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NIPFP/March 13, 2006 NIPFP/March 14, 2006

Nagpur: City Development Plan (CDP) and City-Level Reform Agenda

An Appraisal Report

City Development Plan

1. The Nagpur Municipal Corporation (NMC) has submitted a copy of the City

Development Plan (CDP) accompanied by the city-level Reform Agenda. It has been prepared with assistance from the USAID and CRISIL. The CDP consists of a brief history of the city, the institutions that are responsible for service provisioning and city’s administration, land use pattern, a vision statement for Nagpur, strategies and an action plan, an analysis of the finances of NMC, and an investment plan – in this sequence. The section on strategies and action plan contains a brief account of the service levels and service/infrastructure gaps. What is worth noting is that the vision and strategies are largely a product of stakeholders consultations; according to the CDP, four consultations wee organised and rapid assessments (SWOT) were done to assess the city’s strengths and weakness.

2. The CDP has been prepared by following three steps : -

(a)

Defining vision and mission statements (based, inter-alia, on past studies and data)

(b)

Identifying priority actions to achieve missions.

(c)

Feasibility assessments and investment scheduling

An another place and it is very relevant to note, the CDP claims that it addresses the following three questions:

(a)

How will the Nagpur Municipal Corporation (NMC) guarantee basic level of services to all citizens, and make urban planning responsive to emerging needs;

(b)

How will the NMC manage public finance in a modern and transparent way and execute urban planning and governance in line with an established framework; and

(c)

How will the NMC increase the revenues and expand its tax base, and improve its creditworthiness for sustaining urban service delivery.

3. Nagpur’s population growth of 26% during 1991-2001 is lower than the national average;

the city’s population growth has been registering a decline over successive decades. The CDP attributes this decline to stagnating economic opportunities and neglect of Nagpur – indeed, the

whole of Vidharbha. At the same time, the CDP is built on the economic importance and potential of Nagpur (discussed at length); the CDP presents in this connection the MIHAN

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project under which it is proposed to develop an airport with a capacity to carry 14 million passengers a year in about 30 years time (based on a Techno-Economic Feasibility Study of the Proposed Multi-Modal International Passenger and Cargo Hub Airport at Nagpur), a rail-road terminal, SEZ, IT parks, health city, other manufacturing and value added units and residential, open spaces, hotels, roads etc. What is not clear from the CDP is (i) the current status of this proposal, and (ii) whether the proposed CDP takes MIHAN as a reality, or whether it leaves it out of reckoning. Given the size of the project, it is important that its status and the feasibility of MIHAN becoming a reality are adequately explained and their possible impact on the vision also brought out.

4. The infrastructural status of Nagpur is not entirely clear from the CDP.

para1.3.3, the CDP points out that “the city of Nagpur has decent urban infrastructure both physical and social in terms of quality and quantity to support large industries and services set up. The assessment has indicated that it is of standards comparable with other cities in the country. Under JNNURM, these infrastructures are poised for a quantum change that will support the aspiration of Nagpur emerging as the growth nucleus of central India”.

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Subsequent reference to the status of infrastructure, however, do not support the above. Noticeable services inadequacies are noted. Also pointed out are the problems in e.g., non- revenue water (62%), limited sewerage treatment facility, disposal of industrial effluent into the city rivers, limited road space (land use table), shortage of public transport system etc. In the case of water, the status of metering is unclear. There is no discussion on the factors that might explain the problems of inadequate service levels. Then, there are basic data gaps. The CDP does not given even the status of lpcd or the number of hours water is available in the city, and how it affects the quality of life and efficiency of industrial plants. There is no discussion on the % of population who resort to open defecation.

5 Over 8 lakh persons or 40% of the city’s population live in slums. The CDP has

described the number of slum redevelopment projects and low-cost sanitation projects that have been completed. The Nagpur Municipal Corporation (NMC) has under the Slum Rehabilitation Act, initiated a slum upgradation plan to make Nagpur a slum-free city. The Slum Redevelopment Authority (clarify – is it the NMC or the SRA) has proposed housing projects worth Rs. 250 crore under JNNURM and balance on a PPP model (explain – what is to be done

by the private sector and what is to be done by the public sector).

6. The finances of the Nagpur Municipal Corporation (NMC) have been analysed, with the

main message emerging that the finances are in a satisfactory state. The NMC has a surplus on revenue account; nearly 48% of revenue income is derived from octroi. For the past two years, the NMC has not taken any loan for financing infrastructure. This section does not explain where the problems in NMCs finances are – at other places, it talks of low coverage of properties by property taxes, low collection efficiency, inefficient user charge etc. Also, 48% of municipal expenditure is on establishment. The CDP, in the earlier part, has stated that one of the purposes of CDP is to ascertain creditworthiness of NMC. Some conclusions on this aspect are necessary and so are the identification of the areas of concern. Merely having a surplus does not guarantee a good credit performance.

