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Financing India’s Urban Infrastructure

Author

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  • Soumyadip Chattopadhyay

Abstract

Cities in India are envisioned as engines of growth but they suffer from severe service shortages. The realisation of the full potential of cities depends crucially on their ability in meeting the challenges of providing urban infrastructure on a sustainable basis. This article, therefore, reviews the current financing options for urban infrastructure and discusses the strategies for pursuing reform agenda needed to strengthen financial health of the municipalities. Given the inadequacies of the municipal financial resources and capacities, this article emphasises on the need for an integrated policy and regulatory environment, in which urban local bodies (ULBs) can enhance their capacities to generate resources from existing sources at their disposal and also can better utilise innovative sources of infrastructure financing. In particular, possible reform actions to improve municipal finance are clarifications in institutional arrangements for service delivery, true local financial autonomy, sustainable finances supported by user charges, restructuring of intergovernmental grants to incentivise reform with greater assistances for smaller cities, encouraging public–private partnerships (PPPs), deepening of the municipal bond market, local capacity building, strengthening regulatory framework of service delivery and public participation.

Suggested Citation

  • Soumyadip Chattopadhyay, 2015. "Financing India’s Urban Infrastructure," Journal of Infrastructure Development, India Development Foundation, vol. 7(1), pages 55-75, June.
    • Handle: RePEc:sae:jouinf:v:7:y:2015:i:1:p:55-75
    DOI: 10.1177/0974930615581224
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    References listed on IDEAS

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    1. Simanti Bandyopadhyay & M. Govinda Rao, 2009. "Fiscal Health of Selected Indian Cities," Development Economics Working Papers 22970, East Asian Bureau of Economic Research.
    2. Sridhar, Kala Seetharam, 2011. "The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India's Cities?," WIDER Working Paper Series 054, World Institute for Development Economic Research (UNU-WIDER).
    3. Roy Bahl, 2012. "Metropolitan City Finances in India: Options for A New Fiscal Architecture," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1233, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Kala Seetharam Sridhar, 2011. "The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India's Cities?," WIDER Working Paper Series wp-2011-054, World Institute for Development Economic Research (UNU-WIDER).
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    More about this item

    Keywords

    Municipal finance; urban infrastructure; urban reform; India;
    All these keywords.

    JEL classification:

    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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