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Government to spend Rs 1 lakh crore on developing over 500 cities


The Government of India has approved the spending of around Rs 1 lakh crore on urban development under two new urban missions to be carried out over the next 5 years. The two missions that received approval are the Smart Cities mission, which will receive Rs 48,000 crore and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which will receive Rs 50,000 crore respectively.

Smart cities mission: Under the Smart Cities Mission, each selected city will get an assistance of Rs 100 crore per year for five years from the Central government. The cities will be selected through a ‘City Challenge Competition’, that will ensure selected cities are capable of achieving the mission objectives. The State will identify a few smart city potentials based on as-yet-unknown norms, after which it can prepare proposals for further evaluation from the Centre.

According to the Centre, special emphasis will be given to citizen participation in prioritizing and planning ‘urban interventions’. This ‘intervention’ will consist of retrofitting, redevelopment, pan-city initiatives and development of new cities. The initiative will focus on core infrastructure services like water supply, sanitation and solid waste management, urban mobility and public transportation, affordable housing, robust IT connectivity and power supply. The report mentions Smart City Action Plans will be implemented by Special Purpose Vehicles (SPV) created for each city, and that the state governments will provide the resources required for the SPVs.

AMRUT: The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) looks like it will replace JNNURM, the Jawaharlal Nehru National Urban Renewal Mission. The project will aim at ensuring basic infrastructure services in the city, related to water supply, sewage, septage management, storm water drains, transport and development of green spaces and parks, as well as urban reforms in e-governance, devolving funds and functions to local bodies, constitution of a professional municipal cadre and improvement in assessment and collection of municipal taxes among others.

10 percent of the allocated budget will be given to States and Union Territories, as an incentive based on reforms carried out the previous year. This will encourage competition between the states to do better. Overall, the mission will encompass around 500 cities and towns with a population of 1 lakh and above, some cities situated on stems of main rivers, a few capital cities and important cities in hilly, tourist and island areas. The state government will be responsible for designing schemes for the identified cities, and monitor and execute the projects.

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To acquire the funds, State governments will only have to submit an annual action plan to the Central government based on which funds will be released, unlike the JNNURM fund where individual projects were appraised before being funded. For cities and towns with a population of less than 10 lakh, the centre will provide up to half of the project costs, and one-third of the costs for cities with a population of over 10 lakh. The funds will be released in three instalments in the ration of 20:40:40 based on how well the projects are doing.

AMRUT will also fund projects sanctioned under JNNURM which are yet to be completed. This will include projects sanctioned during 2005-2012 (102 projects) and are half done, which can avail 50% of central assistance, and those sanctioned during 2012-2014 (296 projects). These will be supported till March 2017. Overall, the Centre will make a minimum investment of over Rs 2 lakh crore into urban areas over the next five years, while States and urban local bodies will make a matching investment of around 50 to 66 percent. Other than this, the government expects ‘substantial’ private investments through PPP model.

Image source: Flickr user Swaminathan

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