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Thursday, Jan 27, 2005

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Urban infrastructure development — `Decentralisation of financing a major challenge'

G. Srinivasan

New Delhi , Jan. 26

MOBILISING urban infrastructure in a responsible fiscal framework to ensure growth momentum of the economy and a measure of improvement in the quality of life that citizens should expect pose a formidable policy dilemma, according to a senior official of the World Bank, Ms. Patricia Clarke Annez.

Talking to Business Line here after taking part in a conference on the subject jointly hosted by the Bank, non-governmental organisations and the Ministry of Finance in Jaipur early this month, Ms Annez, currently an Urban Advisor in the Transport and Urban Development Department at Washington, said reconciling these two legitimate but competing objectives in a context of decentralisation of urban local bodies has become a challenging task.

In this regard, she said, the conference promoted "a dialogue across different policy perspectives that usually proceed in isolation from each other". She said the conference saw policy experts from both governments and non-governmental bodies "generating practical, transferable implementation experience from Brazil, China, India, Poland and South Africa".

Ms Annez said the outcome of the discussions in the conference would go a long way in improving the flow of investment in urban areas. She said the Bank had funded several urban infrastructure projects especially in the urban water supply and sanitation sector in India.

Particularly, she noted, the Bank has assisted in water supply and sanitation schemes in Chennai, Bangalore and Mumbai.

Stating that the Bank has adopted an urban-reform based funding approach, she said such programmes have been taken up in Karnataka and Tamil Nadu.

Karnataka programme seeks to foster a long-term vision for the urban water sector in the State, designed to turn its performance of urban water sector into high-quality, sustainable services in all urban local bodies.

The Jaipur Conference discussed issues such as how to manage the risks of decentralising financing and responsibility to lower levels of governance while still rewarding local governments that manage their finances well.

Ms Annez noted that India is not as far along in the decentralisation process as the other case studies countries featured at the conference.

Moreover, it was pointed out at the conference, there has been reluctance to devolve responsibilities or finances to local bodies in India until they have proven their ability to assume them, contrary to experience in other countries.

It was noted that since decentralisation supervened in 1992 with a Constitutional amendment, the meagre 0.6 per cent of GDP spent in Indian cities has not measurably increased with service gaps having widened in spite of rapid economic growth over the period.

Yet another significant feature in the Indian system is the fragmentation of responsibilities for service delivery in Indian cities across a number of State entities, which lowers the profile of elected local governments.

However, Ms Annez is quite optimistic that India could tackle its urban infrastructure problems as several progressive legislations have been in place and once the implementation is through with user charges of services getting reflected in the system, urban infrastructure amenities would vastly improve with the system emerging self-supporting and self-financing.

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