the wherewithal to imbibethe concepts and capabilities needed for theirresponsibilities. These will need to be built up, andlegislative and institutional arrangements to achievethis task will have to be made. That the ULBs arenot yet in a condition to take on all theirresponsibilities is no argument against making thenecessary transition. On the other hand, thechallenge lies in building up the ULBs, becausewithout that there will be neither accountability norsustained development in the urban sector.

6.1.48 The major thrust areas for the Tenth Plancan be readily identified:

1. Investments over the years and institutionaleffort have resulted in the setting up of avariety of urban infrastructure and services.However, there is a grave danger of theseinvestments being rendered ineffectivebecause of poor operations andmaintenance and poor institutional

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capacity. An extra effort has to be made toensure that the capacities created in suchareas as water and sanitation, transportsystems, and planned city development arenot permitted to degenerate.

2. Public-private partnerships should bebrought on to the urban agenda forimproving efficiency and better servicedelivery. However, capacity building in thepublic services has to be given highestpriority, through training both elected andappointed officials, and by restructuring ofmunicipal entities for more efficientmanagement. Performance of the ULBsin their allotted tasks, apart from beingwatched by the citizens, should also beclosely monitored by the StateGovernments.

3. Finances of the ULBs need strengtheningthrough smooth working of the SFCawards, rationalisation and improvementof the property taxation system, and asufficient level of levy of user charges.Transfers from State budget should belinked to defined levels of performance ofthe ULBs in resource-raising, expenditurecontrol, proper financial management, andtransparency in functioning.

4. Broad-based urban sector reformmeasures should commence during theTenth Plan. The fundamental need is tostrengthen the autonomy - functional aswell as financial – of the ULBs. There isneed for improving the debt-servicingcapabilities of ULBs so that investmentfunds from financial institutions and marketborrowings can be made available forurban infrastructure works. Plan supportin the form of centrally sponsored schemesshould be linked to the willingness in thestate and local bodies to implement reformprogrammes.

5. The 2001 Census data provide basicinformation on the trends in urban growthand this will help establish the needs ofthe ULBs, which has to be balanced by

capabilities. Future programmes ofassistance should be based on these twofactors. But first, studies to develop thedisaggregated picture of urban growth indifferent size categories, different statesand types of cities should be taken upimmediately based on the Census data.Planning of urban growth projects shouldbe based on these studies.

HOUSING

6.1.49 Housing is a basic necessity as well as animportant economic activity, in that it is a part of theconstruction industry. Construction activity accountsfor more than 50 per cent of the developmentoutlays. A study by the Indian Institute ofManagement, Ahmedabad, commissioned byHUDCO, to evaluate the impact of investment inthe housing sector on GDP and employment, hasfound that the sector ranks third among the 14 majorsectors in terms of the direct, indirect, and inducedeffect on all sectors of the economy.

6.1.50 The Housing and Habitat Policy, 1998 hasspecifically advocated that Government create afacilitating environment for growth of housing activityinstead of taking on the task of housing itself.Housing is largely a private sector activity in boththe rural and urban sectors. This is not to rule outthe need for a high degree of involvement of theGovernment and its agencies in meeting thehousing needs of the urban poor. The nature of thisinvolvement – it may in some instances extend tohouse construction itself – is to be determined bythe needs of a given situation.

6.1.51 The National Agenda of Governance alsoemphasised that housing activity would be anengine for substantial generation of employment,and all legal and administrative impediments thatstand in the way of vigorous housing activity shouldbe removed forthwith. What is undisputed is thatgovernmental initiatives – and its ‘facilitating role’— have a significant impact on the provision ofhousing and growth of the sector. These initiativesand interventions relate to legislations concerningownership, transfers and development of land;stamp duty and registration laws; rent controllegislation; tax policy particularly relating to housing

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loans; property and land tax laws; town planninglaw and its actual implementation, i.e.,Comprehensive Development Plans, zoningregulations, land use change; and building bye-laws.It also covers urban development activities throughparastatals and urban development authorities; sitesand services schemes; slum policy; provision ofurban infrastructure; urban transport policy andfacilities; the institutions in the public sector relatingto housing development and housing finance; andhouse construction in the public sector.

6.1.52 With the anticipated entry of FDI into thereal estate sector, care has to be taken that theneeds of the urban poor and marginalised sectionsare not ignored. Given the large number of activitiesimpinging on housing directly and indirectly and themultiplicity of agencies involved, designing aframework for orderly and dynamic growth in thehousing sector in the Tenth Plan is a challenge tothe planners.

6.1.53 The Working Group on Housing for theTenth Plan has observed that around 90 per centof housing shortage pertains to the weakersections. There is a need to increase the supplyof affordable housing to the economically weakersections and the low income category through aproper programme of allocation of land, extensionof funding assistance and provision of supportservices. The problem of the urban shelter-lessand pavement dwellers has not been given theconsideration that is necessary in a welfare orpro-poor State, as seen from the lack of progressin the Night Shelter Scheme. Regulation ofbuilding quality and its assurance, especially inareas prone to disasters is an issue whoseurgency was reiterated after the earthquake inGujarat in January 2000. Building designs alsoneed to be gender sensitive and shouldaccommodate the requirements of physicallychallenged population.

6.1.54 In order to increase the proportion ofhousehold savings in the housing sector, as well asto provide houses to those who cannot as yet affordto have their own houses, there is need toencourage the promotion of rental housing by theprivate sector, public sector, cooperatives andindividuals. This requires legislative changes in the

existing rent control laws, something on whichwhich very little progress has been achieved.

