India has to invest $55 billion p.a. in urban infra to meet needs of growing population: WB report

Report flags marked decline in PPP over the last decade, slow implementation of Centre’s flagship Urban Missions by cities on the ground 

A new World Bank report estimates that India will need to invest $840 billion over the next 15 years— that is an average investment of $55 billion per annum— into urban infrastructure to effectively meet the needs of its fast-growing urban population. 

This is at a time when Public Private Partnership (PPP) transactions for urban infrastructure in India have registered a marked decline in the last decade both in monetary value and transaction volume and amid “slow implementation performance” by States and Urban Local Bodies (ULBs) on several of the Centre’s flagship Urban Missions such as Smart Cities and the Pradhan Mantri Awas Yojana (PMAY).

Titled “Financing India’s Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action”, the report underlines an urgent need to leverage more private and commercial investments to meet emerging financial gaps. 

While policy decisions to keep tariffs and service charges below levels required for cost recovery and financial sustainability are contributing to low revenue were also flagged by the report, there has also, the report noted, been slow implementation performance by states and Urban Local Bodies (ULBs) on several of the Centre’s flagship Urban Missions— such as the Smart Cities Mission (SCM) and the Pradhan Mantri Awas Yojana (PMAY) for instance— due to constraints on implementation capacity at the city level. 

ULBs across India, according to the report, have so far executed only about one-fifth of the cumulative cost or outlay of approved projects under SCM and AMRUT over the last six financial years.

The total cost of projects approved under these missions is $27 billion and $10 billion for SCM and AMRUT respectively which ULBs have been able to execute only to the extent of 22% (SCM) and 18% (AMRUT), respectively, the report noted.

Under most of these programs, only the first release of funds has been made upfront by the Centre since the subsequent release of funds to states/ULBs is contingent on the implementation progress of the missions at the project level which “has clearly lagged.”