9th Five Year Plan (Vol-2)

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Human and Social Development
Sectoral Overview || Basic Minimum Services || Education || Health || Family Welfare || Indian System of Medicine and Homoepathy || Housing, Urban Development, Water Supply and Civic Amenities || Empowerment of Women and Development of Children || Empowerment of the Socially Disadvantaged Groups || Social Welfare || Labour and Labour Welfare || Art and Culture || Youth Affairs and Sports


Perspective and Objectives

3.7.1 The level of urbanisation was around 11 to 12 per cent during the first three decades of this century, increasing noticeably in the decade of independence and rising continuously thereafter from 17.3 per cent in 1951 to 25.7 per cent in 1991. The projected scenario indicates a rising trend. The Planning Commission's Technical Group on Urban Perspectives and Policies has projected the urban population at 31.0 per cent of the total population in 1996-97 and 38.0 per cent in 2006-07. During the last four and half decades, some 5-6 million people have been added to urban India every year. The country has one of the largest urban systems with 217.6 million people in 1991, which is projected to increase to 289 million in 2001 and around 605-618 million during 2021-2025. There will be about 40 metro cities in the country in 2001 as against 23 in 1991.

3.7.2 The slow-down in urbanisation during 1981-91 as compared to 1971-81 (36.4 per cent growth as against 46.1 per cent) and the growing concentration of urban population in larger towns are other urban concerns, towards which the Ninth Plan strategies will be directed. The tasks are challenging, for it is mainly in the mega and metro cities that land is a major constraint for undertaking development work. A large part of civic amenities, particularly water supply, sanitation and sewerage, are managed with assets that have outlived their operational efficiency. The required massive upgradation and renovation of these assets, is constrained by high population density and concentrated commercial activities at the locations where these service assets are installed. The lack of comprehensive urban planning in the past to promote regular upgradation and renewal has resulted in a large backlog of development activities.

3.7.3 The key urban concern is the growing gap between demand and supply of basic services. While there has been a steady growth in the housing stock, infrastructure and services, the gaps between demand and supply have been rising, even in terms of conservative norms. It is now well-recognised that these gaps are unlikely to be bridged over the next 5 to 10 years. Many goals of housing, potable water and sanitation that were to be attained by 2001 AD, may require the target point fixed 10-15 years ago to be extended.

3.7.4 In the midst of growing urbanisation, India, nevertheless, continues to live in her villages. As many as 629 million people live in some 580,706 villages, which works out to an average of 1,083 per village. Rural population density is low at an average of 214 persons per sq.km, which brings out the rural development challenges in terms of provision of human settlements-related services of potable water, sanitation, and access to livelihood programmes. Increased per capita cost of the services, Operation and Maintenance( O and M) logistics and recovery of investment are priority concerns.

3.7.5 The rural hinterland has played a critical role in sustaining urbanisation. This is reflected in the indicators of sources of primary inputs, competitively priced labour for urban economic activities, primary funds as reflected in comparative urban and rural credit-deposit ratios and market for urban products. But the unending migration of the rural poor to urban areas may have a destabilising effect on urbanisation and its sustainability. Income and employment opportunities will have to rise in the rural areas, through both the farm and non-farm sectors and habitats and basic services have to be improved so that with rural development and congenial habitats, rural areas emerge as sustainable centres of economic activities and human settlements.

3.7.6 The rural-urban continuum would be strengthened so that gaps between rural and urban lifestyles are reduced. Effective urban strategies and programmes cannot be developed in isolation of those in the rural areas. The Ninth Plan will take cognisance of this ground reality, particularly in respect of three critical components of human settlements development, namely, drinking water, sanitation and housing.

3.7.7 In this perspective, the major sectoral objectives of the Ninth Plan are:

  • Development of urban areas as economically efficient, socially equitable and environmentally sustainable entities;
  • Accelerated development of housing, particularly for the low income groups and other disadvantaged groups;
  • Development and upgradation of urban infrastructure services to meet the needs of a growing population;
  • Alleviation of urban poverty and unemployment;
  • Promoting accessibility and affordability of the poor to housing and basic services;
  • Promoting efficient and affordable mass urban transportation systems in metropolitan cities;
  • Improvement of urban environment;
  • Promoting private sector participation in the provision of public infrastructure and of the community and NGOs in urban planning and management of specific components of urban services; and
  • Democratic decentralisation and strengthening of municipal governance.

Performance Review, Policies and Strategies

3.7.8 The total Plan outlay in the 46 years of planning has been Rs.8,580 crore on urban development, Rs.10,430 crore on urban housing, Rs.15,100 crore on urban water supply and sanitation, and Rs.19,300 crore on rural water supply and sanitation.

3.7.9 The performance review of the Plan programmes has brought out some of the operational problems. The activities were determined by the availability of funds, which is a common constraint in a resource-scarce economy. This resulted in inadequate coverage of the population and encouraged a top-down approach, with the plans being formulated at the national level on the basis of feedback from the States, with marginal inputs from the functionaries directly working at the grass-roots level. At times, ad-hoc interventions were made, driven often by political and administrative expediencies rather than economic considerations and the ground situation. This has resulted in multiplicity of programmes with varying components directed to the same target group and lack of convergence or proper coordination, sequencing and linkages among them. There has also been poor feedback of

Major sectoral objectives of the Ninth Plan :
  • Development of urban areas as economically efficient, socially equitable and environmentally sustainable entities;
  • Accelerated development of housing, particularly for the low income groups and other disadvantaged groups;
  • Development and upgradation of urban infrastructure services to meet the needs of a growing population;
  • Alleviation of urban poverty and unemployment;
  • Promoting accessibility and afordability of the poor to housing and basic services;
  • Promoting efficient and affordable mass urban transportation systems in metropolitan cities;
  • Improvement of urban environment;
  • Promoting private sector participation in the provision of public infrastructure and of the community and NGOs in urban planning and management of specific component of urban services; and
  • Democratic decentralisation and strengthening of municipal governance.

experiences from the field to provide the critical ingredients for a peoples-centred and people-oriented planning. The policy framework under the Constitution (73rd and 74th Amendment) Act provides an opportunity to shift the approach in the Ninth Plan.

3.7.10 Some estimates are available on the magnitude of work ahead. In terms of financial indicators, the investment for urban housing has been estimated at Rs.526,170 crore and for rural housing Rs.172,930 crore between 1997 and 2021 for new housing, upgradation and extension,Rs.70,300 crore to Rs.307,500 crore for different types of urban drinking water systems with the investment being higher for surface than for ground water system. A large part, in some cases, more than one-half, will be the backlog of investment(1). In a shorter term perspective of 1997-2002, urban housing investment has been estimated at Rs.121,370 crore and for urban water supply at Rs. 26,300 crore and for rural water supply at Rs. 40,000 crore (2).

3.7.11 In terms of reach-out indicators, new housing stock required is about 9.0 million units in urban areas and 7.7 million units in rural areas during 1997-2002 and about 77.0 million and 63.0 million units in the longer term perspective, extending upto 2021. Housing upgradation has to cover about 7.5 million units and 20.0 miilion units in urban and rural areas, respectively, during the Ninth Plan period. As regards drinking water, the aim is to cover the total urban and rural population with existing norm and then take up qualitative and quantitatve upgradation. Total conversion of dry latrines into low-cost wet latrines is the immediate task in urban areas.

Water Supply and Sanitation

3.7.12 Drinking water supply and sanitation facilities are very important and crucialforachieving goal of `Health for All’ . The Government is committed to provide drinking water to every settlement in the country within 5 years. The Government has also decided to go all out to achieve the goal of expansion and improvement of sanitation facility along with other social infrastructure.

  1. Government of India (1996), Second United Nations Conference on Human Settlements (Habitat II), National Report, Ministry of Urban Affairs and Employment.
  2. Planning Commission (1996), Reports of Ninth Plan Working Groups.

Performance Review

Drinking Water (Urban)

3.7.13 In the initial period of planning, from the First to the Fifth Plan, the outlay on urban drinking water was considered substantial with respect to the size of the urban population (17.3 to 19.9 per cent) but thereafter, the thrust in the Plan programme was diverted to rural water supply and

Drinking water supply and sanitation facilities are very important and crucial for achieving goal of ‘Health for All’. The Government is committeed to provide drinking water to every settlement in the country within five years. The Government has also decided to go all out to achieve the goal of expansion and improvement of sanitation facility.

sanitation, inspite of the rapidly increasing proportion of urban population which was 23.3 per cent at the time of the Sixth Plan and 25.7 per cent at the time of the Eighth Plan. The proportion of this sector's outlay to total public sector plan outlay marginally increased from 1.28 per cent to 1.38 per cent between the First Plan ( 1951-56) and the Eighth Plan (1992-97). The likely expenditure in the Eighth Plan was about Rs. 7,000 crore. In terms of the Seventh Plan expenditure, the Eighth Plan expenditure was 274 per cent in nominal terms.

3.7.14 The task in the Eighth Plan was to increase the coverage of access to safe drinking water to about 94 per cent of the urban population from 84 per cent at the end of Seventh Plan and of urban sanitation services to 69 per cent from 48 per cent. While the full feedback on coverage is not available, it has been estimated that in terms of estimated 1997 population, the coverage of urban population is unlikely to increase from the level attained in the Seventh Plan. Adequate investment would be needed to meet the requirements of incremental population for drinking water and sanitation services.

3.7.15 The programme review has brought out the concentration of efforts on State capitals and other major cities and on augmentation and improvement, without any significant additional population coverage, resulting in the efforts being absorbed by population growth. The participation of financial institutions and the private sector was not significant, particularly due to the absence of cost recovery, appropriate tariff rate policies and lack of fiscal and monetary incentives.

3.7.16 In this perspective, a new programme was launched in the Eighth Plan for urban water supply, namely the Accelerated Urban Water Supply Programme (AUWSP), which was targetted to small towns (population less than 20,000, 1991 Census) as these towns had been excluded earlier,had encountered severe problems of water scarcity and the revenue base of the urban local bodies in these was weak. The AUWSP was launched in 1993-94 with a modest outlay of Rs.50 crore, with envisaged funding by Central and State Governments in the ratio of 50:50. Out of the 2,151 eligible towns (1991 Census), project reports were approved by the Central Ministry for 227 towns for an estimated cost of Rs. 218.50 crore and Rs. 68.62 crore was released to State Governments upto March 31, 1997. The progress was modest, partly because the scheme was launched only in March, 1994 and there were delays in the acquisition of land, change of water sources, procurement of materials and equipments, submission of timely physical and financial reports by States and release of funds by the State Governments to the implementing agencies. These teething problems would be resolved and the activities should go on full stream in the Ninth Plan

Drinking Water (Rural)

3.7.17 The Plan investment during the eight Plans for rural water supply as a proportion of public sector Plan, has gone up from 0.15 per cent to 2.47 per cent. The Eighth Plan outlay was Rs.10,055 crore and the target was to extend the coverage of water supply facilities from an estimated 78 per cent to 100 per cent, covering all the 3,000 spill-over "problem villages" of the 1985 list and 1.5 lakh "partially" covered villages including hamlets. To achieve this objective, schemes were implemented under the State Sector, Centrally Sponsored Accelerated Rural Water upply Programme (ARWSP), Sub-missions for tackling quality problem (QP) habitations suffering from excess fluoride, salinity, iron, arsenic, scarcity of sources, and requiring sustainability of the sources and the systems. The infrastructure and the support programmes like human resource development, education, information and communication, research and development, science and technology, management information system including computerisation of implementing departments and field formations in the States and monitoring and evaluation were taken up.

3.7.18 Subsequently, the State Governments undertook comprehensive surveys during 1991-94 for the Rajiv Gandhi National Drinking Water Mission, which provided the feedback that the tasks ahead were much more than envisaged at the beginning of the Eighth Plan. As on April 1, 1994, there were 1.41 lakh not-covered (NC) villages/habitations and 4.30 lakh partially covered (PC) villages/habitations, apart from 1.51 lakh villages/habitations suffering from acute water quality problems (QP). In addition, the Sundaresan Expert Committee constituted in May 1993 by the Central Department of Rural Development has evaluated the rural water supply programme with special reference to the Mini-Missions and Sub-Missions.

3.7.19 Recent provisional data indicate that the rural water supply programmes have covered 3.40 lakh villages/habitations during the Eighth Plan. The State feedback has further suggested that during the Eighth Plan, after the survey, 1.114 lakh NC, 1.524 lakh PC and 0.11 lakh QP villages/habitations are expected to have been covered leaving a balance of 0.296 lakh NC, 2.776 lakh PC and 1.40 lakh QP villages/habitations as on 1-4-1997. However, keeping in view the field realities, Rajiv Gandhi National Drinking Water Mission in consultation with the State Govts, further revised/updated the number of NC and PC villages/habitations and thus the task for the Ninth Plan would be to cover 0.88 lakh NC, 3.91 lakh PC and 1.40 lakh QP villages/habitations. In terms of population, about 86.74 per cent of the rural population, as per 1991 Census, is expected to have been provided with an access to safe drinking water. The Eighth Plan review has also brought out the short life span of hand pumps, say 5-6 years due to variety of reasons including the general depletion of the ground water table. The Constitution (73rd Amendment) Act, an Eighth Plan initiative, has provided an institutional mechanism for effective decentralisation of activities and the drinking water and sanitation schemes are good candidates for these, especially because community participatory efforts have to play a key role.

3.7.20 There is a need to bring about organisational reforms in the implementation machinery in the Centre and the States to equip them to work effectively in a Mission mode with guidance from the Rajiv Gandhi National Drinking Water Mission Authority and its empowered committees at the Centre and similar Authorities, empowered committees and District Committees in the States to ensure the achievement of goals and inter-sectoral integration and co-ordination.