6.1.55 Availability of land has been constrainedby certain provisions contained in a variety of lawssuch as the Land Revenue Act, the Land ReformsAct, the Urban Land (Ceiling and Regulation) Act(ULCRA), the Town Planning Act and the UrbanDevelopment Acts. Each of them has, often throughits provisions and equally through the manner inwhich they were implemented — created hurdlesfor legitimate transactions in land urgently requiredfor expansion of the housing stock. The repeal ofULCRA was expected to ease the situation to someextent. This needs to be followed up by otherchanges whereby legally valid availability of landfor urbanization is speeded up, and people are notdriven to adoption of short-cuts to obtaining housingplots and other uses.

6.1.56 Balancing the liberal availability of land,with the demands of orderly growth with adequateprovision of infrastructure is no easy task, andthe ‘land sharks’ are invariably one step aheadof the authorities that enforce regulations andprovide of amenities. This has led to theproliferation of ‘unauthorised layouts’ and‘informal settlements’. The efficacy of townplanning and urban development programmeslies in meeting the growing demand for housingin urban areas within the framework of the tenetsof orderly growth. Public and private initiatives invarious parts of the country have alreadydemonstrated that, given the will and efficiencyof implementation, it is possible to plan aheadand promote orderly growth. These efforts needto be made more widely known and replicated.

Institutional Financing of Housing

6.1.57 The substantial thrust on housing laid byGovernment through the facilitating measuresincluding Reserve Bank of India (RBI) regulationsrelating to priority sector lending, fiscal concessionsand budgetary incentives has started to bear fruit.Institutional credit disbursals have grown from Rs.5,767 crore in 1997-98 to Rs. 12,626 crore in 2000-01. These disbursals are through the 28 HousingFinance Institutions (HFIs) under the ambit of theNational Housing Bank (NHB).

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HUDCO

6.1.58 HUDCO earmarks 55 per cent of itshousing portfolio funds for the economically weakersections (EWS) and low income groups (LIG), withdifferential interest rates, high loan component forlower cost units, and longer repayment period.Though its releases are somewhat less thansanctions, it is noteworthy that HUDCO hassanctioned 12.46 million urban housing units (tillSeptember, 2001) in both urban and rural areas.During 1998-2001, under the Additional 2 MillionHousing programme, against a total target of 30lakh housing units, HUDCO has supported 33.82lakh units.

6.1.59 The other factor in HUDCO operations forthe mass housing programmes is the dependenceon State Government guarantees, which as notedelsewhere, disqualifies some states who havedefaulted. Such states will need to take steps tofulfil their obligations under the guarantee. HUDCOis also a large player in retail lending for housing,and in two and a half years has sanctioned a totalloan amount of Rs. 2,331 crore to 2,62,550beneficiaries. HUDCO has been in the forefront ofthe Government’s efforts to come to the aid ofdisaster-affected households, and has providedfinancial assistance for disaster rehabilitationhousing to the tune of Rs. 2,360 crore forconstruction of over 4 million houses for earthquake,cyclone, and flood victims.

6.1.60 In order to undertake housing programmesfor the poorer sections, states must create anenvironment favouring loan-based houseconstruction for the EWS categories, andstrengthen the state-level machinery for lending andloan recovery. EWS housing in urban areas haslong remained a neglected area in relation to thedemand, and without arrangements in place forcredit support to this section, states will find it difficultto continue giving State guarantees to loans fromHUDCO. To ensure recovery of loans, confermentof ownership rights in the name of the beneficiaryfamily (jointly in the names of wife and husband)could be done only after the entire loan is recovered,till which time the house may be held on a rentalbasis. To augment housing supply for the poor, thereis also need to enlarge private initiatives and public-private sector partnerships. While encouraging the

development of new integrated townships throughforeign direct investment/private entrepreneurship,there should be provision for earmarking apercentage of such housing for EWS/LIGhouseholds.

Cooperative Sector

6.1.61 The National Cooperative HousingFederation operates through 26 apex cooperativehousing federations in the states. There are nearly90,000 primary cooperative housing societies with6.5 million individual members. Up to 31 March2001, the apex federations have mobilised Rs.6,407 crore from LIC, NHB, HUDCO commercialand cooperative banks etc., and disbursed loans ofRs 6,800 crore to housing cooperatives andindividual members. This has led to the constructionof approximately 2.13 million dwelling units(completed and under construction). Housingcooperatives have been given a target ofconstruction of one lakh houses each year underthe 2 million housing programme for the EWS/LIG,and they have been able to construct a total of 2.92lakh units in the 1998-2001 period.

Urban Housing Shortage in the Tenth Plan

6.1.62 The Working Group on Housing hasestimated the urban housing shortage at thebeginning of Tenth Plan at 8.89 million units. While

Box: 6.1.1FDI in development of integrated townships

Including housing and building material

In May 2001, the Government of India announcedthe policy of permitting 100 per cent FDI for thedevelopment of integrated townships, includinghousing, commercial premises, hotels, resorts.FDI was also permitted in city and regional levelurban infrastructure facilities such as roads andbridges, mass rapid transit systems and for themanufacture of building materials. Developmentof land and providing allied infrastructure will forman integrated part of a township’s development.The minimum area to be developed is 100 acres.The guidelines for the scheme were issued bythe Ministry of Commerce and Industry in January2002.

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this is indeed an alarming number, it includes the‘congestion’ needs of joint families, obsolescenceand replacement of old houses, and upgrading ofall the kutcha houses. The total number of housesrequired cumulatively during the Tenth Plan periodis assessed at 22.44 million. There is, therefore, agood case for continuing the Two Million Housingscheme during the Tenth Plan period, as it will takecare of about 3.5 million houses for the urban poor.

