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NURM and the Poor in Globalising Mega Cities

The central government's National Urban Renewal Mission is expected to convert select cities into "world class" urban centres. The submission for basic services that falls under the NURM would benefit the poor only if they have security of tenure and their settlements and dwelling units get connected to these networks. The land question is central to making affordable housing available for the poor. Since the mission does not address this question, how would a city become world class without reaching out to half its population? The mission will instead encourage processes that would displace the poor, rather than include them in the process of city transformation.


NURM and the Poor in Globalising Mega Cities

The central government’s National Urban Renewal Mission is expected to convert select cities into “world class” urban centres. The submission for basic services that falls under the NURM would benefit the poor only if they have security of tenure and their settlements and dwelling units get connected to these networks. The land question is central to making affordable housing available for the poor. Since the mission does not address this question, how would a city become world class without reaching out to half its population? The mission will instead encourage processes that would displace the poor, rather than include them in the process of city



he Jawaharlal Nehru National Urban Renewal Mission (JNNURM – henceforth NURM) is expected to convert select cities into “world class” ones. The term “world class” is now being used more as a paradigm for urban development, signifying cities with international standard infrastructure, particularly roads, airports, public transport, open spaces, and real estate projects. A large amount of funds, in a relative sense, have been committed for this mission. In itself, such a transformation of a city is not disagreeable, if it would benefit all or benefit some and not adversely affect others. But, given the trend of displacement of the poor in the last decade, particularly from the mega cities, it is necessary to take a closer look at the NURM.

The reality of Indian mega and large cities over the last decade has been: forced evictions of slums, hawker removal, removal of “unwanted economic activities” such as banning of dancing in beer bars, displacement of poor through infrastructure projects and speculative property markets, and displacement because of environmental hazards and political violence. For example, in Mumbai, 90,000 to 94,000 slum units were demolished between November 2004 and January 2005. Demolitions continue. In Delhi, 27,000 families in the Yamuna Pushta area and about 1,00,000 families all over the city were evicted from slums in last eight years. Those rehabilitated have been shifted far away on unserviced plots, given on a five to 10-year lease.1 In Ahmedabad city, the Sabarmati Riverfront Development (SRFD) scheme will displace 30,000 households. Four thousand households have been offered rehabilitation in 20 sq yard apartment units, along with a loan of Rs 60,000, in a location not clearly stated. A hundred thousand homeless people in Delhi were in dire conditions in the winter of 2005-06, inviting attention from the National Human Rights Commission (NHRC).

This article asks the question as to whether the NURM would address the burning issue of the urban poor’s access to shelter and basic services (as without shelter, access to basic services is not possible). Is this the right question to ask, given that NURM is supposed to convert mega and large cities into “world class cities” and not necessarily serve the poor? This question, however, is relevant given that a very large section of urban residents, poor and non-poor, continue to live in substandard housing with very poor access to basic services and the NURM has a submission for the urban poor.

The NURM would cover 60 cities: seven category A or mega cities, 28 category B or other metro cities and remaining the 25 of the 28 listed in category C as urban agglomerations (UAs) with less than one million population. The prime minister of India, on the launch of this first major urban development programme of the central government, stated that the NURM was in line with the national common minimum programme (CMP).2 Rationale: The rationale for the mission is based on the expectation that overall reforms would lead to high economic growth and to a higher rate of urbanisation (40 per cent by 2021). Cities thus covered would in turn act as “growth engines” for the entire economy and urban areas would contribute 65 per cent of the total gross domestic product (GDP). For all this to happen, infrastructure services such as power, telecom, roads, water supply and mass transportation, along with civic infrastructure, such as sanitation and solid waste management in the cities have to improve. NURM is to begin with select cities, where investments would be increased in the next seven years, starting from year 2005-06. Since the cities and state governments are not able to do so on their own, the central government will step in with financial support.

The other stated rationale is to achieve the targets of the Millennium Development Goals (MDGs) in these cities – with five of the eight MDGs on poverty, health and gender equality being addressed. The unstated rationale is to force state governments to implement urban sector reforms more seriously than before, which was not possible through the City Challenge Fund (CCF) and Urban Reform Initiative Fund (URIF). Lastly, if it is not a mission then no programme gets implemented. Components: The NURM has two submissions: (a) Submission for Urban Infrastructure and Governance (UIG), which will be administered by the ministry of urban development (MUD), and (b) Submission for Basic Services to the Urban Poor (BSUP), which will be administered by the ministry of urban employment and poverty alleviation (MUEPA).3 Projects such as road and associated infrastructure, public transport, trunk networks of water supply, sanitation and storm water drains,

Economic and Political Weekly August 5, 2006 parking lots and city beautification, would be taken up under the UIG. For those related to slum improvement – shelter and all basic services – and enhancing access of urban poor to other social services, the BSUP submission would be tapped into.