3.7.21 The Eighth Plan review brings out the need to strengthen the contents of the ongoing Centrally Sponsored Schemes of ARWSP, especially in the light of the lessons learnt, suggestions of the Sundaresan Expert Committee and the feedback from the country-wide evaluation study conducted in 1996 by the Programme Evaluation Organisation (PEO) as also the Comprehensive State Survey on rural water supply. The Ninth Plan strategy would, in this context, give priority to totally uncovered and poorly covered settlements (where the supply is upto 10 lpcd) as well as the severely affected quality problem habitations and then to other habitations . There after progressively raise the present norm of 40 lpcd to 55 lpcd, reduce the distance norm from 1.6 km. to 0.5 km. in plain areas and 100 mtr elevation difference in hilly areas as recommended by the CMs’ Conference, held in July 1996 on Basic Minimum Services. Furthermore, installation of piped water supply system should be discouraged, as it has been found to be less dependable by the PEO in their recent country-wide survey. The villagers should be motivated to take over the routine O and M activities and also contribute resources for repair and maintenance.

3.7.22 In rural areas, where piped water scheme is operational or is proposed to be developed, the Maharashtra model may be adopted, which is structured on the basis of strong community participation, through Village Panchayat Committees and Village Water Committees, whose members are directly involved during the construction of different components of the scheme, including in assisting the Maharashtra Water Supply and Sewerage Board in deciding the location of the village works, such as service reservoirs, standposts, etc. and ensuring that the standposts in their jurisdiction are maintained in good running conditions and are properly drained. The Village Water Committees would have at least 50 per cent women members and adequate representation for SC/ST and these local committees are entrusted with the responsibility for house connection. Before these connections are provided, the owner has to ensure that adequate arrangements are made for disposal of sullage water. The village committees are also responsibile for ensuring hygenic conditions of all water sources in the villages.

3.7.23 As regards O and M of handpumps, community-based models have been developed in a number of States, particularly in Betul district of Madhya Pradesh, Banda and Barabanki districts of Uttar Pradesh and Midnapore district of West Bengal. The Midnapore model has been recognised as a good practice and is being emulated and adopted by other States. In this model, a Water Committee is established in each villlage/habitation, two women from the community are trained as caretakers, the beneficiaries raise Rs. 500 per handpump as the initial fund for maintenance and each family contributes 50 paise per month towards maintenance. This has resulted in an optimum level of functional handpumps on a wholly self-sustaining basis with the active participation of the community and the local NGOs.

3.7.24 In this perspective, the Ninth Plan envisages 100 per cent coverage of all habitations with safe water, together with the installation of a quality monitoring and surveillance system all over the country, evolving cost-effective and socially acceptable O and M strategies, re-orienting the structure and functioning of rural water supply planning and implementing agencies and taking all measures to ensure sustainability of drinking water sources. Tackling the problems of drying of sources, providing a role for the beneficiaries and Panchayati Raj Institutions (PRIs) in planning and implementation of the water supply facility are other priority tasks. In view of the resource constraints, it would be necessary to restrict the role of external agencies to priority areas.

Urban Sanitation

3.7.25 The Centrally Sponsored Scheme of Urban Low-Cost Sanitation for Liberation of Scavengers was an important Eighth Plan scheme for urban sanitation. It was first operated through the Ministry of Home Affairs and subsequently implemented by the Ministry of Welfare. It is being operated through the Ministry of Urban Affairs and Employment (earlier Ministry of Urban Development) since 1989-90. The Eighth Plan provision was Rs. 150 crore in the Central Plan, which was only about 25 percent of the required assistance to meet the objective of conversion of all the existing dry latrines in urban areas of the country numbering 50 lakh units into low-cost pour-flush sanitary latrines and 100 per cent liberation of scavengers on "whole town" coverage basis.

3.7.26 As on March 31, 1997, 760 schemes were sanctioned in 1,155 towns with a total project cost of Rs.1,062.36 crore, towards which a loan of Rs. 477..09 crore and subsidy of Rs. 363.31 crore was sanctioned. The loan released was only 30.16 per cent (Rs. 143.87 crore) and the subsidy released was 41.23 per cent (Rs. 155.50 crore). The projects were sanctioned to construct 14.52 lakh new units and convert 19.25 lakh dry latrine units into low-cost pour-flush latrines for the individual households and 3,463 community latrines. In terms of actual work done, 6.95 lakh units were completed upto Eighth Plan period out of 33.77 lakh units sanctioned (20.6 per cent). It is expected that at 1991-92 prices, the expenditure during the Eighth Plan was 45.3 per cent of the Plan outlay.

3.7.27 The impact of the programme on the physical and financial front has not been impressive. This is due to a variety of reasons, particularly insufficient schemes provided by the State Governments, delays in preparing documents and papers for sanction of loan and subsidy (separately for each beneficiary), slow release of subsidy due to inadequate physical progress, inappropriate technology, lack of awareness and reluctance of State Governments to give guarantee. An evaluation of the programme in three States, sponsored by the Central Ministry of Urban Affairs and Employment had brought out evidence to show that the objectives of the scheme were not strictly adhered to, the recommended technology was often unsuitable, relatively better-off families took over a substantial number of the pour-flush latrines and funds were inadequate or not available for the superstructure.

3.7.28 Another Centrally Sponsored Scheme, the Ganga Action Plan (GAP), implemented by the Central Ministry of Environment and Forest, has contributed to the improvement of the sanitation facilities in 25 Class I cities along the river Ganga in the States of Uttar Pradesh, Bihar and West Bengal. Interception, diversion and treatment of sewage works and low-cost sanitation units were set up in GAP -I and 792 mld of sewage has been intercepted and diverted and 596 mld of sewage treatment facilities have been installed.

Rural Sanitation

3.7.29 The Eighth Plan outlay for rural sanitation was Rs. 674 crore to cover an additional 2-3 per cent of the rural population, as per the 1991 Census. Recent data show that population coverage by sanitary latrines has increased from 11 percent to about 16 per cent during the Eighth Plan. This is inclusive of the efforts of IAY, JRY, UNICEF, CAPART and private initiatives, besides the Centrally Sponsored Rural Sanitation Programme (CRSP) and its State counterpart.

3.7.30 As per the existing policy, subsidy under the rural sanitation programme is given to people below the poverty line for construction of individual household latrines and conversion of dry latrines into sanitary latrines. Subsidy is extended to the Panchayats for exclusive sanitation complexes for women, in areas, where adequate space is not available for individual household latrines and other sanitation facilities in the villages/habitations. Interest-free loan is also provided to entrepreneurs/Panchayats to set up sanitary marts and link them to production centres for facilitating easy availability of the materials required for the sanitation programmes. Sensitisation for other sanitation facilities covers drains, soakage/ garbage pits and intensive health awareness through IEC.These activities should be further strenghtened and modified, where required.

Ninth Plan Priorities and Strategies

3.7.31 While the provision of drinking water facilities in urban areas in the country has improved over the years, the provision of sewerage and drainage facilities has not received adequate attention. Ideally the water supply and liquid waste management schemes should be integrated. The absence of this integrated approach has resulted in the degradation of the environment, with serious health impact from water-borne and vector-borne infections. In some areas, industrial contamination with heavy metals also leads to severe health hazards. The Ninth Plan Sub-group of the Planning Commission on Environment and Health had concluded that the unsatisfactory progress in supply of safe drinking water and sanitary disposal of solid and liquid waste has contributed to the continued high morbidity from water-borne and vector-borne diseases. The Expert Group on Public Health and the Working Group on Health Care Delivery in Urban and Rural Areas recommended that water quality monitoring and surveillance as well as the projects for urban waste management should be taken up on a priority basis to achieve substantial reduction in morbidity due to water and vector-borne diseases.

Drinking Water (Urban)

3.7.32 The urban drinking water supply strategies in the Ninth Plan would address the priority concerns of universal coverage, adequacy in terms of minimum per capita consumption norms, quality, distance from source as well as regularity of supply, bringing in its wake the policy and

The urban drinking water supply strategies in the Ninth Plan would address the priority concerns of universal coverage, adequacy in terms of minimum per capita consumption norms, quality, distance from source as well as regularity of supply, bringing in its wake the policy and operational issues of drying and inaccessible sources of water, recycling of waste water and sewage for non-domestic use, water harvesting, among others. The strategies to promote and strengthen decentralisation of production and distribution systems, privatisation and participation of the community in management and maintenance are expected to not only induct higher efficiency levels and effective reach out but also contain line leakages and wastages. Over-exploitation of ground water must be avoided to maintain quality and to control water pumping cost. Appropriate legislation and itsa effective implementation should form an integral part of the strategy. The modified model Bill of the Central Ministry of Water Resources on ground water exploitation may be considered by State Governments for adoption.

operational issues of drying and inaccessible sources of water, recycling of waste water and sewage for non-domestic use, water harvesting, among others. The strategies to promote and strengthen decentralisation of production and distribution systems, privatisation and participation of the community in management and maintenance are expected to not only induct higher efficiency levels and effective reach out but also contain line leakages and wastages. Special attention will be given to strengthen the on going Centrally Sponsored Accelerated Urban Water Supply programme (AUWSP) to saturate the small towns with population less than 20,000 during the Plan period.

3.7.33 The State and UT Governments should prepare long-term Master Basin River Plans, following the guidelines issued by the Central Ministry of Water Resources, apart from making proper estimates of water needs for drinking, cooking and non-consumption domestic uses like bathing, washing, toilets, gardening, etc.City water management system should have atleast a 20-25 year development perspective. Provision should be made to recycle waste water, rain water harvesting, re-use of sewage after appropriate treatment for flushing of sewers and toilets, air conditioning, etc. Over-exploitation of ground water must be avoided to maintain quality and to control water pumping cost. Appropriate legislation and its effective implementation should form an integral part of the strategy. The modified model Bill of the Central Ministry of Water Resources on ground water exploitation may be considered by State Governments for adoption.

3.7.34 Financing of drinking water supply programmes is a crucial issue in urban areas in view of the massive investments required. These are beyond the scope of the Plan, but nevertheless, these would have to come into the sector to meet the goals of the Plan and maintain the sustainability of the human settlements. Further, drinking water and sanitation activities will have to be taken up as an integrated programme, because in the absence of such a linkage, sanitation activities tend to be overlooked. Innovative financial strategies, including alternative leasing instruments and fiscal intervention are called for. Plan funds would be used not only for direct intervention but also as a leverage instrument, a strategy already introduced during the Eighth Plan in case of some urban infrastructure projects. This strategy has to be increasingly adopted to activate and sustain the funds flow from outside the government sector. Equally important is recovery of full cost. New strategies would be gradually developed, in terms of recovery of O and M cost in the first instance and total capital cost later, though subsidy in pricing will continue, more sparingly than in the past.

3.7.35 The delivery and management system has to be strengthened. In the light of the Constitution (74th Amendment) Act, while State agencies may continue to plan and implement capital works, the responsibility of distribution may be progressively decentralised to local bodies, and where feasible, to the private sector, within the policy guidelines of the State Governments. While this process will be initiated with distribution works, in due course capital works may be decentralised. Concerted efforts will be made to enhance the capacity of the municipalities to bridge the gap between their resources and commitments. At the same time, city agencies may continue in mega and metro cities, as long as they operate on sustainable basis.

Financing of drinking water supply programme is a crucial issue in urban areas in view of the massive investment required. These are beyond the scope of the Plan, but nevertheless, these would have to come into the sector to meet the goals of the Plan and maintain the sustainability of the human settlements. Innovative financial strategies, including alternative leasing instruments and fiscal intervention are called for. Plan funds would be used not only for direct intervention but also as a leverage instrument, a strategy already introduced during the Eighth Plan in case of some urban infrastructure projects. This strategy has to be increasingly adopted to activate and sustain the funds flow from outside the Government Sector. Equally important is recovery of full cost. New strategies would be gradually developed, in terms of recovery of O and M cost in the first instance and total capital cost later, through subsidy in pricing will continue, more sparingly than in the past.

3.7.36 In view of the massive investment required, it is obviously not possible for either the State Governments or the Central Government to go forward with this magnitude of funds. Institutional sources/ externally aided projects, private sources and community sources would all have to come forward in case we have to provide every body with safe potable water within the stipulated time frame. Alternative strategies, new technologies, cheaper methodologies as also mechanisms like rain water harvesting etc would have to go in a big way to provide alternatives to the present method of handling the work relating to the sector. It is expected that by deferment of some of the less important activities, use of low cost technology, people and private sector participation and better management, the objective of 100% population coverage in Urban area with safe drinking water supply could be achieved with an investment of about Rs.20750 crore.

Drinking Water (Rural)

3.7.37 The Ninth Plan strategies for rural water supply would seek to attain universal coverage of drinking water through different programmes and strategies in no source villages/habitations, partially covered villages/habitations and water quality problem villages/habitations. A habitation-driven approach will be adopted in preference to a purely village-centred approach. The highest priority is to be given to all the remaining "no-source" and poorly-served "partially covered" (less than 10 lpcd) villages/habitations as well as those facing acute water quality problems. Thereafter, priority will be given to other partially covered (11-40 lpcd) and water quality problem villages/habitations. In each category, completion of the on-going schemes will be given priority before starting new schemes. The liberalised norms for service level of 55 lpcd and one HP/PSP for every 150 persons as also distance norm of 0.5 km may be adopted only after having covered all the villages/habitations with the existing norms of 40 lpcd, 250 persons per HP/PSP and distance norm of 1.6 km. To cater to the drinking water requirements of cattle in the DDP areas, an additional 30 lpcd of water may be provided.

3.7.38 Water is perceived in the rural areas as a social good, to be provided free by the government rather than as a scarce resource that should be managed as an economic asset. Supply of water to consumers should normally be based on the principle of effective demand which should broadly correspond to the standard of service that the users are willing to maintain, operate and finance. There should be a capital cost recovery of 10 per cent from the users in all the new drinking water supply projects aimed at increasing the service level beyond 40 lpcd.