Strengthening Of Housing Stock In VulnerableRegions

6.1.63 About 54 per cent of India’s land area isvulnerable to earthquakes, 8.4 per cent to cyclonicwind and storm surges, and 4.9 per cent of the areais vulnerable to flood damage. The Working Groupon Housing has suggested a scheme forstrengthening of the vulnerable house in the EWS

and LIG category in 107 districts which face highestrisk of damage because they are multi-hazardprone. According to an estimate, these houses canbe strengthened and retrofitted at 10 per cent ofthe cost of construction of a new house on anaverage. What is equally important is todemonstrate retrofitting technologies relevant to thespecific disaster-prone area.

6.1.64 The problem of housing slum-dwellers indecent surroundings is dealt with separately. In viewof the growing problems of the housing sector, andparticularly the urban poor, the following measuresare necessary and should be implemented duringthe Tenth Plan period:

Ø The first priority in urban housing,particularly for the urban LIG and EWS, isthe provision of land at affordable prices.

BOX : 6.1.2GROUP HOUSING COMPLEXES

The growth of multi-storeyed apartment complexes in the cities has led to the emergence of a new setof problems with regard to the maintenance and sharing of common areas.The Delhi ApartmentOwnership Act, 1976 is a typical legislation dealing with the issues of apartment owners. Its mainobjectives are:

a. to provide heritable and transferable ownership right to every apartment owner; and

b. to provide for an association of apartment owners for the maintenance of common areasand facilities in which every apartment owner has a percentage of undivided interest.

Formation of Association of Apartment Owners: The Act provides for the mandatory creation of anAssociation of Apartment Owners for the administration of the affairs of the apartments and the propertyappertaining thereto and for the management of common areas and facilities. The model bye-laws ofsuch an Association, which include the constitution, structure, and powers of the Association and itsoffice-bearers, are to be framed by the Administrator, and the Association will have to abide by these. .The model bye-laws will also deal with maintenance, repair and replacement of the common areas andfacilities and payment for these, as well as the manner of collecting the share of common expensesfrom the apartment owners/occupants. In the proposed new Bill on the subject, the promoter has toapply to the Competent Authority for registration of the Association of apartments owners, and he willremain the associate member of each apartment till it is allotted, sold or transferred to a member.

The formation of an Association or Society of Apartment Owners is for the self-interest of the apartmentowners. Without such a body, the many problems of sharing common services and areas, and undertakingmaintenance work for the entire complex, may not be properly handled. However, instead of leaving itto the apartment owners to voluntarily come together to form an association, it is considered a goodmove to put a provision in the Apartment Ownership Act, making it mandatory for individual owners tobecome members, with the Promoter being made responsible for its registration. Besides, the legislationwill also provide required legal backing to a number of issues which arise in the ownership andmanagement of an apartment complex.

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Increased availability of developed landin urban areas through adoption of variousinnovative approaches like land bank forthe poor and land assembly methods,vacant land tax and transferabledevelopment rights and simplification ofsub-division regulations is called for.

Ø Unauthorised settlements have become apart of the urban scenario. They house alarge number of people and there isambivalence regarding regularisation ofthese settlements and extension ofservices to them. In many cities, they arenot brought under the property tax net.Pragmatic solutions leading to security andextension of civic services are required. Toprevent proliferation of such colonies, theland use and sub-division policies need tobe streamlined, and their implementationrendered speedy and smooth withoutundue hassles to those in need of land forhousing.

Ø The city planning provisions need to betuned to the requirements of the weakersections in urban areas through adoptionof appropriate and affordable standardsand norms, use of cluster housing and‘growing house’ concepts.

Ø The feeling that urban planning ignores theneeds of the urban poor, must be dispelledthrough effective action to meet theseneeds. The urban development authoritieswho acquire and develop large tracts ofland for the growth of the cities, shouldreserve a major part of such land to meetthe requirements of the EWS/LIGpopulation. At present, there is littleevidence that these authorities — who areoften the sole organisation fordevelopment of serviced land — areproviding the due share of land to the urbanpoor.

Ø Housing and economic activities have togo hand in hand with the provision ofhousing for the workers close to workplaces. There is need for coordinating the

development of industrial areas andhousing areas. Layouts should be mixedin nature with the urban poor - providersof services - being enabled to live andintegrate with the rest of the community.

Ø Schemes such as the Two Million Housingscheme and the new scheme of housingwith Central assistance for the slumpopulation (Valmiki Ambedkar AwasYojana or VAMBAY) should be used toprovide immediate benefit to the mostdisadvantaged urban segments.

Ø HUDCO assistance is not available toseveral states which are unable or unwillingto stand guarantee for these loans. Asolution has to be found so that the urbanpoor in these states do not find themselvesat a disadvantage in comparison with otherstates where there is greater willingnessto use HUDCO loans.

Ø Urban housing should mostly be based onsavings and credit from HFIs. The workersof the informal sector and other urban poorincluding slum-dwellers are generally notserved by these Institutions. At the sametime, public institutions such as HousingBoards and Housing Co-operatives, havenot been able to meet the needs of thesesections. This will only increase the growthof unserviced housing and of slums. Thereis a need to make housing loans availableto the EWS in the cities. Credit activity bystate agencies and housing co-operativesneed to be revived. HUDCO and the HFIsshould be encouraged to finance self-helpgroups or groups who have the support ofan NGO and who can be of assistance inloan recovery.

