FINANCING INDIA'S URBAN INFRASTRUCTURE NEEDS

• By 2036, 600 million people in India will be living in urban areas, accounting for 40% of the population. This is likely to put additional strain on India's already overburdened urban infrastructure and services, with increased demand for clean drinking water, reliable power supply, and efficient and safe road transportation, among other things.
• Currently, the central and state governments fund more than 75% of city infrastructure, while urban local bodies (ULB) fund 15% with their surplus revenues.
• Approximately half of the investment required over the next 15 years-$540 billion was in the basic municipal services sector, which includes water supply, sewerage, solid waste management, roads, and streetlights, with the majority of the remainder going toward urban transportation needs.
• Currently, the private sector accounts for only 5% of urban infrastructure investments. With the government's current (2018) annual urban infrastructure investments totaling $16 billion, private financing will be required to fill a large position of the gap.

• Urban Local Bodies (ULBs) are small local government entities that administer or govern a city or town with a specific population,
• The Report noted, been slow implementation performance by states and Urban Bodies(ULBs) on several of the center's flagship Urban Missions such as the Smart Cities Mission (SCM)  and the Pradhan Mantri Awas Yojana (PMAY) instance- due to constraints on implementation capacity at the city level.
• ULBs across India, according to the report, has so far executed only about one-fifth of the cumulative cost or outlay of approved projects under SCM and AMRUT over the last six financial years.
• The total cost of projects approved under these missions is $27 billion and $10 billion for SCM and AMRUT respectively which ULBs have been able to execute only to the extent of 22% (SCM) and 18% (AMRUT), respectively, the report noted.
• Under most of these programs, only the first release of funds has been made upfront by the center since the subsequent release of funds to states/ULBs is contingent on the implementation progress of the missions at the project level which "has lagged."

5. Recommendations of the Report

• The World Bank recommends in its report that India rapidly expands its capacities to deliver large-scale infrastructure projects.
• Currently, the ten largest ULBs have spent only two-thirds of their total capital budget over the last three fiscal years. Furthermore, India will face a weak regulatory environment and poor revenue collection, which will complicate cities' access to more private financing according to the bank.
• As a result, a series of structural reforms, including those in taxation policy and the fiscal transfer system, is required, which should allow cities to leverage more private financing.