Habitat International 39 (2013) 55e61

Contents lists available at SciVerse ScienceDirect

Habitat International
journal homepage: www.elsevier.com/locate/habitatint

Urban challenges in India: A review of recent policy measures

Sangeeta Nandi*, Shama Gamkhar
The Lyndon B. Johnson School of Public Affairs, University of Texas at Austin, 2315 Red River St., Austin, TX 78712-1536, USA

a b s t r a c t
Keywords: Long-term institutional under-investment has resulted in severe infrastructure and service deficits in
JNNURM urban India, with disproportionately higher impacts in small towns and on the urban poor. This paper
India
researches existing policy literature to examine urban governance and civic challenges, and the imple-
Urban reform
Governance
mentation of urban reforms against the backdrop of two policy initiatives: the 74th Constitutional
Policy Amendment Act 1992 that recommends urban governance devolution; and the programmatic Jawaharlal
Nehru National Urban Renewal Mission (JNNURM) that attempts to effect governance reforms, and
improve urban infrastructure and basic services, including affordable housing for the poor. However,
there has been inadequate governance devolution from states to urban governments, and the pace of
decentralisation is uneven across states. Also infrastructure projects sanctioned for completion by March
2012 under JNNURM remain incomplete and have been granted a two-year extension until March 2014.
Policy assessments point to political economy factors and inadequate management capacity as key
institutional challenges impacting effective urban reforms in India.
Ó 2012 Elsevier Ltd. All rights reserved.

Introduction: urban growth and governance
The urban sector is recognised as key to stimulating India’s
economic growth (GOI, 2011a): urban India, constituting 31.16
percent of the national population (GOI, 2011b), was estimated to
have contributed more than 60 percent of national output (GOI,
2010a), and about 80 percent of total tax revenue (McKinsey and
Company, 2010). However, inefficient urban governance systems
have exacerbated deficits in physical infrastructure and municipal
amenities, and helped perpetuate socio-economic inequities, thus
undermining the potential of urban India as an agency of economic
development. Urban deficits remain widespread despite two mile-
stone policy initiatives: the 74th Constitutional Amendment Act (74th
CAA), 1992, enacted to devolve urban governance to local govern-
ments; and the Jawaharlal Nehru National Urban Renewal Mission
(JNNURM)1 launched in 2005e06 to effect urban governance devo-
lution and reform, and to improve city-wide infrastructure including
basic services and housing for the urban poor. India’s urban challenge
is set to magnify manifold: by 2050, when the country is projected to
be more urban than rural, more than 875 million people will live in
cities compared to 379 million in 2010 (Fig. 1).
* Corresponding author. Tel.: þ1 512 934 3661
E-mail addresses: sangeeta.nandi@gmail.com (S. Nandi), gamkhar@
mail.utexas.edu (S. Gamkhar).
1
Abbreviations used in paper: JNNURM (Jawaharlal Nehru National Urban
Renewal Mission); and 74th CAA (74th Constitutional Amendment Act).
This paper examines India’s urban governance and infrastruc-
ture challenges in the context of the above-mentioned policy
initiatives: the 74th CAA, 1992, and the JNNURM. The research is
based on reviews of official policy documentation and published
literature on urban issues in India. The objective is to assess, from
a macro perspective, the extent to which reform initiatives based
on the above policies are being advanced at the ground level, and
draw attention to key institutional shortcomings that have been
identified by existing policy studies as impediments to urban
progress. Our focus is on two overarching urban reform issues: (i)
devolution of governance functions and fiscal responsibilities to
local governments; and (ii) civic development challenges. We
summarize our findings below.
JNNURM is an ambitious attempt to change the urban institutional
architecture in India by mandating governance devolution, as rec-
ommended by the 74th CAA. However, urban governance systems
have not been decentralised uniformly across states in the country.
Also, where administrative responsibilities have been devolved,
political economy factors translate into States not assigning adequate
revenue streams for local bodies to meet their expenditure respon-
sibilities, thus limiting their de-facto independence (e.g. Singh, 2007;
McKinsey and Company, 2010). Further, most local governments are
unable to access private financial resources for infrastructure devel-
opment due to inadequate management capacity and their own weak
financial standing. Inadequate management capacity at the local level
also hinders the optimal utilisation of infrastructure reform oppor-
tunities enabled by JNNURM, especially in small towns (e.g. Tewari,

0197-3975/$ e see front matter Ó 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.habitatint.2012.10.001
56
90
80
70
Percentage
60
50
40
30
20
10
0 held only for municipal governments in large cities prior to the 74th
1970
1950
1955
1960
1965
1975
1980
1985
1990
1995
2000
2005
Percentage Urban
Fig. 1. Urbanisation in India. Source: UN, 2012a.