6.1.65 Costs of urban housing are likely to behigher in comparison with rural housingprogrammes because of the higher land costsstandards of construction in urban areas. It is forthis reason that a scheme such as VAMBAY,launched in the final year of the Ninth Plan, has acombination of subsidy and loan. Expectations offully subsidised housing should be discouraged. An

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environment needs to be created to encouragehousing programmes with credit to the extent thatbeneficiaries can afford.

URBAN POVERTY ALLEVIATION AND SLUMIMPROVEMENT

6.1.66 Reduction and alleviation of poverty, if notits complete eradication, including poverty in urbanareas, has long been one of the objectives ofplanning. There have been encouraging trends inurban poverty in both percentage and numericalterms, though the urban poor still face age-oldproblems at the ground level. Besides, there arewide regional variations as well as differencesamong different size-class towns with regard to theextent and nature of urban poverty.

6.1.67 According to the 2001 Census, the totalurban population is 285.35 million, which accountsfor 27.78 per cent of the total population. While thetotal population in the country increased by 21.34per cent in 1991-2001, urban population grew by31.36 per cent during the same period. Thesomewhat moderate growth of the urban populationis explained by the declining rate of urban growthin the last two decades : (Table 6.1.2)

6.1.68 The encouraging feature is that apartfrom continuation of the fall in the proportion ofthe urban poor, for the first time in the 1991Census, there is also a reduction in the absolutenumbers of the urban poor. According to the largesample survey data on consumer expenditure(55th Round) of the NSSO using a 30-day recallperiod, 67.1 million or 23.62 percent of India’surban population were below the poverty line in1999-2000. As is evident from the Table 6.1.3,while the percentage of persons below povertyline in urban areas had been steadily decliningsince it was first estimated at 49 per cent in 1973-74, the absolute number of persons below thepoverty line had been rising, touching 76.3 millionin 1993-94. This trend has been reversed in thelatest Census.

6.1.69 Though, at the national level, thepercentage of the poor in rural areas is significantlyhigher than in urban areas, only a few of the largerStates conform to this pattern. States such asAndhra Pradesh, Goa, Gujarat, Haryana,Karnataka, Kerala, Madhya Pradesh, Maharashtra,Rajasthan, Tamil Nadu, Delhi and the Union Territoryof Pondicherry have reported levels of urban povertythat are higher than rural poverty. States where ruralpoverty is higher than in urban areas are ArunachalPradesh, Assam, Bihar, Himachal Pradesh, Orissa,Uttar Pradesh and West Bengal. Analysis showsthat poverty reduction among States has beenuneven. The most important point about the inter-state variations in poverty is that it shows nocorrelation with per capita income or otherdevelopment indicators like per capita consumption,levels of industrial and infrastructural development,etc., in urban areas during the nineties. While the

Table 6.1.3Percentage of Number of Poor

Year Poverty Ratio (percentage) No. of poor (million)Rural Urban Combined Rural Urban Combined

1973-74 56.4 49.0 54.9 261.3 60.0 321.3

1977-78 53.1 45.2 51.3 264.3 64.6 328.9

1983 45.7 40.8 44.5 252.0 70.9 322.9

1987-88 39.1 38.2 38.9 231.9 75.2 307.1

1993-94 37.3 32.4 36.0 244.0 76.3 320.3

1999-2000 27.1 23.6 26.1 193.2 67.1 260.3

Table 6.1.2Growth of Urban Population

Percentage of Decadal urbanurban to total population growth

1981 23.34 46.14

1991 25.72 36.46

2001 27.78 31.36

(Figures in percentages)

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lack of development is the cause of urban povertyin many States, the nature and sectoral compositionof development is responsible for poverty in others.

6.1.70 Unemployment data show that the overallunemployment rates are not high, though they arehigher in urban areas than in rural areas. Theunemployed person-day rates are higher than therates obtained for persons, thereby indicating a highdegree of intermittent unemployment. This is mainlydue to the absence of regular employment for manyworkers. Studies have shown that casualisation oflabour is the main, and increasing, source of urbanpoverty. The dynamics of development in urbanareas of many States during the past two decadeshas been such that rapid economic growth has notled to a corresponding decline in poverty. Whileincome levels are rising to meet the basic nutritionalneeds, other equally basic needs of shelter, civicamenities, health care, educational and socialneeds, etc. are not being met in an adequatefashion. Urban poverty, thus, emerges as a morecomplex phenomenon than rural poverty. Someaspects of the complexity of urban poverty are:

6.1.71 Level of basic amenities: There are seriousdeficiencies in urban infrastructure as a result of therapid growth of urban population and low investmentin urban development. In general, the smaller the town,the less likely it is to have a wide coverage ofamenities, and the poor in such towns facecorrespondingly higher deprivation. It has been notedthat the percentage of households having flush toiletsexhibits a strong positive correlation with economicdevelopment, much more than any other indicator ofamenities. The coverage of civic amenities, specificallyelectricity, drinking water and toilets, is uneven andvariation across size class of urban centres showsregularity and a distinct pattern. The percentage ofhouseholds covered by each of the three amenitiesincreases systematically with the size class of theurban centres except for Class VI towns. Class Vtowns (population between 5,000 and 10,000) registera high percentage of households not covered bytoilets, electricity and drinking water (61 per cent, 41per cent, and 28 per cent respectively) in 1991. Theshortages are very serious for urban centres withpopulation of less than 50,000. This emphasizes theneed for greater involvement of the State and CentralGovernments in upgrading the infrastructure of the

small towns. Most of the small and medium townsare not in a position to generate funds to provide civicamenities to all sections of population. These towns,particularly those located in less developed states,should, therefore, be the major focus of governmentpolicy in terms of providing basic amenities.

