1. What per cent of Indian population lives in urban area?

(i) 45% (ii) 50% (iii)30% (iv) None Ans: - (iii) 30%

2. What are the reasons for urban growth? Three decades of rapid economic growth would normally have propelled migration from rural areas but growth in India has not had this effect thus far. This is because industrialization has been capital intensive and the services boom fuelled by the knowledge economy has also been skill intensive. At Indias current stage of development, the industry and services sectors are the principal drivers of growth, with strong contribution from the private sector. Assuming that high-quality infrastructure for telecommunications, power, transport, etc. can be put in place in Indian cities, the scope for private sector participation in the growth process will further widen. This will create demand for employment skilled as well as unskilled. India has the advantage of being at a stage in its demographic transition where the proportion of working-age population is still growing. By 2035, 69 per cent of Indias population will be between the ages of 15 and 65. If the educational system and vocational training are reoriented to create the skills in demand, and if labour laws are modernized to allow freer flow of labour in and out of firms so that labour use is not discouraged through government policies, rapidly growing sectors in urban areas should be generating rising employment opportunities.

3. What are the different methods of financing urban infrastructure? Different forms of Financing:

Municipal Bonds i. They have lower interest rates than term loans on account of the tax break available to investors. ii. Typically, municipalities can raise loans from banks and lending institutions with 9%10.5%, whereas tax-free municipal bonds usually have an interest rate around 8% iii. Municipal bonds do have disadvantages. Municipal bonds require investment grade credit ratings and overall city financial viability.

Term loans i. Since 2006, most of the lending has been for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) projects through term loan. ii. According to the Ministry of Urban Development (MoUD), under JNNURM about 17% (Rs. 1,280 crore or US$285 million) of local governments share of capital costs has been raised through term loans from banks and statelevel funds, as of 2009

Pooled Financing i. Individual municipal bonds are too small to attract institutional investors, and the fixed costs of a bond issue are a high percentage of the total amount borrowed, so pooled financing is useful to have large amount of funds with a low cost. ii. The approach was based on the well-established state bond bank mode from the United States iii. In this model, a bond bank creates and manages an SPV that issues bonds in its own name with the purpose of financing a pool of projects from a group of local governments.

iv.

The funds mobilized by the bond issue are on-lent to the local governments by the bond bank/SPV, and repayment of the bonds is based on the stream of repayments coming to the bond bank/SPV from the participating borrowers in the pool.

Microfinance for Access to Urban Infrastructure i. Currently, 33% of Indias urban population lives in slums, and India has more slum dwellers than any other country in the world. ii. Urban slums grow because Indian cities attract all types of people aspiring to take advantage of new economic opportunities. However, the growth of infrastructure and housing has failed to keep up with population growth. With an inadequate supply of acceptable quality, affordable housing and land, people live in miserable conditions without basic services or secure tenure. iii. However, microfinance has enabled slum dwellers to pay modest connection fees for a house connection with home improvement loans. Slum dwellers are often willing to invest in on-plot work, since the household directly benefits from improved services and appreciated property value.

The FIRE (D) Program pilot in Bhubaneswar worked with an MFI, the local government, and seven slum communities from 2008 to 2010 to provide households with legal connections to the municipal water and sewer networks. Improved services reached all households in the settlements through a variety of solutions: water taps, household toilets (new and renovated), shared toilets, and an improved community toilet with a community-based management plan.

Gap Financing i. Urban infrastructure in India can now be financed with a mix of public and private funding. As a result of the FIRE (D) Programs pioneering efforts and major reforms adopted by the Ministry of Urban Development (MoUD), local government revenues and transfers from state and central governments, such as Jawaharlal Nehru National Urban Renewal Mission (JNNURM) grants, can now be used to leverage private capital investment in urban projects. ii. Private capital may come in the form of equity investment under publicprivate partnership (PPP) agreements or debt financing mobilized through municipal bonds.

4. How 74th amendment act hav helped in Urban infrastructure development? This is a revolutionary piece of legislation by which Constitution of India was amended to incorporate a separate Chapter on urban local bodies, which seeks to redefine their role, power, function and finances. The salient features of this Act are: Urban local bodies, to be known as Municipal Corporations, Municipal Councils and Nagar Panchayat depending on the population, shall be constituted through universal adult franchise in each notified urban area of the country. These shall be constituted for a period of five years and if dissolved earlier, an election to reconstitute it shall be completed before the expiration of a period of six months from the date of its dissolution. Not less than one-third of total number of seats in each urban local body shall be reserved for women. The Legislature of a State may by law entrust on these bodies such power and

authority as may be necessary to enable them to function as institution of local self government, including those listed in the Twelfth Schedule. All the State Governments have either enacted new Municipal Law or amended the existing laws to conform these to the Constitution (74th Amendment) Act, 1992. All the States (except Jharkhand and Pondicherry) have conducted the election to the local bodies. All the States (except Arunachal Pradesh) have constituted State Finance Commissions and most of the Commissions have submitted their reports to the State Governments, recommending significant devolution of resources to the urban local bodies. The national Eleventh Finance Commission has also recommended devolution of Rs 2000 crores as grant-in-aid from the Central Government to the urban local bodies. Constitution (74th Amendment) Act 1992 has made the urban local bodies into vibrant self governing institutions. This has ushered in a new era of urban governance and urban management in India. The future is full of possibilities and excitement for investors, planners, administrators, economists and above all 300 million urban dwellers of India.

5. According to Accelerated Urban Water Supply Program (AUWSP) safe and adequate water supply facilities are provided for the towns having population (as per 1991 census). a) Less than 1,00,000 b) between 50,000 1,00,000 c) Less than 20,000 d) More than 20,000 Ans:- c) Less than 20,000 6. How is the pattern of finance is divided for Accelerated Urban Water Supply Program (AUWSP). a) 50% by central and 50% by state b) 25% by central and 75% by state c) 75% by state and 25% by central. d) 30% by central and 70 % by state. Ans: a). 50% by central and 50% by state. 7. What are the objectives of UIDSSMT (urban infrastructure development scheme for small and medium towns)? (a) Improvement of infrastructure, creation of durable public assets and improvement in quality of services in cities and towns. (b) Enhancing public-private-partnership in infrastructure Development. (c) Promote planned and integrated development of towns and cities. (d) All of the above. Ans: (d) 8. How does UIDSSMT differ from earlier schemes like Integrated Development of Small and Medium Towns (IDSMT)? UIDSSMT differs from IDSMT in the following ways:i) Assistance to urban local bodies under UIDSSMT is linked to implementation of an integrated set of mandatory and optional reforms to be carried out at the State and urban local body/parastatal levels within the scheme period of 2005-06 to 2011-12. Release of funds under IDSMT is not linked to reforms.

ii) UIDSSMT, unlike IDSMT, does not lay down any caps on project size for different categories of towns. iii) The assistance available under UIDSSMT is almost fivefold as that of IDSMT.