Urban Development Recommendations for the Government of India

Urban India

India’s urban population of 410 million makes it the secondlargest urban community in the world. Yet, the urbanization ratio (32%) is still low. Overall, the provision of basic urban services is poor. Total investments of at least $640.2 billion are needed for urban infrastructure and services until 2031 to meet the needs of the growing urban population and improve the standard of living of the existing urban population. The funding gap is estimated at $80–110 billion.

The new administration, in office since May 2014, has announced a number of urban development policies and initiatives in quick succession. This report addresses the issue of how India can unlock the full potential of urban regeneration and development to enable inclusive growth with the participation of the world’s leading private sector organizations.

India aims to achieve “Faster, More Inclusive and Sustainable Growth”. Achieving inclusiveness involves addressing poverty reduction, group equality, regional balance, inequality and empowerment. To achieve these objectives, however, the country needs to address several challenges:

India currently ranks 71 out of 144 countries in the Global Competitiveness Index (GCI) 2014-2015, below its BRIC (Brazil, Russia, India, and China) peers, and scores worst among the BRIC countries in technological readiness (2.7 out of 7.0), innovation (3.5) and infrastructure (3.6). Two recent surveys conducted by the Forum among business leaders and international investors revealed that both groups consider funding and financing, as well as policy and regulation, as main obstacles to investing in India.

The Government of India has sought to foster urban development by introducing legislation such as the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act and through various initiatives, such as the creation of five industrial corridors and, more recently, the launching of the Make in India programme and the 100 Smart Cities programme.

The World Economic Forum’s Future of Urban Development & Services (FUDS) Initiative serves as a partner in transformation for cities around the world as they address urban challenges. The FUDS Initiative provides three strategic recommendations for the Government of India to advance the debate around the newly announced policies and initiatives on urban development:

Integrate spatial planning at all governmental levels

National, state and city Spatial planning is the key instrument for achieving social, territorial and economic development within India and with neighbouring countries. Its primary role is integrating housing, strategic infrastructure and urban infrastructure and improving national and local governance in the context of urban development. Spatial planning has both regulatory and developmental functions. For India to take on board this recommendation, the Government of India should initiate comprehensive work on developing a national spatial strategy by the end of 2015 and link it to the ongoing activities of the industrial corridors programme, the Smart Cities programme, and other urban planning and regeneration initiatives.

Create a stable policy framework for private investment in urban infrastructure

India, like several countries around the world, faces an acute need to provide new or modernized infrastructure and public services. Once the policy environment is stable and the right conditions for investors have been created, the Government of India needs to look at the various tools available to enable investments in strategic infrastructure and urban development. One such tool is public-private partnership (PPP). This report provides a best-practices framework and checklists to facilitate the review of the Indian PPP model of urban development. PPPs can accelerate infrastructure development by tapping the private sector’s financial resources and skills in delivering infrastructure effectively and efficiently on a whole lifecycle-cost basis.

Create institutions to stimulate capacity building and attract talent to grow businesses

An analysis of India’s economic competitiveness reveals two facts: manufacturing accounts for less than 15% of India’s GDP, which is low; and India needs to grow its number of white-collar jobs to retain and attract talent. India also needs “lighthouse” projects with the potential for interdisciplinary collaboration in the area of urban development. As next steps, it is suggested that the Indian administration continue its consultations with industry and infrastructure partners, as well as civil society, to get a balanced view of actions needed to achieve these plans. Fast, measurable and impactful action is necessary. There is a strong desire on the part of Forum Industry Partners to continue engaging in India on infrastructure and urban development initiatives. The Forum will convene roundtable discussion in India in collaboration with Industry Partners early in 2015 to support the Government of India and its ambitious plans.

*) This is an extract of the World Economic Forum report:The Future of Urban Development & Services: Urban Development Recommendations for the Government of India and was written by Alice Charles, Cities & Urban Development Expert, Urban Development Lead, World Economic Forum & External Board Member, NAMA

Alice Charles

*) Featured image: Vidur Malhotra (cc)

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