6.1.72 Town or city size : There is evidence toshow that the incidence of poverty in a town, asmeasured by Head Count Ratio (HCR), declinessteadily with increasing size. In 1987-88, the HCR intowns with less than 50,000 population was 47.40per cent while that in towns with population of morethan one million was 26.73 per cent. In 1993-94, thecorresponding figures are 43.16 per cent and 20.57per cent. The National Capital Territory of Delhi (wherethe urban population accounts for 93 per cent of thetotal population according to the 2001 Census),experienced a population growth of 51.3 per centduring the decade of 1991-2001. The percentage ofpeople below the poverty line in Delhi stood at 49.61per cent in 1973-74 and declined steadily over theyears to 16.4% in 1991 and now stands at 9.42 percent. A larger incidence of secondary and high-valuetertiary activities in large cities gives people residingthere a higher level of income. In contrast, the incomelevels of people in small and medium towns tend tobe low because of the poor economic base and lackof employment opportunities in the organised sector.In the changing economic scenario, care has to betaken to ensure that the process of structuraladjustment does not lead to an increase in urbaninequality. For poverty alleviation in the broader sense,encompassing both income and environment, withina framework of balanced regional development, itwould be important to restructure priorities in favourof small and medium towns and slums in larger cities,where a large majority of the urban poor live.

6.1.73 Household size : The fact that householdsize affects the poverty status of a household iswell known. Larger households tend to have ahigher probability of being poor.

Features of Urban Poverty

6.1.74 Poverty can take specific forms ofdeprivation and misery among individualhouseholds. The degree of poverty can also differ,and attempts have been made to categorise the

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urban poor on a declining scale such as core poor,intermediate poor and transitional poor. Anotherstudy classifies them as declining poor, coping poorand improving poor, with different degrees of priorityfor the three basic needs of survival, security, andquality of life. Box 6.1.3 lists the various types ofvulnerability of the poor:

the Urban Community Development project startedin 1958. The Environmental Improvement of UrbanSlums scheme was started in 1972 at the Centrallevel to provide basic physical facilities like safedrinking water, sanitation, storm water drains, street-lighting and roads. This scheme was transferred toState Governments in 1974. Following experimentswith a variety of combinations of schemes foremployment generation, formation of beneficiarygroups, training, community organisations and thrift/self-help groups, finallythe integrated programmeof Swarn Jayanti Shahri Rozgar Yojana (SJSRY)was launched in 1997.

6.1.77 The implementation of programmes for theurban poor is beset with enormous problems.Theproblem of inadequate funding has beencompounded by under-utilisation of Central funds,diversion of funds released for specific programmes,and infructuous expenditure. Monitoring at theCentral level has been weak and ineffective.Success stories have not been publicised oradopted on a wider scale. The understanding ofthe programmes, their objective and modalitiesrelating to implementation has been weak andsuperficial, leading to inaction in many areas thatare of vital concern to the urban poor. There arefew master plans and very little effort at monitoringthe benefits that are expected to flow to the targetcommunities. In addition, there has been too muchemphasis on engineering or the ‘works’ aspects ofprogrammes without adequate understanding of thesocial, psychological and other dynamics of poverty.The beneficiaries have not been consulted nor givena voice in the implementation of programmes. Whenthere is a deceleration of economic growth,especially when governments experience fiscalconstraints and need to reduce deficits, allocationof funds for the social sectors suffers. This shouldnot to happen.

SLUMS

6.1.78 Provisional data relating to slums in the2001 Census throw some interesting light on theslum population. Nearly 28 million persons lived inthe slums in 1981, accounting for 17.5 per cent ofthe urban population. The estimates for 1991 were45.7 million slum dwellers accounting for 21.5 percent of population. According to the 2001 Census,

Box: 6.1.3Types of Vulnerability of the Poor

Housing Vulnerability: Lack of tenure, poorquality shelter without ownership rights, no accessto individual water connection/toilets, unhealthyand insanitary living conditions.

Economic Vulnerability: Irregular/casualemployment, low paid work, lack of access tocredit on reasonable terms, lack of access toformal safety net programmes, low ownership ofproductive assets, poor net worth, legalconstraints to self-employment.

Social Vulnerability: Low education, lack ofskills, low social capital/caste status, inadequateaccess to food security programmes, lack ofaccess to health services, exclusion from localinstitutions.Personal Vulnerability: Proneness to violenceor intimidation, especially women, children, theelderly, disabled and destitute, belonging to lowcastes and minority groups, lack of information,lack of access to justice.

Approach To Urban Poverty Alleviation

6.1.75 In an environment where the poor areexploited and ignored, there is a major role for theState and its agencies, including the ULBs and theparastatals, in the field of urban development andprovision of services such as water supply, health,education, sanitation, legal protection andemployment generation. This is an immensechallenge because of the known weaknesses of thesystem like the lack of accountability, corruption,and the dominant role of elite groups who wieldsubstantial power in urban governance.

6.1.76 The first formal attempt to experiment withthe community development approach in cities was

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there are 40.6 million persons living in slums in 607towns/cities, and they account for 22.8 per cent ofthe population of these cities. However, the latestCensus data also reflect the problems inherent innot having an accepted definition of slums andabsence of proper listing of slum settlements in theurban offices concerned with slum improvement andcivic amenities. The practice of notifying slumsunder relevant laws is not being followed, especiallywhere the land involved belongs to Government orany of its agencies. As a result of these lacunae,these data are not definitive because towns withless than 50,000 population, and slum clusterswhich are not formally or informally recognised ifthe population was less than 300 are excluded.

