What ails India’s urban governance?

An edited excerpt from an essay published in ‘The Making of Vibrant Cities: A Collection of Essays Compiled by Mumbai First’

The horrific flooding in Chennai in 2015, Delhi’s newly acquired status as the world’s most polluted city, Mumbai’s forever-potted roads, and the eye-popping rise in the number of rape cases from 165 to 643 and of molestation from 483 to 1,675 over the last four years— these are outcomes of weak urban governance.

So, it is pertinent to examine what constitutes weak urban governance. It essentially refers to institutional defragmentation, whereby multiple agencies often have overlapping roles, are run by officials who are not accountable to citizens, and the absence of a single individual accountable to the polity.

In India, while on paper, mayors are deemed accountable for cities, in spirit it is the chief minister. Cities are controlled by armies of bureaucrats and the chief minister, while the mayor has little to do. On the other hand, the world’s major cities, like London, New York, Paris, and Shanghai, are all run by powerful mayors. This makes it necessary to study the causes for urban paralysis.

An analysis suggests four reasons underpin this phenomenon.

First, urban areas are not large enough for them to determine the fate of a general election. Consequently, successive central governments have little or no incentive to focus on urban governance reforms.

For example, with an urban population of a little over 377 million of the total 1.2 billion in 2011, urban India elected roughly 177 members of Parliament, or one-third of the total 543 in the 2014 General Election.

Second, urban dwellers are not sufficiently represented in the sanctums of decision-making. Delimitation, that is, allotment of the number of seats in the House of the People (Lok Sabha) to the states, and the total number of existing seats in the Legislative Assemblies was last done on the basis of Census 1971. According to the 84th and 87th Constitutional Amendments, this allocation will only be altered based on the first Census after 2026.

Such insufficient representation has prevented urban areas from receiving the focus and the funds they require.

Third, the economic might of cities makes them appealing to the political classes. This increases their tendency to continue to wrest control of cities. For example, just the fifty-four metropolitan cities and their hinterlands accounted for 40% of India’s GDP and 45% of its consuming class households in 2012. As is known, it is in cities that business thrives, trade flourishes, jobs are created, and innovation takes place.

Control over cities provides political parties with significant leverage that can be traded to raise funds which, in turn, are used to fight elections in rural India. The state units of the ruling parties facilitate such arbitrage by throwing in infrastructure projects, like shiny airports, expressways, and permissions for skyscrapers that pander to the rich in cities.

Fourth, and most important of all, is the lack of human resource capacity in the country spanning the political class, the intelligentsia, the bureaucracy and the private sector. Severe talent shortage was underscored as the main reason for the slow pace of reform by the erstwhile Planning Commission. And a telling example of this is visible in the ongoing debate on the Goods and Services Tax (GST) Bill.

One of the biggest indirect tax reforms since Independence, the bill is designed to create a harmonized tax structure by subsuming several local body taxes, like the entertainment tax, advertisement tax, entry tax, and luxury tax.

But the Bill remains completely silent on sharing the GST with local bodies as proposed by the 13th Finance Commission. If passed in its current form, this legislative lacuna will further cripple the financial independence of urban local bodies (ULBs). They will lose their own source revenue streams without adequate legal provisions in place to mandate steady compensation.

Consequently, ULBs will be increasingly beholden to state governments for grants in lieu of the local taxes that constitute a significant share of their revenues. Take the example of the Municipal Corporation of Greater Mumbai. It collects about Rs.7,500 crore annually as entry tax.

In Gujarat, the grants-in-lieu introduced in 2007 have not been adjusted for inflation since they were introduced. This has reduced the value of funds to less than half over an eight-year period. But sadly enough, no political party or member of Parliament has questioned this omission, suggesting either ignorance or indifference or perhaps both.

Outlined below is a 10 Point Urban Reform Programme that has the ability to transform urban India, and visibly enhance the quality of life for its citizens. However, to achieve such an outcome, these reforms need to be implemented as much in spirit as in letter—a significant departure from the current incrementalist approach.

1. Reform the 74th Constitutional Amendment to empower city governments, bolster the metropolitan system of government, and move to a system of a directly elected mayor.

2. Fix governance at the Centre and in the states to reduce fragmentation and facilitate alignment of functions.

3. Make the office of the mayor politically relevant to create a culture of meritocracy and performance.

4. Build world-class institutions to catalyse capacity at scale.

5. Establish a National Urban Finance Corporation of India to fund urban infrastructure projects.

6. Set up the regulatory architecture required to facilitate efficient and effective urban services delivery.

7. Reform the civil service, and establish executive agencies to hollow out inefficiencies.

8. Revitalize the role of the State Finance Commissions to bolster municipal finances.

9. Introduce state-specific laws on land use and transport to override legislative vacuum.

10. Deepen citizen engagement in cities to drive change across localities.