World Bank: India needs 68 lakh crores in 15 years for urban facilities, revealed in the World Bank report

Pankaj Prasad
World Bank India needs 68 lakh crores for urban facilities
World Bank India needs 68 lakh crores for urban facilities

Between 2011 and 2018, urban property taxes accounted for a mere 0.15 percent of GDP, compared to an average of 0.3–0.6 percent of GDP in low- and middle-income countries.

India is known as the city of villages, but in recent years urbanization has picked up pace. Because of this, the burden of providing resources on cities is increasing continuously. Shocking figures have come out in the World Bank report regarding this. This report states that India will need an investment of $ 840 billion or about Rs 68 lakh crore in the next 15 years due to the rapidly growing urban population. 

This would be an average of $55 billion per year or about Rs 4.4 lakh crore. The report titled 'Financing India's Infrastructure Needs: Barriers to Commercial Financing and Prospects for Policy Action' emphasizes the need for early and more private and commercial investment to bridge the emerging financial gap. According to the report, by 2036, 600 million people will be living in the cities of India. This will be 40 percent of the total population of the country.

That's why it will be necessary

If the pressure of population increases in urban areas, then the demand for clean drinking water, uninterrupted power supply and safe road transport will also increase. This is expected to put additional pressure on urban infrastructure and services. 
At present, the central and state governments finance more than 75% of the infrastructure of cities, while urban local bodies are able to finance only 15% through the revenue generated themselves.

Private investment very low

According to the report, private companies' investment in providing facilities in cities is very low. Currently, only 5 per cent of the infrastructure needs of Indian cities are financed through private sources. The government's current (2018) annual urban infrastructure investment is reaching $16 billion (Rs 1.29 lakh crore). In such a situation, private funding will be required to fill the demand and availability of finance gap.

Several measures have been proposed, said Roland White, Global Lead, City Management and Finance, World Bank and co-author of the report, that the Indian government can play a big role in addressing the market constraints faced by cities in accessing private funding. Is. The World Bank report proposes a number of measures that can be taken by city, state and federal agencies with an eye on the future. Through this, private commercial finance will become a major part of the solution to India's urban investment challenge. 

Suggestions... the need to strengthen urban bodies and municipalities

Auguste Tano Coume, Country Director for India at the World Bank, said that green, smart, inclusive and sustainable urbanization of India's cities requires a large amount of funding. To enable cities, an enabling environment has to be created for the Urban Local Bodies (ULBs). They have to be made strong, large and creditworthy enough to borrow more from private sources. This is the only way to find a sustainable way to improve the quality of life of a growing urban population.

Recommends expansion of capabilities of urban agencies: The report recommends expansion of capabilities of urban agencies to undertake  large-scale infrastructure projects. Currently, the 10 largest ULBs have been able to spend only two-thirds of their total capital budget in the recent three financial years. Due to the absence of any concrete rules and regulations regarding local bodies and their inability to collect revenue, there is not much private funding. 

Between 2011 and 2018, urban property taxes accounted for a mere 0.15 percent of GDP, compared to an average of 0.3–0.6 percent of GDP in low- and middle-income countries. Low service charges for municipal services also reduce their financial viability and attractiveness to private investment. In the medium term, the report suggests a range of structural reforms, including taxation policy and fiscal transfer mechanism. This would allow cities to take advantage of more private funding.