6.1.79 While demographic data on slumpopulations and on civic amenities to slum dwellersfrom the Census are still awaited, there appears tobe no change in the basic level or improvement inthe features of slum settlements despite severaldecades of programmes for the environmentalimprovement and upgradation of slums. There iscause to wonder whether ‘Cities without Slums’ is aslogan about an objective, which, howeverdesirable, is believed to be unreachable, or whetherit is a serious planning and urban developmentconcern. Certainly the degree of effort to upgradeslums to a more habitable level, does not indicate aserious effort in this direction.

6.1.80 The Draft National Slum Policy drawn upby the Department of Urban Employment andPoverty Alleviation in the Ministry of UrbanDevelopment in April 1999, had been widely debatedand many comments received. It needs to finalised.A National Policy on Slums is of great significancegiven the degree of wrong perception regarding thenature and extent of the slum problem. Such a policycan help bring an attitudinal change among theauthorities and the people at large, including theurban poor and the slum-dwellers, regardingmeasures to improve their quality of life and makeour cities free from the worst features of slums.Slums are generally treated as the inevitableoutcome of continuing migration of unskilled labour,but, in fact, most slum-dwellers are permanentresidents of the city. In many instances, families inslums span several generations. The mainobjectives of a slum policy would be

o To create awareness of the underlyingprinciples that guide the process of slumdevelopment and improvement and theoptions that are available for bringing aboutthe integration of these settlements andthe communities residing there with theurban area as a whole.

o To strengthen the legal and policyframework to facilitate the process of slumdevelopment and improvement on asustainable basis; to ensure that the slumpopulation are provided civic services,amenities, and economic opportunities toenable them to rise above the degradingconditions in which they live.

o To arrive at a policy of affirming the legaland tenurial rights of the slum-dwellers.

o To establish a framework for involving allstakeholders in the efficient and smoothimplementation of policy objectives.

6.1.81 Focusing on slums enables planners tolook beyond income levels to neighbourhood andenvironmental considerations and this results in amore multi-dimensional view of urban poverty. Inview of the progress made in decentralised urbangovernance through the 74th ConstitutionalAmendment, it is necessary ask how this hasbenefited the slum-dwellers and provided them anincreased opportunity to articulate their needs, andobtain assistance from civic authorities and urbanplanners. It does appear that the effort has beenmore towards providing some amount of civicservices in an un-coordinated fashion than towardsdevising all-embracing programmes withparticipation of the slum-dwellers themselves, andfinding solutions which provide not only a decentquality of life with prospects of further improvement,but also make slums redundant in our urbanhabitations. Slum dwellers need not perennially beat the receiving end of selected doles but must bemade part of the urban economic and socialprocesses with adequate opportunities for improvingtheir lives, while contributing what is acknowledgedto be a major share in the economic activities ofthe cities. Upgradation of living conditions of theurban poor has to be recognised as part of thenational development process.

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Some of the obvious lapses in slum programmesare:

Ø Non-listing of all habitations, big or small,which should be classified as slums.

Ø Lack of basic information on the numberof households in such habitations, and thestatus of basic amenities.

Ø Absence of a master plan for a period offive years to gradually increase the levelof civic amenities.

Ø Adherence to outdated and totallyinadequate standards of services to theslum-dwellers, under the EIUS component.

Ø Failure to provide specific provisions inmunicipal laws for dealing with issuesrelating to the urban poor, slums, andeconomic planning for poverty alleviation,etc., which flow from the 74th ConstitutionalAmendment; failure to build up capacity inmunicipal bodies to provide the requiredservices to slum communities and theurban poor.

Ø Uncertainty regarding agencyarrangement for various slumimprovement tasks between the municipalauthority, development authority, slumboard, housing board, parastatals, etc.,and failure to provide a coordinatinginstitutional arrangement;

Ø Failure to implement provisions made inComprehensive Development Plans for thehousing, and economic needs (productionand marketing activities) of the urban poor,especially provision of land, and facilitiesfor street vendors and hawkers. In theabsence of such planning, unplannedgrowth takes place leading to ‘informal’ orunauthorised low quality settlements, andunauthorised hawking which subjects thepoor to harassment from petty officials. Itis often said that ‘there is no place for thepoor in town planning process’ and evenexisting provisions are not implemented forthe benefit of the urban poor.

Ø Failure on the part of land-owning agencieson which slums are located to takedecisions on permission to makeenvironmental improvement and in situupgradation of slum clusters.

Ø Failure to converge available civic servicesin sanitation, paved access and drainage,streetlights, health-care, water supply,education, etc., by organising responsibilitycells and involving the beneficiaries inplanning of services.

Ø Lack of a commitment to achieve abreakthrough in bringing slum-dwellers outof the stigma and misery of living in slums,and instead, use funds such as NationalSlum Development Programme fortinkering with the symptoms.

The Importance Of Slum Upgrading

6.1.82 Action taken so far for slum improvementor in situ upgrading is inadequate. Re-designing andre-constructing settlements with the participation ofresidents and assistance from public bodies is aviable option with the least amount of disturbanceto the settlers or their livelihood. This method ofslum improvement needs to be practised on a muchwider scale. The VAMBAY project permits in situupgradation, and it is necessary that an earlydecision is taken regarding land on which slumsare situated in order to facilitate upgradation.

