Opinion Budget 2023: On cities, a welcome continuity. But reluctance to usher in big reforms is worrying

These proposals follow a consistent trend from previous budget speeches. Last year’s budget proposed improvements in urban transport through metro systems, improvements in land and construction improvements, encouraging a shift to public transport, and a focus on Tier 2 and Tier 3 cities. It proposed to create a “high-level committee of reputed urban planners, urban economists and institutions” to recommend changes in urban sector policies, planning and governance. To build capacity for urban governance, it proposed the setting up of five centres of excellence, and other initiatives.

The 2021-22 budget focused on providing urban infrastructure — public transport, waste management and universal water supply. In 2020-21, the budget, like this year, proposed improvements in sewage treatment and waste management to do away with manual cleaning. It proposed tax concessions to encourage overseas borrowing for specified municipal bonds. In 2019, the government announced, and then formulated a model tenancy law to promote rental housing.

The continuity of these themes in this year’s budget is welcome. Taken together, they indicate a desire to implement reformist and market-oriented ideas to improve the quality of India’s cities. The intent to deliver better infrastructure and sanitation, and to improve affordability through easing up spatial and regulatory constraints is laudable. At the same time, this does not seem to be enough. While the right problems have been identified, much more could be done.

While land is a state subject, the Centre can be more creative in how it manages the process of India’s urbanisation. Historically, the central government has not just been a disperser of fiscal resources, it has also used these resources to shape and disseminate ideas and policies on city governance and land use.

The JNNURM scheme was used to incentivise states to do away with regressive laws on urban land ceilings. Successive reports of the erstwhile Planning Commission first articulated the need to focus on reforms to urban infrastructure and governance mechanisms and the need to deploy central resources for the same. In an earlier era, urban land ceiling laws were themselves propagated and encouraged by the Centre. Going back further, agricultural land redistribution and land-ceiling laws were first articulated in the erstwhile Planning Commission’s reports. Many consequential ideas, both good and bad, have been formulated or championed by the central government before they were implemented by states. The scope and scale of many of these ideas have been broader and more enduring than those seen in the past few budgets.

What, then, explains the relative conservatism of recent budget proposals on these issues? While one can only speculate in the absence of concrete research, some answers are worth considering: First, states and city administrators have themselves come around to the benefits of market-oriented reforms, obviating some of the necessity for the Centre to champion them. This could be driven by the emergence of cities as engines of growth, the resultant commodification of urban land markets and, therefore, the increasing focus on land-use efficiency. Greater openness to new ideas of urban planning could also be driven intellectually by changes in the outlooks of professionals in the field — urban planners, architects and administrators — who are increasingly able to work directly with state and municipal governments.

Second, it could be that while cities are increasingly economically significant, they are not yet significant enough politically for politicians to look at urban governance issues more seriously. While the 73rd and 74th amendments to the Constitution devolved many powers to local governments, state governments continue to hold most of the aces. This could change rapidly in the future as India transitions from rural to urban. One must, however, not assume this sanguinely. Institutional fixes cannot occur unless someone makes them.

Third, this could be a failure of imagination and creativity.

None of these reasons is mutually exclusive, and neither should these be treated as deterministic. While urban governance systems are improving, India’s cities are still plagued by issues that need fundamental changes. Our building by-laws, restrictions on land use and zoning still create inefficiencies and make our cities unaffordable, dirty and polluted. The government’s steps to increase capacity building and to create expert committees to propose reforms in these areas is commendable. However, the pace of these proposals is inadequate to meet urban India’s challenges. It remains to be seen whether and how the government seizes the urban imperative.

The writer is fellow and Associate Research Director at Carnegie India. Views are personal