The NURM will be implemented first, by formulating a city development plan (CDP) indicating policies, programmes and strategies, and financing, followed by the preparation of detailed project reports (DPRs) for the identified projects by urban local bodies (ULBs)/parastatal agencies. Each project would have its life cycle costs

  • capital outlays and attendant operation and maintenance (O&M) costs to ensure that assets are in good working condition
  • recovered. Project preparation, evaluation, capacity building, etc, would be done by empanelled consultants listed by the central ministry of urban development. Detailed guidelines for CDP, project preparation, etc, are also made available. Finances: It is expected that central financial assistance would leverage additional funds for the projects. Central and state
  • government funds would be hosted in a state level nodal agency, which can be an existing agency or a new agency, as grantsin-aid, part of which would be treated as revolving fund – 25 per cent for the UIG projects and 10 per cent for the BSUP projects. At the end of the mission period, the revolving fund may be upgraded to a state level urban infrastructure fund. For the identified projects, funds would be disbursed to the ULBs/parastatals as soft loans or grant-cum-loans or grants. The ULB/parastatal has to get the rest of the funds, for which it can seek private sector participation or borrow from the market and/or financial institution.

    It is expected that Rs 17,219.5 crore per year (Table 1), that is Rs 1,20,536 crore over the seven-year period, would be invested in the cities, of which Rs 50,000 crore over the whole period, or Rs 7,698 crore per year, would come through central government assistance.

    For mega cities, the central grant contribution would be 35 per cent of the total project cost in case of the UIG submission (Table 2) and would go up to 50 per cent for BSUP submission. For the next two categories of urban centres, the central government grant contribution remains the same for both the submissions. For the BSUP submission, the only change from Table 2 is that the state government’s grant contribution is taken away and the state government, ULBs, parastatals and beneficiary contributions make up the rest of the financial requirements. Thus, in cities with one to four million, in UIG, grants would be 70 per cent whereas in BSUP, grants would be 50 per cent; in NE states and J and K, grants for UIG would be 100 per cent and for BSUP would be 90 per cent and lastly for all other non-metro UA, grants for UIG would be 90 per cent and that for BSUP, 80 per cent. In essence, in all except the mega cities, the UIG submission has a higher grant component than the BSUP submission! Conditions: The most contentious part of the NURM is the conditions/prerequisites for accessing central funds. There are a set of mandatory reforms for the ULBs/ parastatals and for the state governments, and there are a set of optional reforms,

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    Economic and Political Weekly August 5, 2006

    to be accomplished during the mission period.

    Some of the mandatory reforms at the ULB/parastatal level are: (a) adoption of modern accrual-based double entry system of accounting; (b) reform of property tax with tax collection efficiency to reach at least 85 per cent within the next seven years; (c) levy of reasonable user charges with the objective of full cost recovery of O&M or recurring costs; (d) internal earmarking, within local bodies, budgets for basic services to the urban poor; and

    (e) provision of basic services to the urban poor including security of tenure at affordable prices, improved housing, water supply and sanitation.

    Some of the mandatory reforms at the state level are: (a) Implementation of decentralisation measures as envisaged in 74th Constitutional Amendment Act (CAA); (b) repeal of Urban Land Ceiling and Regulation Act (ULCRA);4(c) reform of rent control laws, balancing the interests of landlords and tenants; (d) rationalisation of stamp duty to bring it down to no more than 5 per cent; (e) enactment of the public disclosure law to ensure preparation of the medium-term fiscal plans of ULBs/ parastatals and the release of quarterly performance information to all stakeholders.

    The important optional reforms expected to be undertaken by ULBs/parastatals and state governments are: (a) simplification of legal and procedural frameworks for conversion of land from agricultural to non-agricultural purposes; (b) earmarking at least 20-25 per cent of developed land in all housing projects (both public and private agencies) for economically weaker sections (EWS) and low income group (LIG) categories with a system of cross subsidisation; and (c) introduction of computerised process of registration of land and property.

