NEW DELHI: In order to address the needs of a growing urban population in India, the country needs to significantly enhance its urban infrastructure investment to an annual average of $ 55 billion for the next 15 years. The World report published under the title ‘Financing India’s Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action’ said that India would require $840 in the next 15 years.
Around $450 would be needed (in the next 15 years) for basic civic amenities like water supply, sewerage, solid waste management, roads and streetlights, while the remaining fund would be used to address the transport requirements of cities.
Right now, investment in the urban infrastructure sector stands at a meagre five per cent. The World Bank statement reads, “With the government’s current (2018) annual urban infrastructure investments topping at $16 billion, much of the gap will require private financing.”
The report observed the urban local bodies in Tamil Nadu and Gujarat and highlighted that around 75 per cent of the capital expenditure incurred by the ULBs comes from state and central government. While the government of Tamil Nadu was financing 70 per cent of the urban capital expenditure, in Gujarat, it was around 55 per cent.
That southern state was raising 12 per cent of their Capex (capital expenditure) from commercial financing, while in Gujarat, commercial financing was negligible (one per cent). The report also highlighted that low user charges for civic services and a weak regulatory framework add to the woes of local bodies.
The report suggests that the transfer of funds to the cities should be formula based and unconditional, thus increasing the mandate of civic bodies.