3.7.39 The present practice is that the water supply projects are designed and executed by the implementing departments and passed on to the end-users. The experience has brought out the unwillingness of the Panchayats to take on the responsibility for operating and maintaining them.The State Governments do not have an effective machinery at the village level to maintain the assets. A radical change in the management system is required. Rather than being supply-driven, the system should be demand-driven, and should take into account user preferences, private connections and related issues. People should be aware of the technologies and given the option to select the technology, as well as meet the expenditure on the project. People's participation at all stages of the project implementation is likely to help get over the problems of sub-standard materials, poor workmanship and inadequate maintenance.These problems should be addressed to in the Ninth Plan.

3.7.40 As an experiment, it may be advisable, in some places, to transfer the funds to the user communities or the panchayats, who may be induced to buy pipes and install handpumps on their own. The Panchayati Raj Institutions and the local administration should be entrusted with the responsibility for the O and M of the installed systems. The PRIs should be given the option to levy and collect user charges for drinking water and sanitation services, so that at least the O and M, if not the further development works too, may become a self-financing activity.

The rapid development in ground water –based irrigation in many States has caused ground water depletion, resulting in a reduction in the life of the drinking water supply sources. A number of steps need to be taken up to manage ground water in a more scientific manner especially in drak and grey zones and the States should bring in a legislation to control over-exploitation of ground water on the lines of the model Bill brought out by the Central Ministry of Water resources. User groups should be formed, on the pattern of the Joint Forest Management Group, to take up the monitoring of ground water and ensuring that it is managed as a common property resource rather than allowing it to be over-exploited as an open access resource.

3.7.41 The rapid development in ground water-based irrigation in many States has caused ground water depletion, resulting in a reduction in the life of the drinking water supply sources. The highly subsidised electricity tariff for irrigation has led to an indiscriminate and disproportionate level of ground water extraction. Ground water depletion has aggravated water quality problems due to excess fluoride, arsenic and brackishness in certain areas forcing the engineering departments to abandon the low-cost handpump-based systems and to opt for expensive and complicated piped water supply systems. A number of steps need to be taken up to manage ground water in a more scientific manner, especially in dark and grey zones and the States should bring in a legislation to control over-exploitation of ground water on the lines of the model Bill brought out by the Central Ministry of Water Resources. User groups should be formed, on the pattern of the Joint Forest Management Group, to take up the monitoring of ground water and ensuring that it is managed as a common property resource rather than allowing it to be over-exploited as an open access resource.

3.7.42 As in the urban areas, integrated water supply and sanitation programmes will be increasingly implemented during the Plan in the rural areas also. The implementing machinery in the Centre and the States will require organisational restructuring to work in a Mission mode with guidance from the Rajiv Gandhi National Drinking Water Mission Authority and its empowered committees. Micro water-shed based master plans should be prepared to ensure the sustainability of water sources by taking care of demand and supply. The inputs of professional institutions, NGOs and Community Based Organisations (CBOs) should be inducted into planning, development and management. At the same time, integrated water use and conservation methods should be adopted.

3.7.43 Private sector efforts in construction and maintenance of rural water supply and environmental sanitation should be encouraged and mobilised to the maximum extent. Financing of water supply activities in rural areas might not appear to be as attractive to the private sector as those in urban areas. Nevertheless, Sri Satya Sai Trust of Puttaparthy has set an unparallel example of private initiative in implementing on their own, without any State's budgetary support, a massive water supply project, with an expenditure of Rs. 250 crore, to benefit about 730 scarcity and fluoride /salinity-affected villages and a few towns in Anantpur district of Andhra Pradesh in a time frame of about 18 months. This path-breaking effort should encourage business groups, trusts and foundations. Also full cost recovery might not be a realistic approach during the Plan period. Alternative financial strategies will be evolved as the need to ensure adequate supply, in terms of quantitative and qualitative parameters, is a national commitment.

3.7.44 In view of huge requirement of funds, we have to think of other methodologies for raising other resources and alternative strategies to effect economy, such as adoption of low cost technological solutions using local materials to the extent possible and deferment of programme for quality affected habitation, which are not of severe nature and adoption of liberal norms. Some economy could also be effected by taking into account the privately owned sources which yield sufficient water and are accessible to the common people, involvement of community in O and M and some contribution for capital works, ensuring better sustainability to avoid early failure of HPs etc (presently 15-20% HPs go defunct every year), involvement of NGOs and private sector participation to the extent possible. With these measures and the available outlays, it may be possible to achieve the set objective of providing safe drinking water facility to every settlement in rural areas whithin 5 years.

Urban Sanitation

3.7.45 Inspite of the substantial efforts made to eliminate manual scavenging and bring in total conversion of dry latrines into low-cost pour-flush latrines, with a target of 100 per cent elimination of manual scavenging during the Eighth Plan, the problem remains a challenge to planners on the eve of the Ninth Plan. Consistent with the goal of "Health for All", efforts will be made to provide a reasonable level of sanitation to a larger population in urban areas by rapid expansion and improvement of sanitation facility during the Plan, with the specific objective of elimination of manual handling of night-soil through conversion of all dry latrines into low cost sanitary latrines. The goal of 100 percent conversion of dry latrines, elimination of manual scavenging and total rehabilitation of the liberated scavengers will be a permanent tribute to the Father of the Nation. To ensure this, municipal byelaws would need to be modified to ban construction of dry latrines and States should legislate, on the lines of the Central legislation, to prohibit employment of manual scavengers beyond a specified date in the Ninth Plan.

3.7.46 Low-cost on-site sanitation will be encouraged in unsewered parts of cities, small and medium towns and other locations where this strategy might be feasible. In the larger towns and cities and congested locations, including important tourist places and centres of pilgrimage, it would be desirable to adopt the conventional sewerage and treatment system.

3.7.47 The incidence of plague in some parts of the country stimulated interest in solid waste management. Technological innovations to improve the re-usability of the recycled wastes will contribute to the viability of projects and should be encouraged. This strategy would promote the segregation of different kinds of wastes at the collection point to reduce the cost of disposal. Toxic wastes should be collected and disposed of separately. The "polluter pays" principle should be applied and the proceeds may be used to finance waste disposal programmes. Solid waste disposal can be privatised also. Priority will be also given to the implementation of liquid and solid waste management programmes in the State capital towns.

3.7.48 As far as sanitation is concerned, greater community participation is the most important criterian without which other activities would fail. Drainage, sewerage, treatment of wastes/effluents, sanitary land fills, location and installation of incinerators, low cost sanitation etc are areas of concern, but there can be no uniform solution for the whole country and the State Governments would naturally be expected to play their role in a manner suitable to the needs of towns/cities where the sanitation coverage is far below the required levels. In view of the over all resource-constraint and other competing demands, it may perhaps not be possible to make a very huge investment in the next 5 years and therefore we may have to restrict the target in respect of sanitation to about 60%, which may require an investment of around Rs.5500 crore. Besides sectoral plan outlays under State/UT Plans and Central Plan, a significant amount of Central assistance will also be available under the Central Plan scheme of National river conservation plan. A substantial amount is also expected to be contributed through private participation and institutional finance outside Plan.

Rural Sanitation

While the elimination of manual scavenging is a mandatory requirement in urban areas, in the rural areas, a demand-driven low cost sanitation approach would be increasingloy adopted in preference to a supply –driven approach. A network of production centres and rural sanitary marts would be integral components of the new approach to reach out self sustainable and people centred sanitation programmes.

3.7.49 While the elimination of manual scavenging is a mandatory requirement in urban areas, in the rural areas, a demand-driven low- cost sanitation approach would be increasingly adopted in preference to a supply-driven approach. A network of production centres and rural sanitary marts would be integral components of the new approach to reach out self-sustainable and people-centred sanitation programmes.It is essential to adopt a "package" approach to rural sanitation, integrating it with rural drinking water programme and providing sufficient motivation inputs for its effective implementation.This is required in view of the late start of the rural sanitation programme.

3.7.50 In this perspective, rural sanitation programmes should be implemented by PRIs and NGOs, who should be directly involved in creation of demand, IEC, training, implementation, including setting of production centres and sanitary marts. Each State should have a nodal State NGO who would coordinate the NGO activities at the district level. Women should be given a special role at all stages and assisted through credit, skill inputs and employment. Equally important is to mobilise the children, especially through schools and anganwadis so that sanitation and hygiene practices are promoted at an early age and the demonstration effect filters within the rural society.

3.7.51 The programme should improve the technology content and also include compost toilet and latrines-based bio-mass activities. The Midnapore programme has been implemented with little or no subsidy or Government intervention, through the efforts of Ramakrishna Mission, an NGO. The demonstrated sustainability of this people-driven approach has stimulated its subsequent replication across West Bengal.

3.7.52 It is therefore proposed to restructure the ongoing exclusively subsidy-driven sanitation programme using valuable field experience on the low cost sanitation with extensive advocacy and people’s participation. A number of interesting compaigns have conclusively demonstrated the weaknesses of the subsidy-oriented, top-down sanitation programme and have extensively and successfully co-opted NGOs, Banks, Panchayats to achieve very impressive coverage levels (e.g. Midnapur in West Bengal, periyar in Tamil Nadu , Mysore in Karnataka, Allahabad in U.P). A policy note in this regard, under preparation in the Ministry, envisages the use of the CRSP funds as "Seed Money" to propagate low-cost rural sanitation, based on felt-needs, a greater private sector involvement and using the "vertical upgradation" concept . A compaign approach would be developed on the lines of the literacy/immunisation and the subsidies structure reoriented to specifically target the poorest strata. With the above approach and the available outlays, it may be possible to achieve coverage of about 35% rural population by the end of the Ninth Plan.

Action Points for Consideration

3.7.53 For the attainment of the set objectives/targets within the Ninth Plan, the following action points are called for :

(A) Urban Water Supply and Sanitation

  1. Larger external assistance (higher priority to Urban Water Supply and Sanitation) be provided. At present it is estimated to be around Rs.5250 crore for the 9th Plan.
  2. The Government of India will play a role of facilitator in policy framework, institutional capacity building and financial reforms so as to enable the State Governments and urban Local Bodies to achieve the desired objective within the prescribed time frame. In addition to this, the Government of India will also provide technical guidance in order to create proper environment for the concerned agencies to plan and formulate water supply and sanitation schemes.
  3. As recommended by the Working Group, an `Urban Development Fund’ may be created on the lines of the Tamil Nadu model which could be utilised for creating infrastructure facilities in urban areas and such a fund should act as a catalyst to finance those schemes which are viable and with a little help from this kind of fund local bodies can become eligible to obtain loans from commercial institutions like IDBI, ICICI, IF and LS and from the open market. The assistance from the fund can be provided to small and medium towns in the form of soft loans and grants so as to enable them to take further loans from the open market as most of these small towns otherwise might not be in a position to obtain loans from financial institutions, on their own strength.
  4. Since it is difficult to meet the huge resource gap out of State and Central Plan funds, greater emphasis would need to be given for institutional financing through HUDCO, LIC and other institutions. Widening the equity base of the financing institutions like HUDCO for raising the market borrowings could be encouraged.
  5. Some financial support to the ULBs to meet the expenditure towards interest differential on the loan taken from the financing institutions would encourage the ULBs to come forward to take loan even at commercial rate of interest.
  6. Rebate on excise and customs duties for purchase of leak detection equipment and other such machinery needed for development and improvement of infrastructure facilities could be of great assistance to the State Governments/ULBs.
  7. As a follow up of 74th Constitution Amendment Act, most of the State Governments are likely to entrust the responsibility of operation and maintenance of urban water supply and sanitation systems to local bodies and therefore it would be necessary for the State Finance Commission to explicitly indicate the norms and other financial implications make a realistic assessment of requirement of funds and also to make suitable recommendations for provision of finances by different categories of towns.
  8. Private Sector participation in construction and maintenance of water supply and sanitation schemes, to the extent possible be encouraged/mobilised..
  9. Involvement of NGOs and community be encouraged by the State Governments.
  10. Adoption of improved low cost technology be encouraged to save cost of construction and maintenance.
  11. The water tariff be raised substantially to meet at least the full cost of operation and maintenance in smaller towns and to raise some surplus also in bigger towns/cities particularly those having industrial base. This will not only make the running cost self-financing, but also enable the State Governments/ULBs to raise institutional financing.
  12. Improved metering systems, particularly in Class-I Cities, would not only help in actual quantification of the water uses but also the proper billing of the water supply, which would also improve the revenue collection.
  13. Each organisation at the State/ULBs level should be encouraged to have its own training plan and adequate infrastructure facilities commensurate with the work plan. Special emphasis should be given to the need for skill upgradation for the personnel responsible for O and M. The Human Resource Development Programme must endeavour to enhance user sensitivity on the part of O and M staff and increase public awareness which will promote NGOs and consumer participation with respect top protection of assets and improved service delivery.
  14. The quick and amicable solutions between States through Central intervention for sharing of water resources would avoid delay in implementation of the water supply projects and save the increased capital investment.
  15. There is a need for development of National Data Bank and creation of Monitoring Cells at State and Central level for rigorous monitoring of the urban water supply and sanitation system. This would help in detection of bottlenecks and suggest mid-course corrections/reorientation of policies at Central/State level for developmental activities of the sector.
  16. Over exploitation of ground water must be avoided to control deteoriation of its quality and reduced cost of pumping. Regulatory mechanism for ground-water exploitation be brought in by the State Governments, particularly in all such urban areas which are facing acute shortage of drinking water through out the year, for better sustainability of the sources of water.
  17. Conservation of water by better management to reduce leakages and pilferage and re-cycling of treated waste water for non-domestic uses be encouraged by giving incentives. This will not only save precious fresh water but also reduces load on waste water/sewage treatment units.
  18. Rain water harvesting structures be encouraged in a big way to increase availability of water and also increase ground-water recharge for better sustainability of ground water sources.