    NURM and the Urban Poor

    NURM is the first comprehensive mission for urban renewal, albeit in select cities, which is in line with the ongoing changes in mega cities particularly, and for which they have been clamouring for funds. It is a realisation that cities would not be able to undertake this renewal on their own, given the Indian system of vertical fiscal imbalance. The mission, if the funds were made available from the central government as promised, would certainly change parts of some cities (not whole cities). There are doubts whether the central government would get an additional Rs 7,698 crore per year on top of its annual planned outlays for the two ministries concerned.

    For the urban poor, besides the BSUP submission, two mandatory reforms for the ULBs/parastatals are important;

    (i) internal earmarking within local bodies’ budgets for basic services to the urban poor; and (ii) provision of basic services to the urban poor including security of tenure at affordable prices, etc. While the former may be achievable, it is not clear how the latter would be achieved, particularly, as there is no mention of how land prices would be made affordable. Certainly, the market is not expected to do so, as envisaged under the mission through the repeal of ULCRA.

    In fact, the repeal of ULCRA is the first major concern. With its repeal, theoretically there is no other instrument through

    Table 1: Investment Requirements for NURM

    (in rupees crore)

    Category Number of Investment Requirement Annual Funds
    Cities (Over Seven Years) Requirement
    Cities with over four million population 7 57,143 8163.3
    Cities with one to four million population 2 8 57,143 8163.3
    Selected cities with < 1 million population* 2 8 6,250 892.9
    Total 6 3 120,536 17219.5

    Note: * Of this only 25 would be taken, as the total cities to be covered would not exceed 60. Source: From the preface of NURM.

    Table 2: Contribution by Different State Agencies for UIG Submission

    (in per cent)

    Category of Cities/Towns/UAs Grant ULB/Parastatal
    Centre State Share
    Cities/UAs with four million population 3 5 1 5 5 0
    Cities with one to four million population 5 0 2 0 3 0
    Cities/towns/UAs in north-eastern (NE) states and J and K 9 0 1 0 0
    Cities/UAs other than those mentioned above 8 0 1 0 1 0

    which affordable land can be made available to the urban poor. People’s movements for housing rights have now begun asking for the strengthening of ULCRA rather than its repeal. If it does get repealed, we would be back at the pre-1976 situation in this area, that is the prevailing scenario before the UN Habitat Conference held in Vancouver. If the land tenure issue does not get addressed, which is the case with nearly half the population in the megacities, their access to basic services would also not get addressed. In that case, the BSUP sub-mission may not help the poor much.

    The second important concern is that the CDPs are to be framed by consultancy firms, without any public debates. CDPs would not be people’s plans, when there is indeed a dire need to democratise urban plan-making and development processes. One does not have an issue with the NURM benefiting consultancy firms, but their documents may not be covered under the Right to Information (RIF) Act. Thus, while the city master/development plans could be available for public scrutiny, CDPs may not be. In that case, even if implementation of the 74th CAA has been made mandatory, it might be so just for the purpose of cost recovery for the NURM and other projects and not for deciding city development priorities, which would be decided by consultants. There is also no idea as to how the RIF Act and Public Disclosure Law would work in coordination.

    Further, is it not ironical that the 74th CAA has not yet been fully adopted by state governments and that this has to be made into a mandatory requirement for the NURM? The situation indicates the lack of interest on part of the state governments to decentralise power on one hand and a streak of non-transparency on the other. This is how most new projects on urban renewal are being implemented in the cities. Citizens do not know that their local governments are borrowing, and may be mismanaging such funds, and they are then suddenly confronted with the reality of increased charges and taxes.

    Citizens also do not know that international funding institutions such as the World Bank, the USAID, and the ADB are assisting their governments to “reform” and what conditionalities such a reform process bring. In a democratic country such as India, these financial institutions would demand the state and local governments to “reform”? It is known that these financial institutions are more interested in recover-

    Source: From guidelines for the Submission for Urban Infrastructure and Governance. ing their funds and are thus only asking

    Economic and Political Weekly August 5, 2006

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    Economic and Political Weekly August 5, 2006

    for such reforms, for their mandate would not permit them to demand political reforms.

    The most important fear is that the NURM would lead to more slum demolitions and displacement, as we have seen happening across cities. This might especially happen when the relocation and rehabilitation tasks of project affected people are extremely complicated, in an Indian society that tends to be highly fragmented and corrupt. This along with an official policy of non-recognition of slum dwellers who are squatting or living in unauthorised settlements would make the situation more precarious.