7. The CDP has a vision of developing Nagpur as “the growth nucleus of central India”.

Further elaboration of the vision is described as under:: “an eco-city that provides adequate, equitable, sustainable access of urban services for all cities - a city that is safe, liveable, and that

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promotes growth of its citizens”. For this, the CDP has indicated that NMC should (or will) support the following:

(a)

The city should attain a key position in IT, ITES and health services related industries

(b)

Support industrialization in its hinterland

(c)

Promote education, culture and tourism

(d)

100% coverage in water supply and improved service levels

(e)

100% coverage in sewerage collection

(f)

Improved road safety and better traffic management through provision of flyovers, bridges, parking facilities etc.

(g)

100% solid waste collection efficiency and disposal of waste in environmentally friendly manner.

The CDP has given sector–specific mission statements. Given the extent of service levels and the problems that the different services face, it will be useful to ascertain if 100% coverage in respect of water supply, sewerage, or waste collection is achievable within the tenure of JNNURM.

8. The CDP has given sector-specific strategies, with focus on both service augmentation

and remedying the sector-specific problems. The remedies proposed are not backed by specific proposals. For instance, the CDP suggests “adoption of principles of full cost recovery” – how will it be translated is not discussed. Similarly, it says that NMC will have autonomy in tariff fixation (p.62); how will it secure autonomy in tariff fixation when any tariff revision is to be approved by the Government of Maharashtra is not given. In short, there is a lot that needs to be reworked.

9. The financing plan too is not clear – (Table 25).

the central government will be of the order of Rs. 1013 crore for the duration of the JNNURM, but no explanation of where will these be used is given.

It suggests that JNNURM grants from

City-Level Reform Agenda

1. The city-level reform agenda is very weak. Reform agenda is not a mix of statements

that the NMC will do this or that; it is a specific time-bound reform agenda with proper annual phasing and explanation. For example (para 12.1.4), the CDP suggests that NMC plans to gradually increase the user charge to collect full cost of operation and maintenance. Will the NMC use increased tariff as the main reform strategy, or work on reduction of non-revenue water and plugging the leakages – none of this is explained in the reform agenda. On internal earmarking, the NMC has been earmarking (is it earmarking or spending level) for the provision of services for the urban poor. A subsequent paragraph indicates that it is planned from 2006/07 (page 103). Issues of tenurial security to the poor have not been brought out as a part of the provision of basic services.

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(a)

Adoption of modern accrual-based accounting system.

The Nagpur Municipal Corporation has initiated the process of change- over to accrual-based accounting, and this process is expected to be completed by March 2007.

(b)

E-Governance application

This initiative began in 1998 and today covers a number of areas – citizen felicitation centers, computerization of octroi and property tax department, water billing, biometrics system. GIS etc.

(c)

Reform of property taxation

The NMC plans to begin the process of revaluing properties in 2006/07. The overall collection efficiency is 60%. About 55% properties are under tax net. The NMC needs to spell out a strategy of efficiently using property taxation, covering the inadequacies of the existing system. The viability of the present system is questionable.

(d)

User charge

A proper explanation of how the NMC plans to cover the O & M costs is

needed.

(e)

Internal earmarking of budget

The NMC plans to set aside (it claims earlier that 5% of the budget is earmarked for the urban poor) 5% for the urban poor. The Ministry may take a view if it is adequate in light of the fact that roughly 40% of the city’s population live in slum.

(f)

Provision of basic services to the urban poor.

The NMC needs to provide a proper strategy of extending services to the poor; the approach to providing tenurial security needs to spelt out.

On the optional reforms too, there are serious weaknesses. The CDP states that reform of bye-laws have been undertaken and bye-laws has been simplified. What that simplification is, has not been stated. Same weaknesses with the other reforms are noted.

2. The main areas of concern are:

(a)

Use of the existing baseline data and situation in developing the vision and strategies. Rapid assessments are not adequate.

(b)

Identification of factors that have impeded infrastructure improvement

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(c)

Feasibility of achieving sector mission goals

(d)

No examination of institutional problems faced by city.

 

(e)

Re-examination

of

the

city-level

reform

agenda

to

what

extent

are

the

constituents

of

the

reform

agenda

the

problems

faced

by

the

city-level

institutions?

Recommendation The CDP of Nagpur needs substantial revision.

The city-level reform agenda requires to be reworked and redrawn.

The Ministry may, at best, give a conditional approval, with clear directives that the NMC will be required to revise the CDP. The Ministry will need to negotiate and rework on the city-level reform agenda with city-level officials.

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