(B) Rural Water Supply and Sanitation

  1. Larger external assistance (higher priority to rural water supply and sanitation) need to be provided to augment State resources.
  2. Transfer the responsibility of at least operation and maintenance of Rural Water Supply to the PRIs in line with 73rd CAA.
  3. Adoption of improved low cost technology be encouraged to save cost of construction and maintenance.
  4. Free supply of water to people in rural areas should be discouraged and some user charges collected through community participation.
  5. Private Sector participation in construction and maintenance of water supply and sanitation schemes to the extent possible be encouraged/mobilised.
  6. Involvement of NGOs and community be encouraged by the State Governments.
  7. The rapid development in ground water based irrigation in many States has caused ground water depletion . Highly subsidised irrigation electricity tariff have led to an indiscriminate and disproportionate level of ground water extraction. To regulate and develop ground water resources in a scientific manner, a Model Bill was framed by the Water Resources Ministry in 1970 and was circulated to the States. The Bill has again been recently revised and circulated to States in 1996. Except for Maharashtra, the implementation of the provision of the legislation was not satisfactory. State Ministers’ Conference held in August, 1997 resolved against any strong legal measures of controlling ground water discharge and cropping pattern. Instead, they preferred to rely more on improving recharge and arresting run off through water shed programmes. Rain Water Harvesting Structure, therefore, be encouraged in a big way to increase availability of water and also increase ground water recharge for better sustainability of water supply schemes.
  8. Water supply links with watershed development programmes should be made more stronger for better sustainability of drinking water sources.


Performance Review

3.7.54 The dimensions and problems of housing need to be viewed in the overall environment of human settlements. Housing has been primarily a self-help activity. The housing policies and programmes, while accepting that housing is essentially a private activity, has to recognise that State intervention is necessary to meet the housing requirements of the vulnerable sections and to create an enabling environment in accomplishing the goals of "shelter for all" in a self-sustainable basis.

3.7.55 An important development in the Eighth Plan was the bringing about of a consensus in the approach to human settlements development. The National Housing Policy (NHP) provided the basic approach, the economic reforms stimulated the process and the preparatory process for the Habitat II Conference brought together the key actors through the National Steering Committee, Key Groups of human settlements managers, NGOs and CBOs, private sector and the National Human Settlement Forum, which crystalised and endorsed in the National Report.

3.7.56 The Eighth Plan outlay for urban housing wasRs.3,581.67 crore in the State Sector and Rs.1,341.35 crore in the Central Sector (Rs.860 crore as IEBR and Rs.481.35 crore budgetary support,inclusive of equity support). The expenditure under the Central Sector was 96 per cent and in the State sector, 112 per cent. However, there was significant inter-State variations in the funds utilisation rate. In terms of the total activities and investment requirement in the housing sector, the Plan outlay was modest.

3.7.57 The Eighth Plan target was 7.80 million new housing stock, including 6.29 million units in Economically Weaker Sections (EWS) and Low Income Group (LIG) categories. The estimated investment requirement was Rs. 5,779 crore, at 1989-90 prices. Metropolitan cities were estimated to account for as much as 2.75 million units at an investment of Rs. 22,770 crore.The urban upgradation activity was estimated at 1.75 million units at an investment of Rs. 1130 crore. Housing for the totally houseless population, urban and rural, would require an investment of Rs. 610 crore. Housing has been, therefore, largely a people's activity, but constraints of finance, land, other inputs and the absence of a stimulating environment has pushed the urban housing solutions beyond the reach of the majority of the people. Recent Habitat II housing and urban indicators for mega cities and secondary towns show that the cost of a median house in terms of the annual household income goes up sharply with the city size: 13 years income in Mumbai, 12 years in Delhi, 11 years in Bangalore and 7 years in Chennai, and it goes down to 3 to 4 years in secondary towns. This is the situation in the formal housing market, but a similar trend is seen in informal housing with 2-3 years income in mega cities and less than one year in the secondary towns. The comparative variations in housing costs in the formal and informal housing sectors and the composition of the population in the latter also bring out a shift from formal to informal housing as costs go up. Rental housing indicator also shows market distortions as reflected in high rental to income ratio, 20-25 percent in secondary towns and 30-50 percent in the mega cities. Habitat II National Report that 50 per cent of the units constructed through the cooperatives are in the LIG category.

3.7.58 In this perspective, public housing thrust is, most appropriately, directed towards social housing, to reach out housing solutions to the priority groups. An equally important activity is to provide a policy framework and a legislative, fiscal and financial system that would put into effect the enabling role of the government in stimulating, supporting and promoting other actors to play direct roles in the housing delivery system. These two activities have been the pillars of the Eighth Plan approach and would continue in the Ninth Plan.

3.7.59 It has been estimated that during the Eighth Plan, funds flow from the formal sector was about Rs.25,000 crore, inclusive of Central and State Governments, Life Insurance Corporation (LIC), General Insurance Corporation (GIC), National Housing Bank (NHB), Housing and Urban Development Corporation (HUDCO), Provident Fund, commercial banks, housing finance

Public housing thrust is directed towards social housing to reach out housing solutions to priority groups. An equally important activity is to provide a policy framework and a legislative, fiscal and financial system that would put into effect the enabling role of the Government in stimulating, supporting and promoting other actors to play direct roles in the housing delivery system. These two activities have been the pillars of the Eighth Plan approach and would continue in the Ninth Plan

institutions and cooperative apex federations. The State level apex cooperative housing federations had disbursed Rs. 884 crore as loan to primary housing cooperatives during the first three years of the Eighth Plan and this enabled the construction of 2.95 lakh units.

3.7.60 The net flow to individuals was about 50 per cent of the total funds flow from the formal sector. The estimation of output of housing stock and serviced sites from the formal sector investment is difficult because the data have to be compiled from different Central and State agencies. There is an element of duplication in the data of financial institutions and housing agencies. While data on individual loans and other resources mobilised, especially for upgraded units and construction on serviced plots are often not collected, the physical achievements have not been monitored closely with reference to the Plan outlays for new housing stock and upgraded units.The only systematic data collection is undertaken for the 20 point programme in respect of EWS and LIG housing units. Their output in the first four years of the Eighth Plan was 4.68 lakh EWS units and 1.87 lakh LIG units.

3.7.61 It is broadly estimated that the housing stock provided by public agencies, cooperatives and private agencies, with the help of institutional finance, budget outlays and internal resources, may be of the order of 7 lakh units of EWS housing and an equal number of slum housing units are estimated to have been upgraded under the Nehru Rozgar Yojana (NRY). The LIG incremental stock may be 6 to 7 lakh units, on the assumption. The output of units for other higher categories may not exceed 5 lakh. Thus, as against the projected physical housing output of 30 lakh units in the urban areas during the Eighth Plan period, the contribution of the formal sector may not exceed 20 lakh units.

3.7.62 In this development perspective during the Eighth Plan, the tasks ahead for the Ninth Plan have to be examined. Several estimates are available of the present housing shortage and the projected shortage at a fairly disaggregated level. The National Buildings Organisation (NBO) has estimated the 1991 shortage at 8.23 million, up from 7.0 million in 1981, but expects the absolute shortage to decline progressively to 7.57 million units in 1997 and 6.64 million 2001. However, other estimates indicate that the shortage will increase to 9.4 million units in 2001 (Habitat II estimates.)

3.7.63 A major initiative was taken in the Sixth Plan, when the public sector was entrusted with a promotional role in housing in general and restricting its direct operations to housing for the urban poor and provision of house sites and construction assistance for rural landless labourers. Development activities were diversified in the Seventh Plan by providing for setting up an institutional financial system for housing and urban infrastructure and thrust was given to slum upgradradation in situ, development, in preference to relocation and provision of basic services for the poor. Work on the National Housing Policy (NHP) was initiated in the mid-eighties, together with preparatory work to set up a National Housing Bank and the process gathered momentum during the International Year of Shelter for the Homeless (IYSH), 1987.

3.7.64 Social Housing Schemes are implemented in the State Sector with State Plan provision and loan assistance from HUDCO and other financial institutions. These include Housing Schemes for EWS; LIG; MIG/HIG; and Rental Housing Scheme for State Government Employees. HUDCO provides upto 15 per cent of its resources for EWS housing and NHB refinances the State cooperatives and others involved in this activity. The income, cost and loan ceilings were revised in 1992 and are again under review, keeping in view the cost escalations and changes in the incomes of the target groups.

3.7.65 In the case of the EWS, for example, the income ceiling was raised from Rs. 700 in the Seventh Plan to Rs. 1250 in the Eighth Plan and the loan component to Rs. 19,500 for construction and Rs. 9,500 for repairs. The emphasis in the development strategy for the EWS is on sites and services and self-construction. The LIG housing scheme is primarily a loan scheme and is executed by the State Governments through Housing Boards and Housing Departments, and the budget provision is supplemented by institutional finance. The income eligibility level, which was Rs.701-1500 in the Seventh Plan, was raised to Rs.1251-2650 in the Eighth Plan. HUDCO supplements the efforts of State Governments/UT Administrations and its loan component for LIG category housing is Rs.55,000 for construction and Rs.37,500 for repairs/additions. There is a need to further revise the ceilings and norms, which would be taken up in the Ninth Plan.

3.7.66 A national network of Nirmithi Kendras (Building Centres) has been established with Central assistance through HUDCO under a Central scheme. These Centres impart training to artisans in low-cost construction skills and produce building materials and components by utilising agro-industrial wastes. A Central grant of Rs.2 lakh was provided to each Centre till 1994-95 and under a revised funding pattern, effective from 1995-96, the Central grant-in-aid ranges from Rs.3-5 lakh, depending on the level of the activities and a HUDCO loan is also available. As on 31.12.96, 435 Centres have been identified and 239 Centres have become functional. The total Central grant has been Rs.5.75 crore and the output of training exceeds 75,000 construction workers. The ultimate impact on the contribution of these trained workers to new housing stock, including upgradation and renewal, has not been made and will form a part of the Ninth Plan agenda. It is necessary to monitor the career path of the outturns of the centres through tracer studies and indicators.

3.7.67 The scheme of Night Shelters/Sanitation Facility to Footpath Dwellers in Urban Areas provides night shelter and sanitation facilities to footpath dwellers. The per capita development cost provided for this is Rs.5000, 20 percent of which is financed by Central Government and 80 per cent from implementing agencies or a HUDCO loan. The programmes overall implementing agency is HUDCO and the coverage is all urban areas, having the problem of footpath dwellers. As on 31.12.96, HUDCO had sanctioned loan of Rs.10.06 crore and subsidy of Rs.9.13 crore to 56 schemes to provide 19,366 beds, 5,258 pay-and-use toilet seats, 64 baths and 145 urinals. The total number of beneficiaries under this scheme is expected to be about 60,000, but the feedback regarding its impact in terms of actual users, coverage of the foothpath dweller population and their satisfaction level is not available and this task will be taken up in the Ninth Plan.

3.7.68 The schemes for other priority groups which include handloom weavers and beedi workers, are implemented through Central Government subsidy released by the concerned Ministries and HUDCO loan. HUDCO also provides loan for construction of hostels for working women. The National Housing Bank (NHB) has recently launched housing schemes for slum dwellers and households headed by poor women with the funds mobilised under the Voluntary Deposits Scheme.

3.7.69 Under the one-time scheme of Central Assistance for reconstruction of floods-damaged houses in Tamil Nadu, Karnataka and Kerala, HUDCO has sanctioned construction of 77,969 houses till the end of December, 1996, of which 20,318 houses have been reconstructed. The funding pattern provides for 30 percent Central subsidy, 30 percent State subsidy and 40 percent HUDCO loan.

3.7.70 Rural housing did not receive much attention during the first 25 years of planning. Central The rehabilitation programmes of the Ministry of Refugees Rehabilitation provided, until around 1960, housing to about 5 lakh households, mainly in Northern India. A Village Housing Scheme was also launched in 1957 as part of the community development movement, under which loans were provided to individuals and cooperatives, subject to a ceiling of Rs. 5,000 per house and 67,000 houses were built under this scheme by the end of the Fifth Plan (1980). The Estimates Committee, in its 37th Report (1972-73), expressed distress at the unsatisfactory conditions of kutcha housing in rural areas and the apathy of the Government. In response to this assessment, the Housing Sites-cum-Construction Assistance Scheme was launched as a Central Scheme in the Fourth Plan which was later transferred to the State Sector in April,1974, on the recommendation of the NDC.

3.7.71 Indira Awas Yojana (IAY) is the most important rural housing scheme. Its genesis can be traced to the rural employment programmes like the National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP), in which construction of houses was a major activity. There was, however, no uniform policy for rural housing. In June, 1985, a specific proportion of RLEGP funds was earmarked for construction of houses for SCs/STs and freed bonded labour. Later in April, 1989, the NREP and RLEGP were merged into the Jawahar Rozgar Yojana (JRY), and upto 1992-93, the IAY was continued as a part of the JRY, with a special provision of 6 percent of the housing units free of cost to members of SC/ST and freed bonded labour living below the poverty line in the rural areas. The proportion of free housing units was raised to 10 percent in 1993-94 and the scope was extended to cover non-SC/ST rural poor, subject to the condition that the non-SC/ST beneficiaries should not receive more than 40 percent of the total allocation. Further extension of the coverage was made in 1995-96 to include families of servicemen of the armed and para-military forces killed in action. In the identification of the beneficiaries, weightage is given to victims of atrocities, households headed by widows and unmarried women, households affected by natural calamities or displaced by development projects, nomadic, semi-nomadic denotified tribes, internal refugees and disabled families. After the JRY was restructured from January 1, 1996, The IAY has become an independent Centrally Sponsored Scheme for shelter, with the resources being contributed on 80:20 basis by Centre and States.

