Urban Affairs of Budget 2021
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Urban Affairs of Budget 2021

 

By Tathagata Chatterji

Professor (Urban Management & Governance), Xavier University Bhubaneswar


Urban Affairs of Budget 2021

Coronavirus had badly impacted urban India, which accommodates one-third of its population and two-thirds of economic production. Metro cities, which are nerve centers of the economy and gateways to global trade, turned into pandemic epicenters. Millions of jobs were lost during the COVID-19 peak and lockdown phase, which triggered an unprecedented wave of deurbanization of migrant workers.

 

The pandemic had also widened urban social divides. Ignored and entrenched socioeconomic inequalities in our city systems regarding access to water, sanitation, healthcare, and digital connectivity, have come out in the open. It is imperative to get our cities, especially metropolitan cities, up and running again, create jobs, and meet India's burgeoning youth population's livelihood aspirations.

 

Would the first post-pandemic Budget help us restart our city economies in full throttle and help us build better, healthier, and more humane cities? Analysis of the Budget presents a mixed picture. Finance Minister (FM) Nirmala Sitharaman addressed several issues related to urban infrastructure while presenting the Union Budget 2021-22.

 

Total funds earmarked for the urban development have also gone up from Rs 50,040 crore in FY 2020-21 to Rs 54,581 crore in FY 2021-22, an overall increase of 9.07 percent. However, funds allocated for transfer to the states for centrally sponsored schemes had remained static at Rs 24,845 between FY 2020-21 and FY-2020-22. Moreover, devolution of grants to the Urban Local Bodies (ULBs) had also gone down from Rs 25,098 crore in FY 2019-20 to Rs 22,114 crore in FY 2021-22 – a drop of 11.89 percent.

Urban-centric issues in the budget speech could be broadly grouped around the themes of cleanliness, mobility, and shelter.

Cleanliness

The Economic Survey 2021-22 and the 15th Finance Commission report strongly emphasized the criticality of sanitation and water services in the COVID-19. With cleanliness high on the government's priority table, the Swatch Bharat Mission received a new impetus in the Budget. Announcing Swatch Bharat Mission 2.0, FM mentioned that the scheme would aim towards complete fecal sludge management and wastewater treatment, source segregation of garbage, reduce single-use plastic and manage waste construction-and-demolition activities, and bioremediation of garbage dump sites. The second phase of the mission would be implemented over five years through an outlay of rupees 1.41 lakh crore.

Additionally, Rs 2,217 crore was allocated to address air pollution in 42 big cities with more than one million. Moreover, to provide universal piped water supply in all 4,378 ULBs over the next five years, the FM announced the Jal Jeevan Mission (Urban) launching with an allocation of Rs 2.87 lakh crore.

Mobility

FM highlighted both bus and rail-based systems under mobility. Presently, the country has a metro rail network of 702 km, and another 1,016 km of the network is under-construction in 27 Indian cities. She declared that expansion of rail-based mass transit system shall be carried out for Tier-II cities and fringe areas of Tier-I cities primarily through MetroLite and MetroNeo technologies.

According to the guidelines issued by the Ministry of Housing and Urban Affairs (MoHUA), the Metrolite trains would have 3-car units capable of carrying 300 passengers at a maximum speed of 60 km per hour. The trains would be powered by 750V DC overhead traction and standard run-on gauge of 1435 mm width laid at grade or elevated. MetroLite trains' capital costs are about 40 percent of conventional metro lines and are also cheaper to maintain. The MetroNeo trains, which even cheaper, can run on road slabs and have rubber tires.

Adaptation of light rail systems will provide a cleaner and greener mass transit system at a cheaper cost. The Budget also announced that the Centre would provide counterpart funding for the extension of the metro rail networks of Kochi (Rs 1957 crore), Chennai (Rs 63,246), Bengaluru (Rs 14,788), Nagpur (5,9575), and Nashik (Rs 2092 crore).

The budget also announced a scheme to augment city bus services through an 'innovative' PPP (Public-Private Partnership) model. It was mentioned 20,000 new buses would be added for which Rs 18,000 crore is allocated. But what form and shape the 'innovative PPP mode' would take and reconfigure public-sector bus transport undertakings remains to be seen.

Shelter

The government announced an affordable rental housing program as a sub-scheme under the PMAY (Pradhan Mantri Awas Yojana), through PPP mode as part of the economic stimulus package in May 2020. The Budget 2021-22 sought to facilitate affordable housing through indirect measures by extending tax breaks for the developers of notified affordable housing projects. Similarly, income tax rebates of Rs 1.5 lakh for individual home buyers were also extended until March 2022.