2008). While infrastructure and municipal deficits and socio-
economic inequities pervade all urban centres, their impacts are
disproportionately higher in smaller towns (Kundu, 2006, pp. 27e41),
and on the urban poor, 29.4 percent of whom reside in slums with
inadequate access to basic municipal infrastructure and services (UN,
2012b). A snapshot of JNNURM milestones reveals that many states
are yet to implement mandatory reforms related to devolution and
accountability in governance. Also infrastructure projects sanctioned
for completion by March 2012 under JNNURM remain incomplete and
have been granted a two-year extension until March 2014 (GOI,
2012a). Urban policy assessments point to political economy factors
and inadequate management capacity as key challenges impacting
effective urban reform in India (e.g. Singh, 2007 and GOI, 2011a).
The rest of this paper is organized as follows. In the next section
we provide an overview of India’s urban governance structure and
its on-going reform agenda. This comprises an assessment of
governance devolution from state governments to urban govern-
ments, as recommended by the 74th CAA and mandated by
JNNURM. In the subsequent section, we discuss challenges that
relate to urban infrastructure and services. In particular, we
examine disparities in access to civic amenities across large and
small urban centres and between rich and poor neighbourhoods
within them. Based primarily on existing literature, this section also
draws from personal observations of the authors. To inform the
discussion further, Table A1, Appendix 1 summarises key urban
challenges from secondary sources and associated policy
responses; these pertain to urban poverty, water and sanitation
facilities, solid waste management, transportation and environ-
mental vulnerabilities. Making note of milestone-shortfalls in
JNNURM reforms, the paper concludes by highlighting the obser-
vations of the Government of India’s High Powered Expert
Committee on urban infrastructure and services (GOI, 2011a). The
Committee observes that JNNURM has exposed the inadequate
capacity of urban governments. It also underscores the need to
advance institutional reform and capacity building across all cities
in the country in an extended manner; however, policy should
differentiate between the needs of small and large cities.
Urban governance reforms: 74th CAA and JNNURM
Urban governance is a state subject under the Constitution of
India, with the union government providing policy direction. The
Indian federation comprises of a three tier hierarchical structure of
governance with the union government as the top tier, govern-
ments of states and union territories as the second tier; and urban
and rural government bodies as the third tier. The scope and
responsibilities of local governments were ambiguous until the
enactments of the 73rd and 74th CAA, 1992, applicable to rural and
urban local bodies respectively. The term “urban local bodies”
S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61
refers to all constitutionally provided administrative units that
provide infrastructure and municipal services in cities. We will use
the term interchangeably with urban governments through this
paper given that they comprise democratically elected officials.
The 74th CAA recommended the transfer of 18 governance
functions from state governments to urban governments, including
those pertaining to land use, economic development, water, roads
and urban poverty alleviation. It also paved the way for direct
elections to all urban local bodies every five years; elections were
2010
2015
2020
2025
2030
2035
2040
2045
2050
CAA, with state appointees serving as governing committee
members in the administrative agencies of smaller towns (Pradhan,
Percentage Rural 2003). The 74th CAA however did not directly suggest principles for
fiscal devolution to urban governments. It prescribed instead that
State Finance Commissions be established every five years by state
governments, along the lines of Central Finance Commissions
mentioned below, to recommend resource distribution and mobi-
lisation methods that further fiscal decentralisation from state
governments to local governments. Urban governments in India are
structurally differentiated on the basis of size and level of economic
development, with larger urban governments being vested with
greater autonomy and wider responsibilities.
India launched JNNURM in 2005e06 to: (i) fast-track urban
infrastructure development, improve the delivery of basic services
and affordable housing for the urban poor, and (ii) devolve urban
governance to local governments. JNNURM mandated governance
reforms, to be implemented by states and local governments within
the mission period, are divided into mandatory and optional cate-
gories (GOI, 2005). A key mandatory reform is that States legislate to
effect governance devolution to urban governments, as recom-
mended by the 74th CAA. Other mandatory reforms relate to
administrative and fiscal efficiencies; improved infrastructure and
service delivery standards; and local participation, accountability
and transparency in urban governance. Optional reforms include the
implementation of infrastructure projects through Public Private
Partnerships, streamlined administrative procedures, and water
conservation measures. For JNNURM-supported infrastructure
projects, resources are allocated under the aegis of four sub-
missions. Two of these sub-missions, ‘Urban Infrastructure and
Governance’, and ‘Basic Services to the Urban Poor’, are applicable to
65 “mission cities” that are inhabited by more than a million people.2
The other two sub-missions, ‘Urban Infrastructure Development
Scheme for Small and Medium Towns’, and ‘Integrated Housing and
Slum Development Programme’, apply to non-JNNURM towns. The
focus of JNNURM reforms is however largely on the 65 mission cities,
with 75 percent of financial transfers from the union government
under JNNURM committed to the sub-missions applicable to them
(IIHS, 2012). Also, JNNURM financial transfers for infrastructure
projects are conditional on the achievement of pre-determined
milestones.
Devolution of functions to urban local government bodies
The 74th CAA recommended a functional framework comprised
of 18 urban governance responsibilities to be devolved from state
governments to urban local government bodies. However, the final
form of devolution, including the extent of fiscal devolution, was
left to the discretion of individual state legislatures. Consequently,
decentralisation has not uniformly percolated to the local level and
as per JNNURM records, 14 States are yet to legislate on transfers of
74th CAA recommended functions to local governments. The
2
JNNURM mission cities comprise all state capitals and cities deemed important
for reasons of location or heritage.