3.7.72 The output of the IAY is estimated at 37.16 lakh houses during the period 1985-86 to 1996-97 at an investment of Rs. 5,038 crore. The IAY has been recognised as a positive support activity that has provided to the homeless poor in rural areas a feeling of security and has facilitated their integration in the emerging social milieu. An evaluation of the IAY by the Planning Commission in 1993 brought out a high satisfaction rate, with 84 per cent of the beneficiaries being satisfied with their houses. States have accepted it as a major activity and almost every year since its inception, the annual targets have been exceeded. The programme received a major thrust in the Eighth Plan, particularly in 1995-96, when the outlay was substantially enhanced from Rs. 437.69 crore in 1994-95 to Rs.1368.34 crore in 1995-96. During the Eighth Plan period, the total allocation was Rs.3821.73 crore, utilisation Rs.3781.63 crore (99.0 percent), and houses constructed 26.21 lakh, which was 86.7 per cent of the target of 30.22 lakh.

3.7.73 The cost norms under the IAY have undergone changes during the period 1985-86 to 1996-97. The Chief Ministers Conference in July, 1996 recommended an increase in the construction assistance under the IAY from Rs. 14,000 to 20,000 and this was followed by the Ministry of Rural Areas and Employment enhancing the ceiling for new construction to Rs. 20,000 per unit in plain areas and Rs. 22,000 per unit in hilly and difficult areas, effective from 1.8.1996.

Implementation of Agenda 21

There is an enormous shortage in the housing sector and major deficiencies in the housing related infrastructure. The Government has been progressively adopting the role of an enabler rather than a direct provider. This has necessitated a policy shift to encourage private and cooperative sector to play a major role in housing sector, modifying the existing legal and regulatory regime. Keeping this fact in mind Government has since adopted a new Housing and Habitat Policy(approved by the Cabinet in July 1998).

3.7.74 During the Eighth Plan period, significant activities were underatken towards the implementation of Agenda 21, endorsed at the Rio de Janeiro Environment Meeting of 1992. This document had laid stress on the deteriorating situation in human settlement conditions, assessed to be a result of low levels of investment because of resource constraint and recommended promotion and improvement of activities in eight priority areas. The Government of India has responded positively.

3.7.75 The key objective of the National Housing Policy (NHP) 1994 is to provide access to adequate shelter for all. There is an enormous shortage in the housing sector and major deficiencies in the housing related infrastructure. The Government has been progressively adopting the role of an enabler rather than a direct provider. However, this necessitated a policy shift to encourage private and cooperative sector to play a major role in housing sector, modifying the existing legal and regulatory regime. Keeping in view the above Government has since adopted a new Housing and Habitat Policy (approved by the Cabinet in July 1998). Efforts are also being made by the Central and State Governments to achieve the objective of shelter for all through a number of Centrally sponsored schemes and institutional financing through HUDCO and other institutions. Several enabling programmes have been initiated, such as, the establishment of a housing finance system with a National Housing Bank at the apex level, amendment to the Urban Land (Ceiling and Regulation) Act to expand the supply of land, formulation of a model Rent Control Act, model Apartment Ownership Bill and schemes to link up housing and income generation programmes for the poor.

3.7.76 As a part of the strategy to strengthen the human settlements management activities, the Central Government has introduced several schemes such as : Environment Improvement of Urban Slums, a State sector scheme; Integrated Scheme of Low-cost Sanitation; Nehru Rozgar Yojana (NRY) with three components namely Scheme of Urban Micro Enterprises (SUME), Scheme of Urban Wage Employment (SUWE), and Scheme of Housing and Shelter Upgradation (SHASHU); Urban Basic Services for the Poor (UBSP); Scheme of Integrated Development of Small and Medium towns (IDSMT); Scheme of Infrastructure Development in Mega-cities (IDM); Integrated Rural Development Programme (IRDP); Jawahar Rozgar Yojana (JRY); Development of Women and Children in Rural Areas (DWCRA); Accelerated Rural Water Supply Programme (ARWSP); Accelerated Urban Water Supply Programme for small towns with population less than 20,000 (AUWSP) and Minimum Needs Programme (MNP)/ Basic Minimum Services (BMS).

3.7.77 In order to improve the land-use planning capabilities at the city/town level, the Central Government has launched an urban mapping scheme which utilises advanced technologies such as remote sensing and aerial photography to prepare physical and utility maps on appropriate scales. Two-third of Indian States and Union Territories are vulnerable to natural disasters. In order to develop policies and strategies for planning human settlements in disaster-prone areas, the Government. of India has set up the National Centre for Disaster Management. A Vulnerability Atlas is being developed to indicate disaster-prone sites in the country.

3.7.78 The rapidly growing demand for housing and infrastructure is exerting heavy pressures on the natural environment. To promote sustainable development of the construction industry, Government. of India has taken several initiatives to promote energy-efficient building materials and shift the reliance from non-renewable resources to renewable resources. The national network of Building Centres is disseminating information on these eco-friendly and energy-efficient building materials and construction technologies and the Building Material and Technology Promotion Council (BMTPC) is promoting large-scale utilisation of agro-industrial wastes. The Council of Scientific and Industrial Research (CSIR) is co-ordinating the R and D activities on the development of new wood substitutes for use in construction activity. The Department of Environment, Government of India has launched a scheme of labelling eco-friendly building materials and the Bureau of Indian Standards has formulated standards, specifications and code of practice on several innovative building materials. Further capacity building programmes are being launched all over the country to improve human resource development. Sustainable energy and transport systems like Mass Rapid Transit System (M.R.T.S.) are being developed in order to tackle pollution and traffic congestion.

Ninth Plan Priorities and Strategies

  • While housing needs of all segments of the population will have to be met, the Ninth Plan will focus special attention on households at the lower end of the housing market, the priority groups identified for such support, such as eg. People below poverty line , SC/ST, disabled, freed bonded labourers, slum dwellers and women headed housholds.
  • Government will, as a facilitator , create an environment in which access to all the requisite inputs will be in time, in adequate quantum and an appropriate quality and standards.
  • There will be provision for more direct intervention by the Government in the case of lower segments of the housing market and selected disadvantaged groups.
  • A package of incentives and concessions to attract private sectors would be introduced to shoulder the task of housing for the poor.

3.7.79 While the housing needs of all segments of the population will have to be met, the Ninth Plan will focus special attention on households at the lower end of the housing market, the priority groups identified for such support, such as, for example, people below the poverty line, SC/ST, disabled, freed bonded labourers, slum dwellers and women-headed households. Minimum housing adequacy norms will be evolved that would include per capita living space, structural durability, access to drinking water with minimum quantitative and qualitative norms, sanitation facilities and connectivity. The responsibility to fix the norms will be entrusted to the States and it is expected that the State governments will further decentralise the responsibility to Urban Local Bodies (ULBs) and Panchayati Raj Institutions (PRIs), with provision for a participatory process to determine the norms. The norms would be the base for working out State and district housing action plans for both the urban and rural areas.

3.7.80 Housing has been always a people's activity and will continue to be so in the Ninth Plan, both in the urban and the rural areas. Government will, as a facilitator, create the environment in which access to all the requisite inputs will be in time, in adequate quantum and of appropriate quality and standards. All housing delivery systems, such as the cooperatives, private sector, community groups, and people's self efforts, will be stimulated to make their contributions to new housing stock as well as upgradation and renewal of the existing stock. In the case of the cooperatives, the endeavour will be to encourage the formation of cooperatives from the planning stage of the housing programme and maintaining a high continuity rate of the original members.

3.7.81 There will be provision for more direct intervention by the government in the case of the lower segments of the housing market and selected disadvantaged groups, whose needs may not be effectively or adequately met by the market-driven forces, which will, in other cases, be a prime mover of housing development activities, particularly in the urban areas. However, a package of incentives and concessions to attract private sectors would be introduced to shoulder the task of housing for the poor. Uptill now private sector has been playing an almost non-existant role in the shelter delivery for the vulnerable group. Cooperative sector and other public housing agencies could also be encouraged to share the responsibility. Subsidy would continue to be provided for some more time and the flow mechanism will be made transparent and increasingly routed outside the financial system. Government has set the goal to provide housing for all and towards this end it proposes to facilitate the construction of 20 lakh additional housing units annually. The focus will be on providing houses to the houseless, inadequately housed and disadvantaged groups below poverty line. Since ratio of housing shortage between rural and urban areas is 65:35 as per the NBO statistics derived from the 1991 census, out of 20 lakh additional houses 13 lakh will be in the rural areas and 7 lakh will be in the urban areas.

3.7.82 Land market reforms will be undertaken through restructuring legal, planning and fiscal provisions, on which considerable work has been done during the Eighth Plan and the results incorporated in several official documents. A work agenda to implement them will be taken up. Land scarcity is one of the key elements to development of housing and infrastructure services. Legislative provisions like the Urban Land Ceiling and Regulation Act (ULCRA) 1976, whose basic objective is to make land available to all income segments in the urban agglomeration, has in practice, led to distortions in the land market operation. The Cabinet has since taken a decision to repeal ULCRA. To promote sustainable human settlements, the Plan will take specific initiatives to promote and adopt in human settlements programmes energy-saving, eco-friendly and environment-friendly technologies and building materials.

3.7.83 Apart from new construction, the Ninth Plan agenda will take up the massive task of upgradation and renewal of old and dilapidated housing stock. In the urban ,this is a major challenge in the inner city areas and in the growing slum and squatter settlements, which have become an ingenious solution to get shelter perfected by the people who cannot enter the formal housing market on their own. Within this category, the Plan will look into the needs of the households below the poverty line. Urban renewal in this direction is crucial to the health and sustainability of the urban environment.

3.7.84 To build sustainability into the housing of the urban poor as well as in rural housing, integrated development of settlement should be promoted, on the principle of stregthening the linkages and inter-dependency between shelter and income upgradation. India has made a commitment to this approach in the NHP and the Habitat II National Plan of Action (NPA). To promote this strategy, the Ninth Plan will support the use of composite credit instrument, modify land-use patterns and city master plans and strengthen the linkages between the farm and the non-farm sector in the rural and semi-urban areas. The NGOs and other voluntary organisations would have to play the role of a catalyst.

3.7.85 Some special development needs have to be addressed as regards rural housing. Urbanisation has had an impact on the traditional rural housing development activities, with increased flow of information on housing designs, new technology,and materials. The options and need to upgrade the structure, especially the roof and the wall, has been recognised in the NHP and in rural housing programmes. This would reduce the annual maintenance inputs, including human inputs, and provide better protection against natural calamities. Rural housing is also qualitatively different from urban housing, in that the housing activity is not very much based on the cash economy but depends to a considerable extent on land rights and access to resources. Rural housing has also emerged as a major component of rural development programmes and, as such, is considered to be an integral part of rural development planning. Keeping in view the varied range of geo-climatic conditions and housing typologies in rural areas, the tasks are stupendous in developing and managing rural housing programmes. One set of materials, plans or construction techniques cannot be applicable across the country, and hence rural housing requires grass-root level feedback on housing needs, together with basic amenities like approach roads, internal roads, drainage, water supply, sanitation and work place.

3.7.86 As per 1991 census the total rural household shortage was 13.72 million. Of these 3.41 million households were without shelter and 10.31 million households were living in `Kutcha unserviceable’ houses. In addition an estimated increase of 10.75 million households would be required on account of population growth during the period 1991-2002.It has also been estimated that between 1990-91 and 1996-97, about 5.7 million units would have been added to the rural housing stock through the on-going programmes of IAY, State Governments, HUDCO and self-help system. Thus the net housing shortage between 1997 and 2002 is 18.77 millions of which 8.46 millions are new houses and 10.31 million are kutcha/unserviceable houses. Another set of estimates, presented in Habitat II National Report, also brings out a similar scenario with new housing requirement estimated at 7.7 million units and upgradation requirement at 11.2 million units. An additional estimate was made of extension of existing units, which was 8.7 million units. It is clear that large upgradation activity has to be taken up during the Ninth Plan for which realistic estimates of net housing shortage, Statewise, will be required. The overall housing shortage does not reveal the regional dimension of the problem. While housing shortage exist in almost all States, there is a large concentration in a few States with Bihar accounting for nearly 1/3 of the housing shortage in the country followed by Andhra Pradesh , Assam, UttarPradesh and West Bengal, which together account for another 44.65 per cent. In each of remaining States the housing shortage is less than 5%. Therefore in the backdrop of the total housing requirement the housing shortage in selected States is more acute.

3.7.87 Apart from the quantitative dimensions of the rural housing requirements, the qualitative aspects are equally important, particularly those relating to per capita living space, durability and access to amenities. The 1991 Census indicated that 40.8 percent of the 112 million rural households lived in one-room units and the pre-dominant roofing materials used were grass, straw and thatch. These rural housing activities have to be incorporated under the IAY, as a special mechanism for financing is required to facilitate the use of market-sourced materials for increasing the durability of structure and providing access to basic habitat services.

3.7.88 There is virtually no institutional finance in the rural housing sector except what is provided through its scheme by Housing and Urban Development Corporation . The housing finance institutions will have to overcome their reluctance to enter into the rural housing market. The access to rural housing credit, outside the Government schemes like the IAY, would require special attention during the Ninth Plan, as also full access to low-cost materials and appropriate technology. With the growth in the rural housing programme emphasis would also have to be placed on training and development of skills so that skilled masons in adequate numbers are available in the rural areas to carry out construction works , particularly, using new building materials and low cost technology. The financial institutions will have to meet the credit needs of rural housing through innovative credit instruments and delivery systems that take into account the specificities of rural housing, geo-climatic conditions and socio-cultural practices, besides the need to finance the habitat-related services. Multiplicity of institutions to service the shelter and basic needs may not be very much desirable.