With the pandemic accelerating the digitalization process, it was hoped that the FM would announce additional funds for the Smart Cities Mission, a flagship initiative of the NDA government. Moreover, Integrated Command and Control Centres developed under the mission played significant roles in the battle against the coronavirus pandemic through spatial tracking of virus outbreaks, hospital beds' availability, and targeted emergency medical assistance delivery. But the prestigious mission failed to receive any additional support in Budget 2021-22. Similarly, the allocation for the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) had remained static between FY 2020-21 and 2021-22.

Both missions were launched in 2015 to upgrade Indian cities to international standards by infusing digital technology and streamlining management practices. However, five years down the road, both projects are struggling with low fund utilization. In the revised Budget for FY 2020-21, the Smart Cities allocation was sharply cut by Rs 3050 from the original allocation of Rs 6450 crore, while AMRUT faced a more modest reduction of Rs 850 crore from allocated Rs 7300 crore. In FY 2021-22, both the missions are assigned with the same amount as in the previous year.

Expectations from Budget 2021-22 of an urban employment guarantee program went in vain after the COVID-19 induced a livelihood crisis of informal workers in the cities. The hopes were in line with the rural-centric MGNREGA to reduce vulnerabilities of the urban poor.

The Budget failed to provide any additional financial support for the ongoing urban poverty alleviation program- Deendayal Antyodaya Yojana National Urban Livelihood Mission (DAY-NULM). The self-help groups (SHG) registered under the DAY-NULM in various states contributed enormously to the battle against the pandemic by producing over 6.80 crore masks and 2,84,000 liters of hand sanitizers. Moreover, the mission had generated over 21 lakh livelihoods.

But in Budget 2021-22, the DAY-NULM was allocated only Rs 795 crore  - the same amount as in FY 2019-20. Additionally, Rs 200 crore was allocated for PM SVANIDHI (Prime Minister's Street Vendor Atmanirbhar Nidhi) and Rs 100 crore under Nirman Kaushal Vikas Yojana (NKVY). More generous funding for these ameliorating poverty schemes could have helped reduce the urban poor's livelihood vulnerabilities in these difficult times.

The DAY- NULM, together with PM- SVANIDHI and NKVY account for only Rs 1,095, just about 10 percent of their rural counterparts. The rural livelihood mission- Ajeevika was allocated Rs 10,005 crore in FY 2019-20, which had gone up to Rs 14,473 crore in FY 2021-22- a sharp 44.65 percent increase. Even though India is going through a process of steady urbanization of poverty, acknowledgment of the phenomenon seems limited in the top policy circles.

To sum up, the Budget had reposed faith in the supply-side approach, focusing on augmenting urban infrastructure and had sought to favor the PPP model to deliver significant projects. Except for metro rail projects, direct budgetary support for urban sector schemes does not show any appreciable increase. This could be attributed to the difficulties faced by the government due to covid-induced economic downturn and shortfalls in revenue collection.

However, the flow of funds for urban development may improve substantially in near future, as the FM tabled the report of the 15th Finance Commission on the day of the budget presentation. The 15th Finance Commission has allocated Rs 1.21 lakh crore in grants to the ULBs over five years compared to Rs 87,000 crore by the 14th Finance Commission. Recognizing the importance of the million-plus cities in the Indian economy, the 15th Finance Commission has set aside Rs 38,196 crore has been set aside as performance-linked grants for 50 million-plus cities.

Basic grants are available for smaller ULBs. Moreover, the 15th Finance Commission also suggested an additional grant of Rs 70,051 crore to rural and urban local governments for developing public health infrastructure and primary health clinics. If implemented properly, these recommendations can improve the financial health of Indian cities and reduce disparities with regard to health care facilities in Indian cities. However, to enable the ULBs to utilize additional fund flows optimally, it would be necessary to improve their techno-managerial capacities simultaneously. 

About the Author:

Tathagata Chatterji is a professor of Urban Management and Governance at Xavier University Bhubaneswar and a visiting faculty at IIEST Shibpur. Earlier, he taught at SPA Vijayawada, Manipal University, and at the University of Queensland. His research interest focuses on comparative urban governance, rural-urban interface, and spatial politics.


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DISCLAIMER: The views expressed in this insight piece are those of the author and do not necessarily reflect the official policy or position of IndraStra Global.