Seminar 2020
SPA New Delhi
I. Financial Mechanisms in Urban Development ______________________________________________________________________________ Introduction The infrastructure sector is a great booster in any developing nation’s economy. Likewise, is the case of India, which is the second most populous country in the world after China, and one of the world’s fastest-growing economies (Dash and Sahoo, 2010). Infrastructure and construction account for being the second-largest economic activity which has been growing rapidly in India. Adding to the momentum of this growth, the production of machinery has been on a rise and has helped in improving rail, road, and port networks. India’s GDP (Gross Domestic Product) was growing at a rate of around 8% for the first decade of the 21st century, and it was predicted that India would become the fifth richest country by 2020, and the third richest by 2025 (India’s industrial structure - Case study - emerging and developing country India - OCR - GCSE Geography Revision - OCR). But reality has deviated from the math done on paper, where there is a huge gap between the potential demand of amenities that this huge population needs to sustain and the available supply of these amenities. Lately, the Indian economy has been showing signs of overheating because of ever-increasing urbanization and basic infrastructure constraints. However, the Government of India has welcomed the challenge of urbanisation and has proposed projects that would help develop the nation. It is estimated that as of 2030, the urban population might rise to 40% of the total population (in 2030) with a contribution of 75% to the GDP, as compared to 31% from the last census with a contribution of 63% to the GDP. To provide for the increased demands, the Government of India planned the “Smart City Mission” in 2015 (“Smart Cities : Ministry of Housing and Urban Affairs, Government of India,”), whose core objectives include delivering basic amenities like adequate water supply, electricity and sanitation, along with increased emphasis on digitalization, and building a sustainable and secure environment in our cities through Transit Oriented Development (TOD), Housing for all projects like Pradhan Mantri Awas Yojana (PMAY), and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) (Kukreti, 2018). This operation is a Center Funded Scheme (CFS) and would receive financial support from the Central Government along with a significant contribution from the State/ULBs (Urban Local Bodies). Other than this, balanced funds are to be channelized via innovative finance mechanisms like municipal bonds, or Pooled Finance Mechanisms. The government has envisioned a spend of INR 102 lakh crores for a span of five years beginning in 2019-20 and reaching out across 23 sectors, where the private sector is relied 4