 S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61
Table 1
Aggregated revenue and expenditure of urban local government bodies.
ULBs: Aggregate revenue and expenditure 2002e03
Own revenue (in billion USD) 2.95
Total revenue (in billion USD) 4.65
Total expenditure (in billion USD) 4.81
Revenue support (total expenditure e own revenue), 38.60
% of total expenditurea
Data: GOI, 2010b.
a
Note: author calculations; Conversion rate used: 1 USD ¼ 45 Indian Rupees (INR).
reluctance of state governments to devolve power appears to be the
primary reason for local governments remaining administratively
and economically weak (McKinsey and Company, 2010). In this
context, Singh (2007) suggests that understanding and solving
political economy issues associated with sub-national decentral-
ization in India is crucial for improving governance and standards
of public service delivery in India. The efficacy of reform initiatives
is systemically impacted by institutional inefficiencies. These
include inadequate governance capacity; a multitude of over-
lapping administrative bodies and bureaucratic rigidities; inade-
quate transparency and social accountability; inertia in adapting to
new management techniques and systems of service delivery; and
decision-making influenced by political considerations and vested
interests (GOI, 2011a; Tewari, 2008).
Fiscal devolution to local urban governments
There are four main types of financial resources available to
urban governments: tax revenues, non-tax charges and fees,
intergovernmental transfers, and borrowing from government
agencies and the public. Historically, taxes levied on immovable
property together with octroi imposed on consumption articles
entering their jurisdiction were the two major fiscal resources
available to urban governments. Octroi has been abolished in all
states but one, Maharashtra. Therefore property tax is now the
primary source of revenue for urban governments, and is supple-
mented by user charges collected for utilities, and discretionary
fees or tolls (e.g. for vehicles or bridges3). The fiscal structure of
urban governments e including the type of discretionary charges
that may be levied by them, state transfers, and pre-conditions for
market borrowing e are determined by their state governments.
Revenue streams assigned to urban governments by their state
governments are however inadequate to meet their expenditure
responsibilities laid down in the 74th CAA (Govinda Rao & Bird,
2010; Singh, 2007). Most property tax regimes are characterised
by low collections due to poor assessment and enforcement
methods. Property tax revenues in India range from 0.16 to 0.24
percent of Gross Domestic Product (GDP) while many developing
countries collect property taxes in the range of 0.6 percent of GDP
(Mathur, Thakur, & Rajadhyaksha, 2009). According to the High
Powered Expert Committee on urban infrastructure and services
(GOI, 2011a), urban governments in India are among the weakest in
the world in terms of their capacity to raise resources and financial
autonomy: their tax bases are narrow, inflexible and lack buoyancy,
and they have been unable to enforce rational user charges for the
services they deliver. Non-JNNURM towns especially are said to be in
a “precarious financial position” (GOI, 2010b, p. 157). Therefore it
stands to reason that poor cost recovery is correlated with poor
service delivery standards (GOI, 2011a; Singh, 2007). In addition,
inadequate accountability through inefficient record-keeping and
3 5
The Reserve Bank of India provides a state-wise delineation of municipal
revenue powers, http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id¼1160
57
2003e04 2004e05 2005e06 2006e07 2007e08
3.21 3.62 4.05 4.63 5.23
5.14 5.95 7.04 8.32 9.87
5.18 6.13 6.76 8.18 10.45
38.07 40.97 40.03 43.38 49.98
auditing of accounts (GOI, 2010b, p. 152) further undermines urban
institutions.
Faced with revenue-expenditure mismatches, urban govern-
ments depend on intergovernmental transfers, including state-local
revenue transfers and central grants, to plug their fiscal deficits.
Urban local bodies across all states in India show a pattern of
increasing financial dependence, in the aggregate, since 2002e2003
(Table 1), where: (i) total revenue, comprised of own earnings of
local governments from property taxes and fees, and intergovern-
mental transfers and grants-in-aid, are mostly less than total
expenditures; and (ii) revenue support through intergovernmental
transfers and grants-in-aid has been meeting a progressively larger
share of local governments’ expenditure responsibilities. Albeit,
a proportion of the increase in revenue support since 2005e06 may
be attributed to mission-compliance transfers effected under
JNNURM. The Thirteenth Finance Commission of India4 (GOI, 2010b)
has urged state governments to broaden the revenue base of urban
governments and further financial decentralisation. It has also rec-
ommended a central government grant share for states, for alloca-
tion to urban governments under them. This grant would feature
two components: a general grant; and a performance grant
contingent on states implementing urban fiscal reform measures.