    Land costs are not to be covered in project costs. How would the city governments make land available? Most likely by freeing lands from the slums. Lands would also be required for raising financial resources. Earmarking at least 20-25 per cent of developed land in all housing projects has been suggested as an optional reform and hence, the state and city governments have no tool at their disposal to make lands available for the housing of the urban poor. In states where urban planning is done through town planning schemes there is such a provision but it has never been made use of. Land and property costs are spiralling. Given that a large proportion of the urban population, even in mega cities, still works at low wages in the informal sector, it would not be possible for this section to buy a formal house from the market. This indeed is the reason that they have resorted to living in slums and will continue to do so.

    The land question is central to making affordable housing available to the poor along with other facilitative mechanisms such as microcredit and affordable basic services provision. Since this question is not to be addressed by this mission, how would a city become a “world class city”, without reaching out to half of its population?

    Would conditions attached to NURM funding deter state governments from accessing central funds? Newspaper reports suggest that the major metros, in particular, are quite enthusiastic about NURM and many states have already prepared CDPs for the cities covered under the mission. It is likely that not all the cities listed would be covered and only those with the capability to raise their own resources would come forward.

    There is also concern about the type of projects selected by the city and state governments. For example, Ahmedabad’s CDP states that the city would spents 16.6 per cent on roads and bridges; 20.1 per cent on storm water drains and sewerage;12.7 per cent on housing and slums; 30.8 per cent on other projects, most likely to be city beautification projects; 6.41 per cent on water supply, 7.44 per cent on social services, just 1.03 per cent on solid waste management; 3.66 per cent on city management and the rest on other activities, of the total Rs 3,900 crore of projects proposed over the seven-year period.5 Some cities, such as Mumbai and Bangalore might just spend on road and transport projects. In fact, Bangalore Municipal Corporation has been spending more than half its budget on such projects in the last few years since water supply and sanitation are provided by a parastatal, which has now moved towards privatisation, assisted by the USAID.

    Further, in the proposed budget for 2006-07, the Ahmedabad Municipal Corporation’s capital budget has increased by 179 per cent to Rs 8506 crore from Rs 305 crore in the previous year, because of the NURM. Further, 47.9 per cent would be spent on city level basic infrastructure such as water supply, sewerage and storm water drains, whereas a whopping

    37.6 per cent would be spent on road projects such as widening, flyover construction and making of footpaths. It is likely that most NURM cities would come up with such priorities. It is likely that the selection of projects would be susceptible to the working of pressure lobbies such as the IT lobby in Bangalore and the Bombay First and middle income households organised under resident welfare associations.

    Summing up, the problems that the urban poor are facing in the mega cities of India today, mainly the lack of shelter with a secured land title and access to basic services at affordable costs, do not get addressed by the NURM. The BSUP submission and other infrastructure projects would benefit the urban poor only if they have security of tenure and their settlements and dwelling units get connected to these networks. Attaching the name of the first prime minister of India, Jawaharlal Nehru, does not automatically make the mission pro-poor.

    NURM might well turn out to be a mission for improving a certain type of infrastructure, which is being demanded by the business class and middle class lobbies in the mega and large cities. It will certainly expedite the process of transforming the 60 large cities into “world class cities”, more by encouraging processes that would displace the poor from them. This has been witnessed since last 20 years, the poor have been displaced rather than actively included in the process of city transformation.




    [Based on discussions held at a workshop titled ‘Right to Shelter and Basic Services in Globalising Mega Cities of India’, in Ahmedabad on February 10, 2006, under the Indo-Dutch Project on Alternatives in Development (IDPAD), jointly organised by Centre for Development Alternatives (CFDA) and Institute of Social Studies (ISS), The Hague, the two project partners of a research project titled ‘Inclusive Mega Cities in Asia in a Globalising World’.]

    1 From a presentation made by Lalit Batra of Hazards Centre, New Delhi titled ‘Trajectory of Urban Change in Neo-liberal India: The Case of Delhi’, on February 10, 2006 at this workshop.


    3 For the details of the mission, sectors and projects eligible for funding under both the submissions, and mandatory and optional reforms see: http:// jnnurm.htm.

    4 In respect of people-oriented schemes relating to water supply and sanitation, UCLR Act repeal and reform of rent control laws may be taken as optional reform.

    5 Based on data from Gujarat Samachar, February 4, 2006. 6 Ibid.

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