6.1.83 Various Central Government schemes –National Slum Development Programme (NSDP),Swarna Jayanti Shahri Rozgar Yojana (SJSRY),VAMBAY, Night Shelters, Two Million HousingScheme, Accelerated Urban Water SupplyProgramme (AUWSP), Low-Cost Sanitation —provide for a wide range of services to the urbanpoor including slum-dwellers. They includeidentification of the urban poor, formation ofcommunity groups, involvement of non-governmentorganisations (NGOs), self-help/thrift and creditactivities, training for livelihood, credit and subsidyfor economic activities, housing and sanitation,environmental improvement, community assets,wage employment, convergence of services, etc.What is needed is to ensure that the task of meetingthe needs of the slum-dwellers is better organisedand effectively administered, and duly monitoredat both State and Central levels. There are alsomany instances of successful implementation ofurban poverty alleviation/slum upgrading andservices programmes in the Indian situation.

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APPROACH AND PROGRAMMES OF URBANPOVERTY ALLEVIATION IN THE TENTH PLAN

6.1.84 The 74t h Amendment is intended toincrease the participation of the people andaccountability in administration. State Governmentsshould legislate the requisite amendments to themunicipal laws, to clearly devolve the tasks of urbanpoverty alleviation and slum improvement to theULBs.

6.1.85 A multi-dimensional strategy is called for,which will focus on empowerment of the urban poor.The community structure under the SJSRY shouldbe made the common pattern and the foundationof all programmes for the urban poor and slumdwellers. This would be an effective way to give thepoor a forum to talk about their needs and, giventhe empowerment of the poor when organised,ensure that their demands are then met.

6.1.86 Services required by the urban poor –physical infrastructure as well as humandevelopment services - are simple to enumerateand, over the years, most of them have beenattempted at least in a rudimentary fashion. Duringthe Tenth Plan, the focus has to be on upgradingthese services, and on convergence for achievingsynergy. Convergence of services such as watersupply, drainage, solid waste management, as wellas for health care, family welfare, education,anganwadis and crèches should be the main plankof urban poverty alleviation. Outlays on water supplyand sanitation should, in particular, focus on theneeds of the urban poor. Setting up basic healthand education units such as crèches, anganwadis,primary schools, public health units and primaryhealth centres (PHCs) in areas where the urbanpoor live, is equally important.

6.1.87 At the state level there is need to:

Ø Set up urban poverty and slumimprovement task forces. The first taskshould be to upscale the old standards ofservices under EIUS and make them morerelevant to the average level of servicesavailable to the residents of the town/city.

Ø City administrations should create urbanpoverty alleviation (UPA) cells at the

municipal level. The cell should haverepresentation of all the services requiredby slum-dwellers, as well as of theCommunity Development Societies set upunder SJSRY, and NGOs active in the field.The UPA cell should be in overall chargeof urban poverty and slum relatedprogrammes.

Ø The UPA cells should draw up City PovertyAlleviation Plans in which the communityorganizations of the poor created under theSwarn Jayanti Shahri Rozgar Yojana(SJSRY) should be involved. The tasks ofvarious agencies should be well-definedand coordination should be effective. Thethrust should be on the provision of all basicservices such as potable water andsanitation services, including householdtaps, toilets with septic tanks, covereddrains, waste collection services etc. to theslum settlements. Other activities for thesocio-economic upliftment of the slumpopulations should also be taken up,making maximum use of the SJSRY andsimilar schemes.

Ø City-wide master plans for slumimprovement should be drawn up with theobjective of removing the slumcharacteristics of the selected settlements.The annual programmes and projects,including those to be financed out of NSDPfunds, should be based on such masterplans.

6.1.88 Programmes for urban infrastructuresupported by the Central Government, such as theIDSMT and the Mega City Scheme should haveadequate provisions for meeting the infrastructuraldeficiencies of settlements of the urban poor.

6.1.89 The personnel who deal with UPAprogrammes must appreciate the many forms urbanpoverty can take. These programmes must alsodeal with the policy-related causes of urban povertysuch as inappropriate framework of urban services,inadequate coverage of education, health,infrastructure and transport, lack of labour rightsand unemployment benefits, land and housingregulations which make it unaffordable for the poor

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to find housing and push them to disaster-proneand unhygienic areas, lack of safety nets and socialsupport systems, etc.. The designated UPA cell inthe ULBs should be sensitised to ensure that theneeds of the poor are provided for in investmentplans and maintenance provisions.

6.1.90 The community structures created underSJSRY need to be strengthened and furtherdiversified. One method would be to formassociations of specific groups such as streetvendors, who could have their own self-help groups,and network to create a financial interface with theformal sector financial institutions in order to gainaccess to credit. Social security benefits would beanother area to cover. During the Tenth Plan, thescope of SJSRY should be expanded to include ascheme of contributory social security assistancesuch as insurance against death of the bread-winner,sickness, disability, and old age benefits to membersof the community structures, in which there will be amatching contribution from the Government.

6.1.91 Capacity building is required fordeveloping communication and inter-personalskills among the people responsible for providingfor the needs of the urban poor, for improving thelevel of services and satisfaction of thebeneficiaries, and for providing coordinatedservices from a number of line agencies. Thecreation of UPA cells has to be followed up byexposing personnel to techniques of convergenceand team formation, communication and planning.

6.1.92 The positive aspect of SJSRY is that itcontains the two basic requirements of anyprogramme of poverty alleviation namely,community involvement and empowerment, andemployment generation. Evaluation studies showthat the progress of the scheme has not beenremarkable, but that is no reason to give up thescheme itself. What is needed, instead, is to takecorrective measures and improve implementation.Some areas of improvement are:

Ø The wage employment component shouldbe used only for building assets andinfrastructure relating to the urban poor,and not for general municipal works. Therequirements should be selected bybeneficiaries themselves and

implementation should be from such listsof works identified by the beneficiaries.