Bond financing and Private Public Partnerships for infrastruc-
ture development feature as optional reforms in JNNURM. Simul-
taneously, the union government is also preparing guidelines and
a model legislation to help states facilitate effective private sector
participation in urban infrastructure, and has removed many
restrictions on foreign direct investments (FDIs) in the sector.5
However, only 22 municipal bonds for urban infrastructure devel-
opment were issued until 2009 (Vaidya, 2009). While the Ministry
of Urban Development has proposed a state-level pooled-financing
mechanism to help smaller municipalities jointly mobilise infra-
structure finance from domestic capital markets, only Tamil Nadu
and Karnataka have issued municipal bonds by pooling issuances
across municipalities. Successfully implementing market-based
mechanisms for local government funding would require
strengthening of own finances and administrative capacities in
addition to transparency and accountability in governance (GOI,
2011a). Larger capacity constraints in small urban centres would
however tend to disproportionately impact their ability to access
markets and negotiate contracts with private entities.
Urbanisation patterns and civic challenges
Population projections show a widening urban-rural population
differential in India, with rural population growth rates eventually
declining to negative levels (Fig. 2). It is therefore inevitable that
cities will play an enormous role in social transformation and
4
Central Finance Commissions are established in India every five years (or earlier
if need be) to determine the share of centrally levied taxes for the Centre and the
States, and Central grants to be allocated to the States.
Ministry of Urban Development website, http://www.urbanindia.nic.in/
urbanscene/urbanreforms/urbanreform.htm, last accessed 6 August 2012.
58 S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61
5.00
4.00
Percentage
3.00
2.00
1.00
—
1950 -1955
1955 -1960
1960 -1965
1965 -1970
1970 -1975
1975 -1980
1980 -1985
1985 -1990
1990 -1995
1995 -2000
2000 -2005
2005 -2010
2010 -2015
2015 -2020
2020 -2025
2025 -2030
2030 -2035
2035 -2040
2040 -2045
2045 -2050
-1.00
-2.00
Urban average annual rate of change (%)
Rural average annual rate of change (%)
Fig. 2. Annual population growth rate in urban and rural India. Source: UN, 2012a.
economic mobility, but this could also exacerbate existing ineq-
uities (IIHS, 2012). McKinsey and Company (2010) estimates of
urban growth suggest that 70 percent of net new employment
generated in India by 2030 will be in cities; and that capital
expenditures to the tune of USD 1.2 trillion, equivalent to USD 134
per capita per annum (against the existing expenditure of USD 17
per capita per annum), will be required over the next 20 years on
basic urban infrastructure (comprising water and sanitation, solid
waste management, transportation and affordable housing). More
than half the increased expenditure would be required to meet pre-
existing infrastructure backlogs. Additionally, policy safeguards are
imperative for the urban poor, whose estimated population is over
80 million (GOI and UNDP, 2009), and many of whom live in small
towns (IIHS, 2012) with critical deficits in the provision of basic
services and infrastructure. Inadequacies in infrastructure devel-
opment and governance institutions also increase the exposure of
urban inhabitants to the adverse impacts of climate change
(Mukhopadhyay & Revi, 2009).
Differences in growth patterns between large and medium/small
urban centres
The Census of India 2011 identifies 468 Class I cities out of a total
of 7935 urban centres, where 70 percent of the total urban pop-
ulation lives; population growth in non-Class I cities has been
“nominal” since the 2001 Census (GOI, 2011b).6 The corresponding
Census 2001 figures were 5161 towns with 394 Class I cities. Class I
cities are defined as urban agglomerations with at least a million
people living in them while urban agglomerations are defined as
continuous urban spreads constituting physically contiguous towns,
and any adjoining outgrowths that they may have. Census 2011
estimates 53 major urban centres with population sizes of more than
a million that house 42.6 percent of the urban population. This is in
contrast to 18 percent of the urban population living in five million-
plus cities in 1950 (UN, 2012a). In this context, Kundu (2006) iden-
tified a “dualism” in the urbanisation pattern of India: a decelerating
rate of aggregate urban growth rate through the 1980s and the 1990s
(Fig. 2), despite intensifying urbanisation in Class I cities. Also,
economic output (deriving especially from services but also
including manufacturing) tends to be concentrated in districts that
host some of the largest cities, and workforce participation rates are
highest in “major metros” with population sizes of four million or
more (IIHS, 2012). The clustering of economic activity around large
6
The Census of India 2011 defines urban areas as: (i) “statutory towns” with
established urban local bodies, and (ii) “census towns” without urban governments
that have a minimum population of 5000 people, with at least 75 percent of the
male workforce engaged in non-agricultural occupations, and a minimum density
of population of 400 persons per square kilometre.
urban centres is evident with three Indian cities growing to be
amongst the 10 largest urban agglomerations in the world (UN,
2012a): Delhi, ranked second (population 21.94 million); Mumbai,
ranked seventh (population 19.42 million); and Kolkata, ranked
tenth (population 14.28 million). This pattern of growth implies that
institutional focus, development initiatives and economic oppor-
tunities diverge widely between large and medium or small cities.
Large urban centres
Large urban centres juxtapose rapid economic growth with
deepening stresses on already inadequate infrastructure and civic
amenities, and scarcity of affordable housing for the urban poor.