3.7.89 The provision of house sites has emerged in recent years as a crucial requirement in some parts of the country, and especially for the rural poor, a large proportion of whom do not have security of tenure nor the right or access to land for building a house.Land should be acquired in places where public land supply may be a constraint and this strategy should take into account the ecology and environmental considerations, as also the appropriateness of the location in terms of the economic activities and access to basic habitat services.Under an on-going programme of House Sites-cum-Construction Assistance, which is implemented by the tate Governments, 233.43 lakh house sites have been allotted and construction assistance provided to 77.6 lakh beneficiaries upto 1995-96.The implementation of this scheme has been slow, with most States not being able to keep up the desired pace vis-a-vis the extent of the housing shortage.The IAY may be modified to include a provision for making minimum land available to such rural poor and the land would have to be acquired in the proximity of village habitations.Tenurial arrangements to protect the nistar rights of the rural poor and disadvantaged groups on the houses and lands occupied by them is another priority concern.

3.7.90 The IAY would be the main Government programme for achieving the objective of shelter for all rural poor. It would continue to be a 100 per cent subsidised programme, targetted specifically towards providing shelter for the houseless, inadequately housed and disadvantaged groups. Under the IAY, the funds are allocated to the State/UT on the basis of the proportion of rural poor in the State/UT to the total rural poor in the country. This modality fails to take account of the actual housing shortage and does not take into account the housing needs of the economically weaker section who are just above poverty line. There is need for modification of present IAY. This issue being discussed separately under this chapter.

3.7.91 In view of the massive upgradation activities to be undertaken, the IAY may have to be modified to support these activities, initially utilising upto 20 percent of the total IAY funds for upgradation of unserviceable kutcha houses.The Ninth Plan would also give a thrust on improving the quality of houses under the IAY through cost-effective measures and introduction of appropriate technologies and functional designs to suit the housing needs of different geo-climatic conditions, cultural preferences and lifestyles of the people.

3.7.92 In this effort, the focus of research and development would be on innovative low-cost building and construction technologies, cultural-specific housing designs and appropriate housing materials for building durable and safe houses.Apart from developing new technologies, the rich stock of appropriate technologies will be disseminated to the rural areas.To utilise these technologies effectively a major role will be provided for development of skills by the Nirmithi Kendras (rural building centres) under the aegis of HUDCO for dissemination of rural building techniques and for effective training to rural youth in trades related to low-cost housing.Institutional facilities already available in select rural ITIs, polytechnics and vocational training centres will also be strengthened.NGOs should also participate in conserving and upgrading the traditional housing architecture and should promote development of integrated programmes for the upgradation of artisans' skills and the deployment of unemployed youth in various trades related to low-cost housing.

3.7.93 Integrating the financing of rural and urban housing within a single organisation might not necessarily be in the interest of the rural housing sector. Rural housing finance requires a different type of approach, more development-oriented than a purely financial approach. Rural housing finance might have to take into account the financing of habitat-related services and in the case of housing in poorly connected areas, also economic activities. Kutcha housing units should be eligible for institutional finance and there must be a high level of flexibility in the repayment schedule, linked more to seasonality of income flows than to the conventional monthly repayment programme. There is also the problem of ownership of land as in some parts of the country, particularly in tribal societies, land is owned by the community rather than on an individual basis. The Ninth Plan would examine the feasibility of special integrated rural human settlements finance and development institution, as well as specific programmes like the IAY that would look into the financing and development of upgradation activities.

3.7.94 Several States/UTs are implementing their own housing programmes, in addition the IAY. It is necessary to coordinate all the efforts with a view to addressing the housing shortage in a phased manner. There should be regular and timely data on allocations, cost norms, and the number of houses constructed each year,Statewise. A strong data base and monitoring system is required for this purpose. The Central and State Governments, along with financial institutions would then be able to jointly undertake the tasks of providing a house to all, with basic habitat services, in a time bound manner.Activities will have to be undertaken at the village level through convergence and collective action. This would necessitate the proactive participation of the village community who would formulate an action plan on the basis of identified needs and priorities and in line with the resources available.

3.7.95 The magnitude of the housing task ahead is so great that besides the State Government's efforts at providing land and finance, making available easy access to local construction materials and dissemination of appropriate building technologies, there has to be a more active involvement of several other agencies such as cooperatives, the community, voluntary organisations and the private sector. Public sector undertakings would also be required to participate in the programme as part of their social obligation and commitment. The PRIs have to also play a key role.

3.7.96 A few legislative changes are required particularly relating to tenurial arrangements, including rights to house and land. The"nistar rights" of the poor to access traditional building materials and undertaking cadastral surveys are priority activities to be undertaken during the Ninth Plan. Another concern, in the case of States with large tribal population, is to safeguard the non-alienable property rights of the people and evolving a workable solution to the oft-identified problem of mortgaging of community owned land for individual home loan programme. It is equally important to converge all habitat-related activities presently implemented by various departments into a single programme so that planning, community mobilisation and effective monitoring and impact assessment can be taken up in a more effective manner. The village should be made an effective planning unit, giving full recognition to the Constitution (73rd Amendment) Act.

Special Action Plan- Urban Housing

3.7.97 It has already been mentioned about the target of construction of 20 lakh additional houses every year under the Special Action Plan. The target of additional dwelling units has been broadly bifurcated as 13 lakh units for rural areas and 7 lakh units for urban areas. This division of target is stated to be based upon the ratio of housing shortage in the urban and rural (basis 1991 census). The Government's role is that of an enabler than that a builder. Taking a clue from this approach government may provide necesary fiscal concessions, access to land, appropriate technological support and inexpensive finance to the sector. There would be necessity to bring the legal reforms required for the sector particularly in respect of rent control regulating the activities of builders, Apartment Ownership Act Building Bye-laws and National/Departmental Standards and Codes. Land is most critical input. An integrated programme for land assembly and infrastructure development to be taken up on a priority basis.

3.7.98 Keeping in view the large quantum of low cost funds needed, the finance Ministry would have to consider allowing substantially higher allocation of tax free bonds for resource mobilisation. The banking sector would need to be directed to make available more funds for housing, both by expanding the percentage of incremental deposits as well as earmarking dedicated funds under the priority sector especially for EWS/LIG housing. Fiscal incentives under the Income Tax Act for housing initiatives need to be provided. Further assistance under I.T.Act to the HFIs should be continued. Tax concession under Wealth Tax may be provided for promoting rental housing scheme. Amendments to the NHB Act need to be expedited for early foreclosure procedures.

3.7.99 Based on the average cost of EWS and LIG of Rs. 35000 and I lakh respectively the investment requirement for 7 lakh new units has been worked out to be of the order of around Rs. 4000 crore. The extent of funding from institutional financing is proposed to be 70% and the balance 30% is proposed to be met partly as subsidy from Central/State Governments and partly as beneficiary contribution in cash, kind and labour. This, however, is the assumption that there would

Special Action Plan – Urban Housing
  • Government has set a goal to provide housing for all and towards this end it proposes to facilitate the construction of twenty lakh additional housing units annually.
  • The target of additional dwelling units has been broadly bifurcated as 13 lakh units for rural areas and 7 lakh units for urban areas.
  • Based on the average cost of EWSand LIG housing units of Rs. 35000 and Rs. 1 lakh respectively the investment requirement for 7 lakh new units would be of the order of around Rs. 4000 crores.
  • The extend of funding from institutional finance is proposed to be 70 per cent and the balance 30 per cent is proposed to be met partly as subsidy from Central/State Governments and partly as beneficiary contribution in cash, kind and labour.
  • Investment expected from the institutional financing bodies would be of the order of Rs. 2800 crores.
  • A package of incentives and concessions is needed to attract the private sector.

not be any change in technology leading to reduction in costs. The investment expected from the institutional financing bodies would be of the order of Rs. 2800 crores. The bulk of institutional finance for housing in the country is provided by HUDCO, NHB, 25 HFIs and Commercial Banks for direct lending and the LIC/GIC for supportive lending for housing sector. There is a need for all financing institutions to lend their helping hand for supporting the additional 20 lakh houses every year.

3.7.100 One of the key demands in the housing programme is active participation of Private Sector. A package of incentives and concessions is needed to attract the private sector. It is proposed that shelter delivery would be through private sector public housing agencies, co-operative sector and NGO/CBOs. The implementation of the programme would require a strong public private partnership in assembly/ development of land provision of infrastructure and shelter delivery.

3.7.101 While the Union government is responsible for policy formulation, the actual implementation lies with the State Governments. At the Central Government level, the Ministry of Urban Affairs and Employment will be directly involved in the policy formulation on urban housing, for the techno-financing dimensions for the whole housing sector and legal and regulatory reforms in the sector. Ministry of finance would be involved in granting various fiscal concessions so as to make the housing sector attractive for investment and in allowing additional resource mobilisation through market borrowings and international assistance. Ministry of Law would need to consider reforms in the regulatory regime particularly speeding up of foreclosure procedures and amendments required on other statutes which have impact on the housing sector.

Requirements of Funds

3.7.102 As has been pointed above, the total investment requirement for the construction of 7 lakh additional units is of the order of Rs. 4000 crore, annually. This consists of institutional finance of the order of Rs. 2800 crores including equity support to HUDCO to be provided through central budget and the balance Rs. 1200 crores consists of subsidy from Central/State Govts. and beneficiary contribution in cash, kind and labour. Assuming that the investment requirement remains constant over a period of time the requirement for implementation of PMSA during IXth Plan works out to Rs. 16000 crores because PMSA commences from the second year of the Ninth Plan (1997-2002).

Physical Targets

3.7.103 The physical targets under SAP are 7 lakh additional dwelling units annually starting from second year of the Ninth Plan (1997-2002).

3.7.104 Assuming that physical output of formal sector institutions in the implementation of SAP would be commensurate with the investment requirement of 70%, the target for formal sector financial institutions would be 4.9 lakh dwelling units annually and the balance 2.1 lakh units would be provided by the beneficiary contribution ,subsidy. Out of formal sector institutions HUDCO is expected to build one third of the total target namely 2.33 lakh dwelling units annually. However since there is likely delay in the implementation of the SAP and HUDCO is currently engaged with the task of providing roughly one lakh dwelling units annually through ongoing schemes the additional target for HUDCO has been kept at a reduced level of 1.5 lakh dwelling units for 1998- 99 instead of 2.33 lakh originally proposed. The shortfall in the current year (0.83 lakh dwelling units) may be undertaken by other Formal Sector Institutions. During the remaining years of IXth Plan (i.e. 1999-2002), HUDCO could take up one third of the shortfall in 1998-99 (i.e. 0.83 lakh dwelling units) over and above the original target of 2.33 lakh dwelling units.

3.7.105 As an incentive for taking up the additional targets in the formal sector through the various activities/programmes a corpus of approximately Rs. 100 crores could be set up which could be utilised for leveraging additional resources for meeting the requirement of funds for housing of the deprived sections of the society

3.7.106 Housing is a State subject. Given the wide variation in the housing needs in the States and constraint of resources to meet the housing needs, State Govts. and UTs would have to play a critical role in formulating plans and programmes suited to local needs and conditions in consultation with the local bodies. State Governments would need to identify the specific agencies for implementation of the Action Plan. Developmment of housing infrastructure and services has not kept in tune with the growth of housing. The problem of upgradation and renewal of basic services like potable drinking water and sanitation is serious. An integrated programme for land assembly and infrastructure development particularly water supply, sanitation, drainage and electric supply would require to be taken up on a priority basis. Action of the State Government would need to take into account the resource flow from the private, cooperative and public sectors. The role of the Central Government would be to guide and facilitate the implementation of Action Plan.The synergy created with the efficiency of private sector and experience of the public agencies would ensure that the overall costs is kept at minimum.

Special Action Plan for Rural Housing.

Present Status Of Construction In Rural Housing

3.7.107 At present it is estimated that approx 12.3 lakh houses are being constructed annually in rural areas under various housing schemes. Based on this estimation it was projected that approx 61.50 lakh houses (i.e. 12.30 lakh x 5 years) will be added to the overall housing stock between 1997-2002 AD at the 1997-98 level of funding. In addition, from the Additional Central Assistance (ACA) for BMS which includes rural housing as one of the seven components, it is estimated that at least 1.70 lakh additional housing units would be constructed annually from 1998-99 to 2001-02. Therefore, a total of 68.30 lakh units of rural houses were to be constructed as per earlier projections.

Special Action Plan For Social Infrastructure: Targets For Rural Housing

3.7.108 Under the Special Action Plan for Rural Housing, an additional 13 lakh new houses are required to be constructed annually in the rural areas in addition to the existing 12.3 lakh units per year. Therefore, the total houses to be constructed annually would increase commensurately to 25.30 lakh.

Operational Strategy To Achieve The Targets Set Under Special Action Plan For Social Infrastructure: Portfolio Of Rural Housing Schemes To Be Implemented

3.7.109 The task for preparing the Action Plan on Rural Housing has been taken up in the second year of the Ninth Five Year Plan i.e. 1998-99. The composite housing strategy for the Ninth Five Year Plan is multi-pronged and includes proposed modifications in the existing housing schemes and certain new initiatives. These are detailed below:

i) Indira Awaas Yojana (IAY)- Main Programme: The Indira Awaas Yojana is the most important rural housing scheme which aims at providing dwelling units free of cost to the rural poor living below the poverty line. On 1.1.1996 with the restructuring of Jawahar Rozgar Yojana (JRY), IAY became an independent Centrally Sponsored Scheme (CSS) for shelter for the rural poor with resources being shared on a 80:20 ratio between the Centre and States. The main objective of the scheme is to construct dwelling units free of cost for the target group below the poverty line which comprises SC/ST, freed bonded labourers and also non-SC/ST families. The cost norms under IAY have been periodically increased and in the latest upward revision the maximum ceiling of assistance admissible under IAY has been raised from Rs.14,000 to Rs.20,000 in plain areas and from Rs.15,800 to Rs.22,000 in the hilly/difficult areas.

