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17/11/22 13:46 PM IST

Indian cities will need $840 bn investment over 15 years: World Bank

In News 
  • India’s urban infrastructure would require an investment of $840 billion – that is, 1.18 per cent of the estimated GDP – over a period of 15 years till 2036, according to a World Bank report released recently.
Major Findings
  • By 2036, 600 million peopleor 40% of India’s population, would be living in cities, putting further strain on the country’s already overburdened urban infrastructure.
  • To adequately address the needs of its rapidly growing urban population, India would need to invest $840 billion in urban infrastructure over the next 15 years – an average of $55 billion per year.
  • It emphasizes the urgent need to leverage additional private investments to cover rising financial gaps.
  • The percentage of urban Indians will increase from 32.8% in 2015 to 43.2% in 2035.
  • Only 5% of the infrastructure needs of Indian cities are currently being financed through private sources.
  • With the government’s current (2018) annual urban infrastructure investments topping at $16 billion, much of the gap will require private financing.
  • Cities in India need large amounts of financing to promote green, smart, inclusive, and sustainable urbanization. Creating a conducive environment for ULBs, especially large and creditworthy ones.
Recommendations 
  • The report recommends expanding the capacities of city agencies to deliver infrastructure projects at scale.
  • Currently, the 10 largest ULBs were able to spend only two-thirds of their total capital budget over three recent fiscal years. 
  • Between 2011 and 2018, urban property tax stood at 0.15% of GDP compared to an average of 0.3-0.6% of GDP for low- and middle-income countries.
  • Low service charges for municipal services also undermine their financial viability and attractiveness to private investment, the report stated.
  • Continuous, formula-based and unconditional funding to ULBs; increasing property tax, and user fees; establishing Cities investment Support Unit; developing the capacity of ULBs.
  • The report suggests a series of structural reforms including those in the taxation policy and fiscal transfer system - which can allow cities to leverage more private financing.
  • In the short term, it identifies a set of large high-potential cities that have the ability to raise higher volumes of private financing.
Source- The Hindu

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