Population pressures have resulted in increased inner city conges-
tion, and expanding urban sprawl. Therefore the integration of
spatial planning with socio-economic programmes should enable
the integration of adjoining areas into urban agglomerations to
capitalize on existing spatial and functional linkages (GOI, 2011a).
The Eleventh Five Year Plan of India (applicable from 2007 to 2012)
had provided for the development of planned satellite towns or
“counter-magnets” around seven million-plus mega cities (GOI,
2010a). The construction of these have spilled over to the Twelfth
Five Year Plan period, with a separate infrastructure basic services
development scheme being planned for them (GOI, 2012b). Also, the
Government of India recently launched the DelhieMumbai Indus-
trial Corridor initiative spanning six states, 91 districts and more
than 230 million inhabitants. The aim is to develop 24 industrial
cities in the area that feature transit-oriented development patterns,
integrated communication systems and service provisions sup-
ported by smart technologies (GOI, 2011a).
Small and medium-sized urban centres
Infrastructure and capacity imbalances between large and
small/medium urban centres have intensified over time despite the
adoption of a centrally sponsored scheme, Integrated Development
of Small and Medium Towns, in 1979e80 (GOI, 1995); this has since
been subsumed under the JNNURM reform agenda for non-mission
cities. Kundu (2006) points out that unless corrected through local
infrastructure and capacity building, India’s under-developed and
under-served small towns may lose out on the development
stimulus attributed to urbanisation. The development of small
towns is impacted gravely by inadequate management capacity and
inertia at the local governance level. Examining applications for
central assistance under the Urban Infrastructure Development
Scheme for Small and Medium Towns of JNNURM, Tewari (2008)
found that apart from inadequate capacity to apply for centrally
sponsored assistance schemes, local government officials in small
cities may have even been unaware about their existence. GOI
(2011a) reinforces that policy interventions need to distinguish
between the challenges of large and small urban centres, particu-
larly small towns with population sizes of less than 100,000 that
have relatively weak economic bases, high incidence of poverty,
low access to civic benefits, and very different levels of managerial
competence and governance systems.
Inequities in urban growth and infrastructure access within cities
Civic shortcomings prevail in both large and small cities in India,
but tend to be more pronounced in smaller cities as well as poorer
localities within cities e as confirmed by personal observations and
communications of the authors of this paper.7 Socio-economic
7
Observations based on visits to Indian cities: most recently to Delhi, Gurgaon,
Kolkata, Srinagar and Silchar during AprileMay 2011; and Kolkata and Silchar in
NovembereDecember 2011.
 S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61
inequities are apparent from the existence of gated communities,
housing units, and modern office buildings, alongside slums and
squatter settlements, open waste dumps, leaking sewage, poor
roads and pedestrian facilities. Upscale business and residential
districts tend to be better-served by municipal and transport
infrastructure and services. We compare household electricity
supply patterns in middle-class neighbourhoods of two Indian
cities that experience hot summers: metropolitan Kolkata, with
a population of more than 14 million, and a non-JNNURM city,
Silchar, located in North-eastern India. During the hottest days in
summer, when electricity demand peaks due to the use of cooling
devices, power outages are random, prolonged (often for more than
an hour at a time), and occur multiple times daily in Silchar.
Additionally, random power outages occur throughout the year
although not as incessantly. In metropolitan south-central Kolkata,
in comparison, power outages tend to occur only during the hottest
days, they are relatively brief (lasting for not more than 45 min at
a time) and do not occur more than twice a day. It was also
observed that irrespective of city-type, many middle-income
households purchase rechargeable inverters or generators as
supplementary power sources to cope with power-cuts. In general,
large informal private markets exist in urban areas to meet lacunae
in water supply, waste collection and lighting systems.
Existing macro-level information on key civic challenges, along
with relevant policy responses to these are summarised in Table A1,
Appendix 1. These pertain to the following: poverty, inadequate
housing and unemployment; water; sanitation; solid waste
management; transport infrastructure; and environmental
vulnerabilities. As Table A1 shows, socio-economic inequities and
infrastructure and services deficits pervade urban India. Within
cities, the poor are disproportionately impacted by inequitable
access to basic services. Despite 29.4 percent of urban India living in
slums8 (UN, 2012b), most slum households do not have security of
tenure and therefore no institutional right to improved water,
sanitation, waste and electricity services. Additionally, urban
infrastructure is ill-equipped to cope with systemic shocks and
climate events. This is demonstrated by frequent water-logging in
city streets during the monsoons across the country. A heavy-rain
event that saw a 944 mm downpour within 24 h in the city of
Mumbai in 2005 lead to the loss of almost 500 lives and massive
municipal disruptions. Along with highlighting urban deficits,
Table A1 also makes note of important policy efforts, some of which
precede or complement JNNURM, to meet India’s urban governance
challenges.