       The existing scheme has a limited format i.e. construction of new houses. As the need for upgadation of unserviceable kutcha houses in the rural areas is acutely felt, the existing pattern of public investment in the rural housing sector is not necessarily the most efficient. In principle, it would be cost effective to provide part financing for upgradation of existing houses as the field level situation supports this. Hence in its modified form it is proposed to implement the IAY in two components namely, (a) construction of new houses (at an average weighted cost of Rs.20,900) and (b) upgradation of kutcha and unserviceable houses (at a unit cost of Rs.10,000). States would be allowed to use upto 20% of the funds allocated under IAY for the upgradation of unserviceable kutcha houses.

       To correct the regional imbalance, implicit in the overall housing shortage, in the country, it would be imperative to change the existing allocation criterion under IAY from the incidence of poverty to actual housing shortages in States. Also the absorptive capacity of the States both physical and financial in terms of their 20 per cent share would also have to be taken note of as problems of implementation are acute in some States.

Special Action Plan for Rural Housing
  • The National Housing and Habitat Policy 1998 aims at providing ‘Housing for All’.
  • 20 Lakh additional housing units proposed to be constructed annually, of which 13 lakhs dwelling units would be in rural areas. These would be in addition to 12 lakh units constructed per year. Therefore, a total of 25 lakh rural houses would be constructed annually.

Main ingredients of the composite housing strategy are:

  • Indira Awas Yojana (IAY) – for construction of new houses free of cost for the target group below the poverty line comprising SCs/STs, freed bonded labourers and also non-SCs/STs families to continue.In addition, a new component for upgradation of kutcha and unserviceable houses is being introduced.
  • Credit –cum-subsidy scheme to cover people upto twice the income level of the Below Poverty Line families. Assistance in the form of subsidy and loan on a 50:50 basis within Indira Awas Yojana(IAY) cost norms.
  • Innovative Stream for Rural Housing and Habitat Development (ISRHHD) – to encourage the use of cost effective, environment friendly, scientifically tested and appropriate indigenous and modern designs, technologies and materials.
  • National Housing Bank(NHB) – to finance 1 lakh housing units under the Swarna Jayanti Housing Finance Scheme.
  • Greater equity participation to HUDCO for construction of additional houses in rural areas.
  • Rural Building Centres to facilitate technology transfer, information dissemination, skill upgradation and production of cost effective and environment -friendly materials.
  • Basic Minimum Services(BMS) Programmes – Housing is one of the seven components identified under the BMS to provide housing to the shelterless poor in a time bound manner.

ii) Credit-cum-Subsidy Scheme (CCS): There are a large number of households in the rural areas who have not been covered under IAY, since they do not fall within the BPL category. For such households living just above the poverty line, but still constituting the segment of economically weaker sections, a new Credit-cum-Subsidy Scheme (as a sub-scheme of IAY) is proposed to be launched covering people upto twice the income level of the BPL families. The Finance Minister in his budget speech for 1998-99 has also made a reference to the introduction of such a scheme. Under this scheme it is proposed that 50% of the assistance would be in the form of subsidy and 50% as loan but within the IAY cost norms (presently Rs.20,000 for the plain areas and Rs.22,000 for the hilly/difficult area). The loan portion would be provided by financial institutions, commercial banks, housing boards, etc. and the refinance facility will be provided from HUDCO, National Housing Bank etc. The funding of the subsidy portion would be shared in the ratio of 80:20 between the Centre and the States. It is proposed to launch this scheme in 1998-99 .

iii) Innovative Stream for Rural Housing and Habitat Development (ISRHHD): The Innovative Stream for Rural Housing and Habitat Development (ISRHHD) is proposed to be launched as a sub scheme of IAY on a pilot project basis for the BPL poor. Under this scheme it is proposed to encourage the use of cost effective, environment friendly, scientifically tested and proven indigenous and modern designs, technologies and materials to construct IAY houses suited to the particular location. The Innovative Stream for Rural Housing and Habitat Development would be launched in 1998-99, on a pilot scale.

iv) National Housing Bank/Commercial Banks Funding: The National Housing Bank (NHB) and other banks would have to enhance their performance in rural housing. The Golden Jubilee Rural Housing Finance Scheme (GJRHFS) was launched by the National Housing Bank in 1997-98 with its coverage extending to the rural areas and to small towns having a population upto 50,000. The benefits of this scheme have however been cornered mainly by the small towns. The total estimated contribution of NHB and other commercial banks to rural housing annually is only 0.6 lakh units.

In the Budget speech of the Finance Minister, the NHB has been directed to finance 1.00 lakh rural dwelling units under the Swarna Jayanti Housing Finance Scheme (SJHFS) as against the existing 50,000 units.

v) Rural Building Centres (RBCs):To address the primary objectives of technology transfer, information dissemination, skill upgradation through training of rural masons, plumbers etc. and production of cost effective and environment friendly materials, there is a need to establish an institutional network of RBCs in all the districts in the rural areas as has been done in the urban areas.

Rural Building Centres in the rural areas would be taken up initially on a pilot basis. After assessing the viability of this scheme, it would be extended in a phased manner to cover all the districts of the country.

vi) Housing and Urban Development Corporation: The Housing and Urban Development Corporation (HUDCO) is functioning with equity support provided by Government of India, as the apex national techno-financing agency in the housing sector. So far its operations have been largely confined to urban areas. However, at present HUDCO is directing 15% of its total housing resources for financing housing activity in the rural areas and constructing approx. 3.00 lakh rural houses annually. In his budget speech the Finance Minister has enhanced the capital base of HUDCO by Rs.110 crore so that it may leverage more funds for housing construction in the urban and rural areas.

    Equity participation by the Department of Rural Employment and Poverty Alleviation (DREPA), Ministry of Rural Areas and Employment (MRAE) in HUDCO earmarked for rural housing would facilitate HUDCO to raise eight times of the amount from the market for construction of additional houses. By way of illustration Rs.50 crore equity participation in HUDCO would leverage Rs.400 crore and which would finance 1.8 lakh houses in rural areas (It may be noted that houses to be constructed by HUDCO with equity participation from Department of Rural Employment and Poverty Alleviation in the remaining 4 years of Ninth Plan (1998-99 to 2001-2002) would be an additionality over their existing effort at constructing 3 lakh houses annually.

vii) Cooperative Housing: The cooperative housing movement has also contributed to the housing sector by constructing 7.00 lakh units in the rural areas. It is expected to improve its performance in the ensuing years of the Ninth Five Year Plan period.

viii) Others including BMS: The Basic Minimum Services (BMS) programme was launched in pursuance of the recommendations of the Chief Ministers’ Conference held in July, 1996. Housing has been identified as one of the seven components of the BMS to provide housing to the shelterless poor in a time bound manner. In addition to the normal State Plan provisions for BMS being made in the States/UTs Annual Plans and the funds routed through the Centrally Sponsored Schemes, the Central Government provided Additional Central Assistance (ACA) for BMS to the States and UTs. It is assumed that from the ACA provided to the States for BMS, at least 1.70 lakh additional housing units would be constructed annually under BMS in the rural areas. Further, it is projected that outside IAY 5.80 lakh housing units will be constructed by various financial institutions like NHB/Commercial Banks and State Governments rural housing programmes. It is therefore estimated that 7.50 lakh additional units would be constructed annually outside IAY by various housing agencies.

Ninth Plan : Physical targets

3.7.110 In the first year of the Ninth Plan i.e. 1997-98 the Central outlay for rural housing (i.e. IAY) was Rs.1190.00 crore. With this financial provision approximately 7.00 lakh IAY houses were constructed during that year. Approx. 5.30 lakh units have been constructed outside the IAY by various housing agencies and by the State Governments. Therefore the total houses constructed in 1997-98 were approx 12.30 lakh.

3.7.111 In the financial year 1998-99, a Central outlay of Rs.1600.00 crore has been provided in the Budget for Rural Housing. Based on this Central provision it is estimated that 13.28 lakh houses can be constructed under the IAY and other housing schemes. In addition 7.50 lakh houses would be constructed under other rural housing schemes implemented by the State Governments, including rural houses constructed under BMS, thereby cumulating a total of 20.78 lakh units in the current year.

3.7.112 A composite profile of the total houses to be constructed in eatch of the five years of the Ninth
Plan is given in Table 3.7.1.

Table 3.7.1

Lakh units

Year        Houses to be constructed   Addl. Houses to be constructed     Total
            Under IAY   and   other        under other housing  schemes    houses to be 
             Schemes with  Central           including BMS             constructed
------------ ---------------------------------------------------------------------------
1997-98             7.00                              5.30                 12.30
1998-99	   	     13.28				 	 	     	7.50		         20.78
1999-2000	         17.83							    7.50	        	 25.33
2000-2001          18.06			                    7.50	   			 25.56
2001-2002	         18.06			                    7.50	         	 25.56
  Total		   74.23				 35.30				109.53
Note: It may be noted that the above calculation is based on the current unit cost.

3.7.113 The schematic break-up of houses to be constructed during the Ninth Plan period is detailed
in Table 3.7.2.

Table 3.7.2 Lakh units


































Other Housing schemes/State Government effort/BMS






Grand Total






* Includes both new construction and upgradation component under IAY.

3.7.114 At the end of the Ninth Plan i.e. 2001-02, 109.53 lakh units would be constructed under various housing schemes in the rural areas. The break up of these 109.53 lakh units in terms of new constructions and upgradation of unserviceable kutcha houses is given in Table 3.7.3.

Table 3.7.3
Lakh Unit





























Tenth Plan

3.7.115 By the end of the Ninth Plan , 109.53 lakh units would be constructed leaving a residual gap of 78.17 lakh units (i.e. 187.70 – 109.53= 78.17 lakh units). It may be noted that at the end of the Ninth Plan the housing shortage would be only in terms of unserviceable and kutcha houses needing upgradation in the Tenth Plan. However, housing shortages during the Tenth Plan are likely to be surfaced on account of population growth. These shortages would be taken care of during the Tenth Plan.


3.7.116 The IAY is implemented through District Rural Development Agencies (DRDAs) specially set up in each district of the country for the implementation of rural development programmes or through Zilla Parishads. At the field level the block machinery is entrusted with the responsibility of ensuring that targets for construction of houses under IAY are achieved. At the village level the onus is on the gram sabha to identify and select the beneficiaries. However, given that most State Governments also have their own rural housing programmes, in order to facilitate the implementation of a composite housing plan in the States, it is proposed that the Centrally Sponsored Scheme of Indira Awas Yojana be transferred to the State sector, to be implemented by the State Governments with Central assistance specifically earmarked for this purpose.

3.7.117 The Credit-cum-Subsidy Scheme and the Innovative Stream for Rural Housing and Habitat Development would also be implemented by the DRDAs/Zilla Parishads. The former scheme would be implemented in collaboration with financial institutions/commercial banks, housing boards with the refinance facility being provided by HUDCO and the NHB. The Innovative Stream for Rural Housing and Habitat Development would be implemented on a project basis through HUDCO/NGOs.

3.7.118 The scheme of Rural Building Centres would be implemented by HUDCO/well known State rural housing organisations and NGOs through the DRDAs.

3.7.119 Among the other housing schemes being implemented in the rural areas, the Golden Jubilee Housing Finance Scheme, which has a rural component, is being implemented by the NHB. The NGOs engaged in construction of rural houses are financed through CAPART.


3.7.120 The Department of Rural Employment and Poverty Alleviation in the Minisitry of Rural Areas and Employment is responsbile for release of Central share of funds, overall guidance, policy-making, monitoring and evaluation of the rural housing programme at the National level.

3.7.121 The programme is continuously monitored by Department of Rural Employment and Poverty Alleviation, on the basis of the monthly reports received from the States/UTs. Senior Officers of the rank of Deputy Secretary and above in the Ministry are appointed as Area Officers for different States/UTs. These Area Officers visit the allotted States/UTs from time to time and inspect among other programmes the actual implementation of the rural housing programme in the field. They also paprticipate in the State Level Coordination Committee (SLCC) meetings providing thereby, an effective link between the policy makers (Government of India) and the implementing agencies (State/UT Governments). The programmes are also reviewed at the meetings with the State Secretaries of Rural Development and with the Project Directors of DRDAs in the Workshops which are held annually.

3.7.122 The State Level Coordination Committee (SLCC) monitors the programme at the State Government level.

3.7.123 In addition to the regular monitoring of the programmes by the Ministry, the Programme Evaluation Organisation (PEO) of the Planning Commission also periodically evaluates programmes in the rural development sector. The PEO has carried out a quick study of IAY in 1992-93. A system of Concurrent Evaluation has been evolved by the Ministry of Rural Areas and Employment under which reputed independent institutions/research organisations are involved in undertaking the evaluation work. A Concurrent Evaluation of the IAY is being undertaken on the initiative of Department of Rural Employment and Poverty Alleviation.

