Monday, September 28, 2009

Urban renewal mission plagued by delays, cost overruns: study

Urban renewal mission plagued by delays, cost overruns: study | Bank Information Center: Monitoring the projects and policies of the World Bank, IMF and other international financial institutions
Urban renewal mission plagued by delays, cost overruns: study

23 August 2009 | Mumbai

This is one of several articles spotlighting the findings of a BIC commissioned study by Lalitha Kamath and Vinay Baindur. Findings reveal how India's urban poor are meted out injustice as local needs are left unaddressed.
Source: The Hindu

By: Siddhesh Inamdar

Mumbai: The much-touted Jawaharlal Nehru National Urban Renewal Mission (JNNURM) received flak from a panel of eminent economists and researchers here on Friday for its dismal record of merely 10 per cent completed projects.

The panel observed that the Union government’s Rs. 1,25,000-crore flagship urban development programme, which promotes Public-Private Partnerships (PPP) for financing infrastructure in 63 cities, was plagued by tremendous delays and cost overruns.

These were the findings of a two-year study commissioned by the Bank Information Centre, a non-governmental organisation that partners with civil society in developing countries to influence international financial institutions (World Bank, Asian Development Bank, etc.) to promote socio-economic justice.

The study observed that the policy reforms under the JNNURM (repealing the Urban Land Ceiling Act, for instance) were based on the recommendations of these international banks. The resultant promotion to private financing of urban infrastructure “hollowed out urban local governments” and meted out injustice to the urban poor by not addressing local needs, it said.

This was explained with an example by urban planner Dr. Lalitha Kamath, co-author of the report that was released. “Under the Greater Bangalore Water Supply and Sanitation Project, the beneficiaries were made to bear the capital cost. That is, they had to pay for the cost of even laying the pipes,” she said. “The beneficiaries thus contributed 35 per cent of the project’s cost. Despite this, people who paid up in 2005 haven’t got water connections yet.”

The other co-author Vinay Baindur, researcher and activist on urban issues, said that the JNNURM thus failed to provide for the basic needs of the urban poor while focusing on “big ticket” infrastructure projects, as the emphasis remained on attracting private financing.

He added that despite the JNNURM’s limited success, the Centre decided to take an additional loan of Rs. 25,000 crore from the World Bank for Phase 1 and proposed to launch Phase 2 for all towns having a population of 5 to 10 lakh.

The study observed that the current model diluted the role for local, popularly elected governments, instead creating parallel bureaucratic structures to manage infrastructure projects financed by international financial institutions.
No role model

Chief economist of the Aditya Birla Group Dr. Ajit Ranade, who released the report said, “We don’t have any role models [from developing countries] to replicate as we try to figure out how to manage a city with a 20 million population.” Though the job was difficult, infrastructure was a public good and so had to be developed through public money.

He said he was unconvinced about the insufficiency of public money to develop infrastructure, given that the national budget was to the tune of Rs. 10 lakh crore. “I know there is a huge fiscal deficit, but the problem lies elsewhere,” he said.

However, he said that he did not advocate doing away with international banks. “In the absence of international governance, though, it becomes necessary to scrutinise the working of these institutions.”

Reengineering Urban Infrastructure: How the World Bank and Asian Development Bank Shape Urban Infrastructure Finance in India, by Lalitha Kamath and Vinay Baindur, Bank Information Center, August 2009 (PDF 490 KB)

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