Of this the Centre is committed to pay over Rs 2,000 crore (Rs 20 billion), consisting of a Rs 500 crore (Rs 5 billion) viability gap funding for the Mumbai project and nearly Rs 1,600 crore (Rs 16 billion) for the Bangalore project.
This is not an exorbitant sum for the Centre but not insignificant either. But what is not clear is whether this funding has anything to do with the national urban renewal mission. The latter is mentioned off and on while these projects are discussed but that is all.
The significance of the mission is that it promises large funds provided state governments put through certain key administrative reforms, which are crucial to improving the governance scenarios of large cities.
The bottom line is that the centre is effectively committing itself to paying out large sums without strictly laying down a roadmap for reforms - making it clear that if you do not deliver on the reforms we will turn off the tap. It can be argued that the Bangalore municipality has already carried out some of the reforms that have been enumerated in the urban mission strategy and the Rs 500 crore (Rs 5 billion) for a city like Mumbai is really peanuts.
Rigid conditionalities for such sums are not on. If that were the case, then the project should be viable without the central funding. As for Bangalore, it better learn to be satisfied with whatever reforms have already taken place and not hope for more.
The Centre's position is not surprising. The name of the game in independent India is to get a public or plan project sanctioned and a small amount disbursed by whatever means possible. Then over the years the prospects of wasting the money, already sunk if the project is abandoned, becomes the blackmailing gambit to keep securing the funding
for the project to be eventually completed.
But reforms are good and must be talked about. Hence the prime minister has not failed in his duty to remind everyone that they ought to be carried through. He told his Mumbai audience: "People need better urban governance, a more responsive and transparent urban administration. Urban administration should be freed from the cancer of corruption and the stranglehold of land mafias." This is not all.
The prime minister also emphasised the need to have a unified metropolitan transport authority. His Urban Development Minister Jaipal Reddy went one step further and asked the Maharashtra administration why it had a "mental block" against repealing the Urban Land Ceiling Act. Fine, but no commitment was obtained as to precisely when the Land Ceiling Act would be repealed or the unified authority would be set up. Some kind of authority may well be set up but that is quite different from there actually being unified transport planning as a result of which various agencies with their fiefdoms and administrative egos are forced to fall in line.
Why are urban reforms important? Rakesh Mohan has examined the history of urban bodies in mature economies raising long-term finance and found that "such systems have been successful since they have ensured that towns and cities face an incentive structure that encourages them to remain credit worthy and essentially self financing
" How can this be ensured in India? I see little choice," he says. "If Asian cities have to thrive and prosper, they will have to develop self-sustaining local taxation and user charge systems so that they can tap national and international financial markets for their financing needs." So good governance is vital. It alone will ensure the viability and livability of cities. And good governance will not come if there is no incentive to pursue it, that is if you can keep getting funding without delivering reforms.
Rakesh Mohan has also outlined the irony created by globalisation by pointing to the new trans-border mobility of the professional classes which has led to these people comparing the living conditions in Asian cities with others even though average incomes in Asian cities is far lower. He puts it succinctly when he says, "In order to attract and retain the very people who are essential for city competitiveness, Asian cities will have to prematurely invest in world-class facilities at much lower average income levels."
This is where the argument comes full circle, particularly in the case of Bangalore. It has outrageous traffic jams and more cars than it knows what to do with. The jam at the city centre (MG Road) is the worst on Sunday when so many come to see the bright lights of Brigade Road and Commercial Street. But most of the city has no provision for collection of parking fees! The previous Congress mayor abolished it when the BJP agitated against corruption in the collection of such fees. So much for the levying of user charges.
The least that the prime minister could have done during his visit to the city to inaugurate not one but two projects was to tell the state's political leaders: For god's sake at least start levying parking fees everywhere, or else we will stop the funding. There is no report indicating that he has obtained promises of better governance along these lines. Even if he has, the fact of it has been kept carefully hidden from public.