Shortfalls in JNNURM milestones
The pace of urban reform has been unequal across states and
shortfalls in mission-milestones apply to both state governments
and urban governments. The status of major JNNURM-directed
mandatory reform milestones as of 31st March 2012 e the
seventh year of the programme e is available at the JNNURM
website.9 We highlight some of these below. At the state level: 14
states are yet to legislate the transfer of administrative functions
to urban governments as laid down in the 74th CAA; nine states
are yet to legislate on community participation in urban gover-
nance; four states are yet to pass Public Disclosure Acts; and metro
8
Slums are heavily populated urban localities characterized by substandard
housing and squalor that exemplify various manifestations of urban poverty (http://
www.unhabitat.org/downloads/docs/GRHS_2003_Chapter_01_Revised_2010.pdf,
last accessed 13 December 2011).
9
Updates on the status of JNNURM and UIDSSMT milestones are available at
http://urbanindia.nic.in/DMU/JNNURM/DMU-JNNURM.pdf, last accessed 31 July
2012.
59
planning committees (MPCs) are not yet operational in five states.
Reform progress has been uneven at the local government level
too: 52 out of a total of 65 JNNURM cities have migrated to the
double entry accrual based accounting system; only 33 cities have
been able to adopt all e-governance modules prescribed by
JNNURM; and 20 urban governments claim to have achieved 100
percent recovery of their operations and maintenance costs for
water supply public utilities. In addition, as mentioned above,
infrastructure projects sanctioned under JNNURM have fallen
short of their milestones, thus calling for a two-year extension to
their schedule. A mid-term appraisal of JNNURM goals (GOI,
2010a) notes tardy progress in the utilisation of allocated
JNNURM funds, with 25 states and union territories having used
less than 80 percent of the allocated budget for urban infrastruc-
ture development as of March 2012. GOI (2010a) ascribes this to
an unwillingness to adopt wide-ranging reforms, and to the lack of
skilled capacity to proactively identify, plan and execute projects.
The mid-term government appraisal further observes that
achieving financial sustainability remains a challenge for urban
governance: four potential funding sources e user charges for
public utilities, property taxes, monetisation of land, and private
equity e have either not yielded adequate resources, or have not
been implemented efficiently during the mission period.
Conclusions
The ongoing JNNURM reform agenda in India reveals a time-
bound forward-looking urban development outlook, but one that
has proven to be overly ambitious to implement given the scale
and depth of issues and the entrenched institutional environment.
The policy literature reviewed in this research draws attention to
two overriding governance issues that impact the effective
implementation of urban reforms in India: political economy
factors and inadequate management capacity. Political consider-
ations lead to a reluctance to devolve governance, especially fiscal
governance, from states to local urban governments. They also
impact the implementation of municipal reforms, and ration-
alising property tax rates as also making their collection more
efficient. In addition, inadequate management capacity, especially
in smaller cities, does not allow local governments to optimally
benefit from reform initiatives. Together, these result in reform-
inertia and large gaps between policy intent and implementation.
The Government of India’s High Powered Expert Committee on
urban infrastructure and services (GOI, 2011a) affirms that gover-
nance and accountability is the weakest and most crucial link in
India’s urban transformation, and that JNNURM has exposed the
lack of capacity at the local government level to prepare and
implement urban infrastructure projects. Therefore, the Committee
advocates increased governance devolution and urban manage-
ment capacity building during a second, post-JNNURM extended
phase of reforms that should apply equally to all cities. In line with
the civic challenges reviewed in this paper, the Committee cautions
that urban reform policies should differentiate between the needs
of large and small cities. Also, post-JNNURM reforms should inte-
grate the needs of the urban poor into the broad task of managing
urbanisation sustainably and not focus on their needs in isolation.
Acknowledgement
The research for this paper was undertaken under a Policy
Research Initiative proposal development program on Urban and
International Programs, funded by the LBJ School of Public Affairs,
University of Texas at Austin.
60 S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61

Appendix 1

Table A1
Civic challenges in India

Urban challenge Summary of issues Policy responses

Poverty, inadequate housing
and unemployment
Water
Sanitation
Municipal Solid Waste
(MSW) management
Transport infrastructure
Environmental
vulnerabilities
a
Ranks available at http://pib.nic.in/archieve/others/2010/may/d2010051103.pdf, last accessed 13 December 2011.
