LAST WEEK, a scathing report by the CAG on the performance of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was tabled in Parliament. Lasting from 2005 to March 2012, JNNURM was the Central government’s largest ever initiative to address the challenges of India’s rapid urbanisation. The scheme envisaged a total investment of more than Rs 1 lakh crore in urban infrastructure for 65 mission cities, and tied it to policy reforms aimed at strengthening the framework of municipal governance.
The CAG report paints a dismal picture of JNNURM’s accomplishments. As of March 2011, only 68 percent of funds earmarked by the Centre were allocated, and only 253 of the 2,815 projects approved (9 percent) were completed, largely due to inadequate implementation capacity and lack of third-party monitoring. On the reforms end, the progress was lacklustre as well, with most cities following a “box-ticking” approach to access funds, and few implementing the reforms in spirit. The report also notes some instances, although small in value (less than 0.1 percent), of diversion of funds for unauthorised expenditure.
These findings may seem striking, but they aren’t surprising. A mid-term appraisal by the Planning Commission in 2010, and another appraisal by the High-Powered Expert Committee on Estimation of Urban Infrastructure Financing Requirements in 2011 had raised similar issues. What the CAG report fails to do, though, is suggest anything radically different for a new and improved mission (JNNURM-2) expected to be launched in a few months.
While JNNURM undoubtedly heralded a new era for India’s urban policymakers, its biggest problem was that in a rush to approve new projects, and by relaxing reform pre-conditions, it reduced itself to a spending project rather than a policy response to India’s urban crisis. To achieve different outcomes, there are two areas where JNNURM-2 needs to strike a fundamentally different note from JNNURM.
First, JNNURM-2 should reposition itself as a competitive reward fund. Unlike JNNURM, which provided fixed allocations for each state with no real incentive for superior performance, the new mission should have fixed allocations of funds only for groups of states based on their developmental status (the top group would comprise Gujarat, Kerala, Maharashtra and Tamil Nadu). Within each group, the mission should encourage competition among all cities for project funding. Every year, it should make varying allocations to cities based on three main criteria: progress on reforms during the past year, the quality of project proposals submitted, and availability of trained staff for project implementation and monitoring.
Doing this might mean not pleasing all the cities or states, but will ensure the most efficient allocation of funds. Moreover, the amounts allocated to cities will signal real progress or failure to urban voters who can hold their municipal governments accountable better than any Central or state diktat.
Second, JNNURM-2 should explicitly reward innovation and experimentation, perhaps by setting aside a small fund for innovative pilot projects that could elicit lessons for all cities. Urbanisation is a complex problem, and there should be some room to acknowledge that we might not have all the answers. As the CAG report notes, a common problem in JNNURM housing projects has been about targeting the right beneficiaries among the urban poor. Even if they are accurately identified, how do you ensure they have enough incentives to move to the newly built houses? And if they do move in, will they stay in the new apartments allocated to them, or will they put them up for resale? The answers are anything but obvious, and need rigorous research.
Last month, Karnataka Chief Minister Jagdish Shettar handed out allotment letters to 800 beneficiaries of a JNNURM housing project in Bengaluru. Interestingly, the letters were in the name of the wives of the beneficiaries to ensure that the men do not mortgage the property without their wives’ consent. JNNURM-2 should create avenues to identify such new policy ideas in advance, and test them rigorously to learn if they work or not. After all, what’s worse than a Rs 1 lakh crore initiative with massive project delays, is one that we learn nothing from.
(The views expressed in this column are the writer’s own)