Govt To Front-Load Rs 100 Lakh Crore In Infra Projects: Sitharaman
The government expects a centre-appointed task force set up, to identify infrastructure projects that require funding for completion, to soon submit its report, based on which it would 'front-load' Rs 100 lakh crore in these projects, finance minister Nirmala Sitharaman said, on September 10, 2019.
In this year’s annual budget, the government had set aside this amount to be used for infrastructure development in the country. Under tremendous pressure due to the economy hitting a six-year low of five per cent in the April-June quarter of the current financial year, the government has been busy launching measures to correct the situation.
Can Indian Cities Fund Better Infrastructure?
India is urbanising fast but is it ready for this? Data show that while about 590 million people are expected to live in India's cities by 2030, the infrastructure in Indian cities may not be adequate to accommodate the growing population. Despite the fact that there is no shortage of resources and Indian cities are far more productive than rural areas, what could be the reason behind this?
Funds we need
While urban policy in India emphasises on lowering the expense on infrastructure, former World Bank researcher Alain Bertaud points out that for every thousand Rupees authorities save on spending on infrastructure, it loses millions. Figures also point out that throughout India, large cities are productive enough to fund infrastructure development.
For example, the combined revenues from Mumbai, Thane and Pune in 2014-15 was 46.8 per cent of Maharashtra's. When compared to Mumbai's contribution of Rs 1, 88,739 crore to Maharashtra's exchequer in this period, the cost to build the Mumbai Trans Harbor Link Bridge (MTHL) is Rs 11,000 crore. In fact, the annual tax revenues from Mumbai is over 17 times the cost of the bridge. When built, the bridge will vastly reduce commuting time in Mumbai, connecting South Mumbai to Navi Mumbai. The bridge will allow people to build more affordable homes in either sides of the bridge and travel to workplace without commuting too much.
When the World Bank did a study of the first of its kind in 2013 to calculate underutilised land in India, they found that the public sector owns 32 per cent of the developable land in Gujarat's Ahmedabad. A large fraction of this land was either idle or under-utilised. World Bank estimated that by selling such land, the municipal authorities can raise $3.6-$9.8 billion. This was twice the estimated cost of the infrastructural investments Ahmedabad for the next 20 years.
By doing an audit of idle land and other resources under their jurisdiction, urban local authorities across India will be able to fund projects better.
The floor plan
In major Indian cities, the floor space index (FSI), which is the ratio of floor area to the size of the plot, is between 1 and 2. An important way to raise revenues is raising FSI. If the FSI is raised in cities, revenues that accrue from the additional floor space built will be more than sufficient to develop infrastructure.
In private hands
By involving private players, the government will be able to develop its infrastructure better. The success of cities like Jamshedpur, Jharkhand, are a testament to this fact. Even though business major Tata does not completely own the city, they own tracts of land that are large enough to make infrastructure investments feasible.
Here are some ways in which urban planners can make a city more efficiently structured:
- India's land use policy could be better utilised to develop urban space better. By applying this policy in a directed way, urban planners can raise or lower densities in various parts of a city. For example, if greater mixed use development is allowed in Connaught Place, Bandra-Kurla Complex or Nariman Point, the structure of Delhi and Mumbai may change in the long run. Similarly, if the FSI in South Mumbai rises from 1.33 to 15, economic activity will be more concentrated in here. This will lower commutes and raise productivity. This will also lower the number of trips within the city.
- Building better infrastructure and transportation networks will increase mobility and affordability of homes. For instance, if mass transit is extended to all parts of the city, it will allow many people to move to suburbs. Better water and sewage systems in the suburbs would inspire more people to move there.
- The taxation system also changes the shape of cities. For instance, if properties in cities are taxed according to the value it would generate under best possible use, people are likely to move elsewhere. Many companies in Mumbai moved their offices from Nariman Point to the Bandra Kurla Complex when there was such a transformation in the property tax system.