 Urban population below national poverty line: 20.9 percent  Separate ministries for poverty alleviation and
in 2012 (UN, 2012b); over 80 million urban poor e incidence urban development e calls for integrated urban
of urban poverty growing (GOI and UNDP, 2009) governance (GOI, 2011a)
 29.4 percent of urban population lived in slums in 2009  Central assistance scheme since 1997 for poverty
(UN, 2012b): 17 percent of notified slums and 51 percent alleviation through employment generation,
of non-notified slums have no sanitation facilities (GOI, 2008a) administered by urban governments
 Unemployment rates very high in urban areas, particularly  Integrated housing and slum development
in 15e24 age group; 65e70 percent of urban workforce under the JNNURM; security of tenure extended
employed in unorganised sector e many in need of to select slums e progress slow
“occupational up-scaling” (GOI, 2010c)
 95 percent of urban population has access to safe water  Provision of drinking water primary objective
(UN, 2012b), but the quality and quantity of access is of the National Water Policy and State Water
unreliable; 74 percent have access to piped water supply Policies
(McKinsey and Company, 2010)  Service Level Benchmarks (SLBs) established
 An average of 105 L of water per capita per day is supplied for urban water supply (GOI, 2009)
to urban India as opposed to a basic service standard of 150 L  Central assistance scheme since 1993e94 for
per capita per day (McKinsey and Company, 2010) universal water supply in towns with less
 Non-recovery of costs; rationalising water pricing is a than 20,000 people
contentious socio-political issue
 58 percent of urban population with access to “improved sanitation”  A National Urban Sanitation Policy (NUSP),
(UN, 2012b); community and shared sanitation facilities used by 2008, to achieve total sanitisation
28 percent of urban households; 18.5 percent households have  SLBs established for sanitation (GOI, 2009)
no access to drainage networks; 40 percent households are  Cities ranked in 2010 under NUSP guidelines
connected to open drains (GOI, 2008a) to establish a baseline to measure progressa
 30 percent of sewage generated in urban areas treated
(McKinsey and Company, 2010)
 Inadequate discharge of untreated municipal/domestic wastewater
has contaminated 75 percent of surface water (GOI, 2008a)
 72 percent of solid waste generated is collected (McKinsey and  MSW (management and handling) rules,
Company, 2010); 20e25 percent of MSW generated in cities is 2000 e large gaps between policy and
construction and demolition debris; inadequate waste segregation implementation; draft e-waste (management
and recycling practices; non-recovery of sector-costs (TERI, 2009) and handling) rules, 2009, under discussion
 Most cities not able to provide MSW collection and disposal services  SLBs for solid waste management (GOI, 2009)
uniformly across all areas, especially crowded low-income settlements  Good practices in select large city locations
 More than 90 percent of MSW disposed on low lying lands in unsanitary include: waste segregation, mainstreaming
conditions without leachate collection or landfill gas monitoring/collection informal recyclers and waste-pickers
systems (Sharholy, Ahmad, Mahmood, & Trivedi , 2008); (TERI, 2009)
‘dump sites’ filling faster than intended
design period, shortage of land for additional land-fills (TERI, 2009)
 Travel demand greater than supply; 30 percent of total urban trips are by  National Urban Transport Policy (GOI, 2006);
public transport (McKinsey and Company, 2010); combination of state-run SLBs for urban transport in JNNURM cities
and privately-operated buses ply cities e poorly maintained, and (GOI, 2009)
non-recovery of costs by state run operations; exponential increase in  Phased harmonisation of vehicle emission
number of private vehicles and motorized two-wheelers standards with European norms; standards
 Poor traffic management, no lane separation for motorized and stricter in metropolitan cities.
non-motorized transport; many accidents (increase from 160,000 in  Judicial activism: Compressed Natural Gas (CNG),
1981 to 390,000 in 2001) and fatalities (increase from 28,400 in 1981 a clean fuel mandated for public transport in
to 80,000 in 2001) (GOI, 2006) Delhi and three major cities of Punjab.
 Urban centres largely served by road networks; metropolitan cities CNG buses being progressively introduced
served by intra-city rail networks; underground railways in two in JNNURM cities
cities e Delhi and Kolkata; sky train proposed in Mumbai
 Air pollution: high vehicular emissions, construction activity, and urban  Multiple legislations on environmental quality
congestion; lack of adequate green spaces or “lungs” for cities since the 1970s (air, water, etc.)
 Poor land management: congested and unplanned developments; inadequate  Revised national annual ambient air quality
waste management and drainage; surface water contamination; spatial standards, 2009, removed air quality
expansion of cities into areas important to preserve ecosystem services, distinctions between residential and industrial
e.g. construction along mangrove ecosystems in Mumbai areas, increased pollutants monitored.
 Climate impacts: Due to infrastructure deficits and urban poverty, cities  National Mission on Sustainable Habitats,
will have to cope with both hazard exposure and high levels of vulnerability a sub-mission of the National Action Plan on
to climate extremities; mega coastal cities (Mumbai and Chennai) vulnerable Climate Change (GOI, 2008b) focuses on energy
to climate-induced sea level rise. efficient buildings, public transport, MSW
management

References Government of India (GOI). (2006). National urban transport policy. GOI. http://
www.urbanindia.nic.in/programme/uwss/NUSP.pdf last accessed 13.12.11.
Government of India (GOI). (2008a). National urban sanitation policy. GOI. http://
Government of India (GOI). (1995). Integrated Development of Small and Medium
www.urbanindia.nic.in/policies/TransportPolicy.pdf last accessed 13.12.11.
Towns (IDSMT), revised guidelines 1995. GOI. http://www.urbanindia.nic.in/
Government of India (GOI). (2008b). National action plan on climate change, Prime
writereaddata/GuideLines%20of%20Schemes/90.pdf last accessed 13.12.11.