Ø The guidelines need to be simplified andmade more concise, removing allambiguities and contradictions.

Ø The component of vocational trainingshould be revamped and the quality oftraining improved;

Ø Community organisers and projectcoordinators should be appointed whereverthey are not present, and the persons mustbe qualified in social work. The role of NGOsin projects should be strengthened. Thecommunity structures created under thescheme should be fully involved in theactivities under the scheme, includingselection and implementation of works, thrift-and-credit groups, group economic activities,etc. These community structures should beencouraged to fulfil their role as pressuregroups for highlighting issues relating to theirupliftment.

Ø Monitoring of the project at both the Centraland State levels should be strengthened.

6.1.93 There is, in general, despondency amongagencies responsible for programmes such asSJSRY with regard to availability of credit. There isa feeling that the increased emphasis on the viabilityof banks and reduction of non-performing assets(NPAs) is beginning to affect the availability of creditfor the urban self-employed. This would be anunfortunate development. There is an urgent needto restore the banking sector’s role in providingcredit support to the urban informal sector,especially the self-employed urban poor. As the TaskForce on Employment Opportunities noted, bankscan meet the credit needs of the informal sector byfinancing self-help groups which provide micro-credit for informal sector activities.

6.1.94 The concept of micro-finance essentiallyrests on the premise that (a) self-employment/enterprise formation is a viable alternative means ofalleviating poverty, (b) lack of access to capital assets/credit acts as a constraint on existing and potentialmicro-enterprises and (c) the poor are capable ofsaving despite their low level of income. Micro-financecould be referred to as providing credit support, usuallyin small amounts, along with other components such

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as training and other related services to people withpoor resources and skills but who are in a position toundertake economic activities. Significant progresshas been made in this area in recent years and theeffort needs to be extended. Such self-help activitycan be strengthened with the assistance of NGOswith a good track record.

6.1.95 The other area requiring a thorough reviewand overhaul is vocational training under SJSRY,much of which is in the government sector and failsto equip the candidates with any sustainable levelof skills or for self-employment. Innovative areas ofemployment, as has been developed in Keralaunder the Kudumbasree programme, needs to beemulated in other states.

6.1.96 Land-owning agencies should be set astrict time limit to decide whether or not they wishto retrieve the land under slums and participate in aresettlement programme. If they fail to decide, theslums should be brought under in situ developmentwithout further reference to the agency.

6.1.97 The National Slum Policy which hasalready been subjected to wide debate anddiscussion, should be given a final form, followedup by implementation.

Performance Of NSDP

6.1.98 The National Slum DevelopmentProgramme (NSDP) initiated in the year 1997 as ascheme of Special Central Assistance, has beenproviding additional central assistance to StateGovernments for slum improvement. However, itsperformance has not been satisfactory mainlybecause of the delays at the State level in releasingthe funds to implementing agencies. The monitoringof the programme at the Central level requiresstrengthening. To ensure proper utilisation, duringthe Tenth Plan the NSDP funds should be releasedfor specific projects. States should submit annualplans for projects which will upgrade selected slumsto get over the slum characteristics. The existingpractice of releasing the funds to the states shouldbe modified to this extent.

Night-Shelters For The Homeless

6.1.99 The programme of construction of NightShelters for those without homes in urban areas

requires rejuvenation. The provision of subsidyunder the scheme has to be adequate to make itfeasible for NGOs working in the field of housingfor the poor, to take up construction and operationof the shelters. The NGOs will also need assistancein procuring land, though the maintenance of theshelters can be left to the NGOs themselves. Hencethere is need to revise the scheme, raising thegrants per bed to realistic levels, so as to achievethe objective of providing a sufficient number ofnight-shelters. Establishment of special night-shelters for shelterless women and children will bea focal area for the Tenth Plan.

Plan Outlay

6.1.100 An outlay of Rs 29719 crore has beenallocated to Ministry of Urban Development &Poverty Alleviation of which Rs 18669 will comefrom IEBR and remaining Rs 11050 crore will beprovided as gross budgetary support. Theschemewise break-up of the Tenth Plan outlay forMinistry of Urban Development & PovertyAlleviation is given in the Appendix.

Box: 6.1.4VAMBAY : The Scheme for Housing of Slum-

Dwellers

The objective of VAMBAY (Valmiki-Ambedkar AwasYojana), introduced in 2001-02, is to meet a long-standing gap in programmes for slum-dwellers,namely, provision of a shelter or upgrading the existingshelter of people living below the poverty line in urbanslums. Twenty per cent of the total allocation underVAMBAY will be provided for sanitation and communitytoilets will be built for the urban poor and slum dwellers.Each toilet block will be maintained by a group fromamong the slum dwellers who will make a monthlycontribution of about Rs. 20 per family. Provision ofwater is also included in the scheme.

The programme is intended to be implemented inpartnership with State Governments, who will set upthe implementation machinery, arrange for land whererequired, and arrange for the credit component of thehousing programme. The upper limit of Central subsidywill be Rs. 30,000 per unit in Delhi and the five megacities, and Rs. 25,000 per unit in other million-pluscities, and Rs. 20,000 for all other cities and towns.The upper limit for upgradation of an existing unit shallbe 50 per cent of the cost ceiling specified for theconstruction of a new house. The entitlement of thestates for funds under the scheme will be in proportionto their slum population.