Ministers Council on Climate Change. india.gov.in/allimpfrms/alldocs/15651.doc
Government of India (GOI). (2005). The Jawaharlal Nehru Urban Renewal Mission:
last accessed 13.12.11.
Mission overview. GOI. http://jnnurm.nic.in/ last accessed 12.12.11.
 S. Nandi, S. Gamkhar / Habitat International 39 (2013) 55e61
Government of India (GOI). (2009). Handbook on service level benchmarks: Perfor-
mance indicators. http://urbanindia.nic.in/programme/uwss/slb/Handbook.pdf
last accessed 13.12.11.
Government of India (GOI). (2010a). Mid-term appraisal of the eleventh five year plan
2007e2012, Planning Commission. GOI. http://planningcommission.nic.in/plans/
mta/11th_mta/chapterwise/Comp_mta11th.pdf last accessed 13.12.11.
Government of India (GOI). (2010b). Report of the thirteenth finance commission
(2010e2015). Finance Commission of India, GOI. http://fincomindia.nic.in/
ShowContentOne.aspx?id¼28&Section¼1 last accessed 13.12.11.
Government of India (GOI). (2010c). Annual report to the people on employment. GOI.
http://labour.nic.in/Report_to_People.pdf last accessed 13.12.11.
Government of India (GOI). (2011a). Report on urban infrastructure and services. GOI.
http://www.niua.org/projects/hpec/FinalReport-hpec.pdf last accessed 05.08.12.
Government of India (GOI). (2011b). Census of India 2011: provisional population totals,
urban agglomerations and cities. GOI. http://censusindia.gov.in/2011-prov-results/
paper2/data_files/India2/1.%20Data%20Highlight.pdf last accessed 04.08.12.
Government of India (GOI). (2012a). Office memorandum on extension of JNNURM
time. Ministry of Urban Development, GOI. http://jnnurm.nic.in/wp-content/
uploads/2012/04/extension-of-jnnurm.pdf last accessed 07.07.12.
Government of India (GOI). (2012b). Submission to parliament on reforms in urban
sector. Ministry of Urban Development, GOI. http://pib.nic.in/newsite/erelease.
aspx?relid¼86918 last accessed 28.08.12.
Government of India and United Nations Development Programme. (2009). India:
Urban poverty report 2009. GOI and UNDP. http://data.undp.org.in/poverty_
reduction/IUPR_Summary.pdf last accessed 13.12.11.
Govinda Rao, M., & Bird, R. M. (2010). Urban governance and finance in India, working
paper no. 2010-68. New Delhi: National Institute of Public Finance and Policy.
http://www.nipfp.org.in/working_paper/wp_2010_68.pdf last accessed 13.12.11.
Indian Institute for Human Settlements (IIHS). (2012). Urban India 2011: Evidence.
IIHS. http://www.iihs.co.in/programmes/research-programme/publications/
urban-india-evidence-report/ last accessed 05.08.12.
61
Kundu, A. (2006). Trends and patterns of urbanisation and their implications. In India
infrastructure report 2006: Urban infrastructure. New Delhi: Oxford University
Press.
Mathur, O. P., Thakur, D., & Rajadhyaksha, N. (2009). Urban property tax potential in
India. New Delhi: National Institute of Public Finance and Policy.
McKinsey and Company. (2010). India’s urban awakening: building inclusive cities,
sustaining economic growth. http://www.mckinsey.com/Insights/MGI/Research/
Urbanization/Urban_awakening_in_India last accessed 13.12.11.
Mukhopadhyay, P., & Revi, A. (August 1, 2009). Keeping India’s economic engine
going: climate change and the urbanisation question. Economic & Political
Weekly, xliv(31), 59e70.
Pradhan, H. K. (2003). In Y.-H. Kim (Ed.), Local government finance and bond markets
(pp. 87e165). Manila: The Asian Development Bank.
Sharholy, M., Ahmad, K., Mahmood, G., & Trivedi, R. C. (2008). Municipal solid waste
management in Indian cities: a review. Waste Management, 28, 459e467.
Singh, N. (2007). Fiscal federalism and decentralisation in India. Munich Personal
RePEc Archive (MPRA) Paper No. 1447. http://mpra.ub.uni-muenchen.de/1447/
last accessed 13.12.11.
Tewari, V. (2008). Managing urban infrastructure and services in IndiaIn Global
urbanisation in the 21st century, the city in the twenty-first century book series, .
Philadelphia: University of Pennsylvania Press.
The Energy and Resources Institute (TERI). (2009). An exploration of sustainability in
the provision of basic urban services in India cities. New Delhi: TERI Press.
United Nations (UN). (2012a). World urbanisation prospects: The 2011 revision. http://
esa.un.org/unpd/wup/index.htm last accessed 06.08.12.
United Nations (UN). (2012b). Millennium development goals indicators, database.
Available at. last accessed 17.10.12. http://unstats.un.org/unsd/mdg/Metadata.
aspx.
Vaidya, C. (2009). Urban issues, reforms and way forward. Working paper No.4.
Department of Economic Affairs, Ministry of Finance, Government of India
(cited in GOI 2011a).