Urban Development

Performance Review

3.7.124 The National Commission on Urbanisation (1988) had provided an assessment of the urban scenario and a long-term perspective. With this document as the base, and on the feedback of major sectoral developments and urban sector projects, the range of economic reforms initiatives, the New Delhi Declaration of ESCAP countries, 1994, Habitat II national report and UN Habitat Agenda, 1996, the formulation of a National Urban Policy was taken up as a priority activity. The preparation of State urbanisation strategy documents was another important activity, providing an insight into the future development needs in terms of new assets required to meet the anticipated demand for urban services. These State level documents have not, however, brought out the urban renewal and upgradation requirements. The Ninth Plan will seek to incorporate this aspect in the State urbanisation strategy documents so that, if required, these activities may be given special attention in on-going and future programmes, particularly relating to water supply, sanitation, sewerage and waste disposal. At the same time, the Plan would seek to strengthen the preparation and updating of State urbanisation strategy documents, with technical assistance, where necessary. The adoption of a commercial and market approach to infrastructure planning, development and management will be encouraged. For this purpose, suitable capacity building inputs would be provided to State and city officials. Within this macro urban agenda, various on-going schemes like the IDSMT, Mega City, UBSP, Slum Development, NRY, PMI-UPEP, Urban Mapping and any new schemes that might be introduced, will be dovetailed to attain the goals of the State macro urban development model.

3.7.125 The two aspects of urban development activities, namely the creation of new assets and upgradation of existing assets, would need to be taken up simultaneously to maintain the healthy urban environment, prevent the further process of deterioration and reduce the inequity in access to basic civic amenities. This deteriorating urban situation is reflected most glaringly in the extension of the "city within a city" syndrome of vastly varying urban environment conditions in different parts of the urban agglomerations. Action will be directed to positively contribute to the reduction of the existing level of these disparities and the State urban strategy will provide a valuable policy and operational framework.

Among the major legislative contributions of the Eighth Plan was the Constitution (74th Amendment) Act,1992,also known as the Nagarpalika Act, which was passed by Parliament in 1992. This landmark legislation provides a common framework for the structure and mandate of Urban Local Bodies for effective democratic decentralisation. Among the major legislative contributions of the Eighth Plan was the Constitution

3.7.126 Among the major legislative contributions of the Eighth Plan was the Constitution (74th Amendment) Act, 1992, also known as the Nagarpalika Act,which was passed by Parliament in 1992 and received the assent of the President on April 20, 1993. This landmark legislation provides a common framework for the structure and mandate of ULBs for effective democratic decentralisation. The Act provided a period of one year to amend or modify the existing municipal laws to bring them in conformity with the provisions of the Nagarpalika Act. The State and UT Governments have taken measures to establish State Finance Commissions (SFCs) and State Election Commissions (SECs). All States have established the SFCs and by March 1997, 10 SFCs have submitted their reports to their respective State Government.There is, however, a long time lag between the submission of the SFC Report and its placement in the State legislature. The SECs have been established and have conducted elections in all ULBs except in Bihar and Orissa. In the case of Punjab, elections have been held in only two municipalities and 29 nagar panchayats. By Januray, 1997, about 60,000 elected representatives are in municipal corporations, municipal councils and nagar panchayats in 15 major States.The responsibilities and functions of the elected representatives have, however, yet to be articulated and defined by the State Governments.The District Planning Committees have been set up in only West Bengal, Kerala and Madhya Pradesh, where separate legislations have been enated for this purpose. In none of the States has the government notified an area as a metropolitan area for the purposes of the Amendment.

3.7.127 Major efforts were made during the Eighth Plan to identify the lacunae and operational constraints in the Urban Land Ceiling and Regulation) Act, 1976 and these have been documented in the Habitat II National Report. The feedback on the implementation indicates failure to curb or prevent concentration of urban land holdings, profiteering, and ensure equitable distribution of land. Out of 4,06,282 applications filed in relation to excess vacant land, less than two-third were dealt with by the State/UT Governments and only 7.5 per cent of the 220,774 hec. of land declared surplus had been taken over. In terms of other indicators also, the performance has not been satisfactory. Exemption under Section 20 of the Act was provided in 53,963 cases, which was 42.1 per cent of the total application number submitted under this provision and only 2,984 schemes out of 9,638 (31.0 percent) received approval under Section 21 of the Act for construction of dwelling units for the weaker section of society. The approved activities are expected to result in the construction of 4.83 lakh tenements on 5,327 hec. of land. There has been a slow-down in housing development due to delays in acquisition and transfer of surplus land. The Central Government should take up the rationalisation of the Act during the NinthPlan and the thrust of the new approach would be guided development rather than regulation per se.

3.7.128 The NCR Planning Board was established with the object of containing Delhi's population within a manageable level and developing the National Capital Region in a harmonious and planned manner. As a part of its Regional Plan - 2001, the Board is finalising extensive land acquisition and development of physical infrastructure. It has prepared functional plans for Delhi Metropolitan Area as well as basic strategies and financial mechanism for use of funds. Sub-regional plans for Uttar Pradesh and Rajasthan sub-regions were approved by the Board in June, 1992 and April, 1994 respectively, while those for Haryana sub-region and for Delhi are under preparation and finalisation. An important functional plan for transport sector seeks to bring out a coordinated development of transport networks and shift the modal share from road-based to rail-based transport, which is likely to be more efficient, economic and environment-friendly.

3.7.129 The NCR is an innovative effort at regional planning and development is the only urban initiative to encompass several States. The approach is inter-sectoral, covering various components of regional infrastructure like road and rail transportation, power, communication, among others, apart from local level town-specific infrastructure and civic amenities. The regional development initiative is dependent on timely release of funds and convergence of the various activities of different organisations and partner governments so that the requisite infrastructure can be speedily developed and made operational. This is critical because any delay would lead to an increase in the population who may have to be deflected from Delhi and may create a situation which may be beyond the capacity of the 6 DMA and 8 priority towns in the NCR to properly absorb in terms of providing them adequate and affordable shelter, civic amenities and opportunity to take up a sustainable income-generating activity. Delay in implementation of the programmes carries the risk of making the regional planning initiative a non-viable activity within a short period.

3.7.130 Recognising the potential of the NCR strategy to promote and sustain effective regional development, the NCR programme will be further strengthened to promote regional development in the identified locations. Similar programmes of developing new townships will be promoted in other parts of the country where regional disparities and economic backwardness are critical concerns and also where there is a need to develop viable townships around metropolitan cities.

3.7.131 The IDSMT scheme, an extremely valuable development instrument for small and medium towns, was initiated in the Sixth Plan in 1979-80 to develop the infrastructure, primarily the physical components, in selected towns with population upto 5 lakh, that were assessed to have the potential to emerge as regional centres of economic growth and employment and serve as catchment centres to arrest migration to large towns and cities.The guidelines were revised in August 1995 to make its implementation more effective. A major change was in the financing strategy. Prior to the revision, the entire funding was in the form of loan and a large proportion, 40-70 per cent, was to be mobilised from financial institutions, which was found to be a major operational constraint for most of the municipalities.The revised guidelines provide for varying levels and mix of grant (Central and State) in the ratio of 60:40 and institutional finance /internal revenues to the extent of 20-40 percent of the project cost. Grant-in-aid for the preparation of town development plans and project reports has also been provided for.

3.7.132 The IDSMT scheme has covered 904 towns upto the end of the Eighth Plan and the the cost of the approved schemes, as on March 31, 1997, was Rs. 1427.38 crore and the Central assistance released was Rs. 283.96 crore. During the Eighth Plan, 387 towns were covered, with approved cost of Rs. 890.65 crore and as much as Rs. 403.68 crore was on commercial shops and stalls.The Ninth Plan would develop mechanisms to ensure a better mix of projects.

3.7.133 The revised scheme is expected to be a major instrument of urban sector reforms in the selected growth centres, as envisaged under the Constitution (74th Amendment) Act, as it promotes the use of Central and State grant components to leverage resources internally through the project and externally from financial institutions. The internal resources will develop a Revolving Fund,which would strengthen the municipal financial base for the future. Also, special attention is now paid to economic analysis of the projects, based on cost-benefits techniques.

3.7.134 The performance review brings out a concentration of project activities in a few areas like market complex/shopping centre, tourist facilities, roads and bus terminals. There is no feedback on the impact of these developments on city/town development as well as regional development. The efforts of the implementing agencies have been to see that the number of towns earmarked for coverage in the Plan has been largely covered, but even in respect of the numerical targets of coverage, the annual Plan sanctions have not been as per the provisions made in the Plan. The release of funds has not been satisfactory.

3.7.135 It is too early to get a feedback on the introduction of the cost-benefit analysis in the IDSMT activities, as this component was introduced in the revised guidelines in August, 1995 and is being actually included in the project reports from 1996-97. The Ninth Plan would monitor the progress on this important component since the social and economic benefits should be higher than the cost of the special initiatives taken through the IDSMT at the town and regional level.

3.7.136 One reason for the shortfall has been identified to be the failure of the State Governments to make their contribution and in some cases, the Central funds have not been properly utilised. This has happened because of inadequate monitoring, as the monitoring exercise was limited to administrative reports from the State Government and occasional visits by Central officials to the State capital and some project sites, where there was not much opportunity for Central officials to directly interact with the beneficiaries independently.

3.7.137 The Mega City Scheme, introduced in 1993-94, covers five megacities of Mumbai, Calcutta, Chennai, Bangalore and Hyderabad. As on April 30, 1997, 163 projects were sanctioned for an approved project cost of Rs. 1,439.22 crore. Work has been completed in 14 projects, is in progress in 136 projects, and is to be initiated in 13 projects. An expenditure of Rs. 493.99 crore had been incurred, even though the Central and State governments had released Rs. 703.80 crore as their share. The balance is to be raised by the projects from the capital market and financial institutions, using the Central and State government's contribution for leverage. HUDCO had approved a loan of Rs. 383.56 crore to 20 projects ( 26.6 percent of approved project cost), and only 31.1 percent of this had been released (Rs. 119.16 crore). The Ninth Plan will strengthen the follow-up and monitoring functions so as to accelerate the development of projects at all the stages and ensure that the leverage effect is a minimum of 50 per cent. To facilitate the attainment of this target, the scope of more financial institutions providing institutional finance, including from the private sector, will be explored.

3.7.138 The Scheme takes up three categories of projects, namely, remunerative, user charge-based and non-remunerative or service-oriented. The recommended mix is 40:30:30 among the three categories so that the total city project is financially viable. A study of the project mix shows under-realisation of the ratio of remunerative projects in the case of Calcutta, Bangalore and Mumbai,, where the ratio is in the range of 16-18 per cent and it is 35 per cent in Chenai. However, it is 51 per cent in Hyderabad. In contrast, the ratio was attained in all cities except Calcutta for the non-remunerative projects, suggesting that the concern of total city-level project viability does not appear to have been given due attention. This aspect in project selection will be taken up in the Ninth Plan projects.

3.7.139 Project selection criteria should also take into account the inclusion of only those projects which are not likely to receive funding from other accessible sources, especially under the remunerative projects category. Housing, truck terminal, market, shopping and office complexes may have to be given a lower priority. Some non-remunerative category projects have a good potential to be covered under user-charge category, such as flyovers, bridges, public conveniences. The Ninth Plan would focus on development of urban fringes, urban renewal, sanitation, sewerage and drainage, ring roads, while other activities in the illustrative guidelines will have to be taken up through other financial strategies. Thus, for example, city beautification may be given for adoption by major corporates in the public and private sectors, with advertisement rights; wastes collection and disposal through commercialisation of the recycling of solid wastes; slum improvement through alternate programmes; and truck and bus terminals, housing, land development and commercial complexes through privatisation.

3.7.140 While the period of implementation of the Mega City Scheme may not be adequate to assess the impact, the Ninth Plan would take up impact assessment as an activity before extension of the programme within the selected cities and to other megacities that are likely to emerge in the country. The impact assessment inputs would also facilitate the project components to become more focussed. The initial flow of projects brings out the need for a comprehensive City Urban Agenda on infrastructure requirements, new as well as in the renewal category, together with proper estimates and the cost-benefit analysis. The mega city nodal agencies should also take into account the metropolitan and regional aspects and not restrict their activities to land development and housing. In this context, the state and city town planning laws, urban development authority acts, etc, should be amended to facilitate planning reforms and permit schemes like land adjustment, for example, to promote the use of land as a resource.

3.7.141 This macro approach to mega city planning is essential to decide upon the projects that may be undertaken under the Mega City Scheme and those that may have to be marketed for implementation by other agencies and sources of financing, including the private sector. It is also necessary to break up the massive activities during the Ninth Plan and thereafter into a well-defined time schedule, to ensure the completion of the total infrastructure development on which the sustainability of the mega city depends.

3.7.142 The project feedback brings out that the leverage activity has not yet become fully operational. The Plan will review the reasons for inadequate leverage effect in the project funding and, in that context, consider modifications in the scheme and any other inputs, including fiscal instruments, and professionalising the financial functions that may be required to make the instrument of leverage funds an effective mechanism. Special attention should be paid to strengthen the monitoring of the scheme, which presently is being done through informal reviews and reporting mechanism. The regular monitoring and impact assessment functions may be institutionalised in an independent agency, outside the project for the effective implementation of the scheme.

3.7.143 Cost recovery is another crucial factor for the success of the scheme and for this purpose direct as well as indirect methods will be introduced. The latter may include, for example, conversion charges for change of land use, development and betterment charges related to impact of on-site and off-site activities, Tradable Development Right (TDR) as per the Mumbai model, extra FAR/FSI surcharge, Shelter Tax on large and luxury housing to finance low-income housing, etc. These innovative strategies will be preceded by specific assessment of the real estate market situation and potential revenue generation analysis to determine the type of instruments to be used and the most suitable timing for mobilising resources to meet the cost of the project, and possibly for generating a surplus.

3.7.144 Slum Development is another major activity taken up to upgrade the urban environment and see that the proliferation of slum and squatter settlements does not further deteriorate it. In the past, several schemes have been introduced to improve the living conditions in the slums, where an increasing proportion of the urban poor and migrants live and often work. Recognising the poor access to basic urban services in these settlements, the UBSP and EIUS have been provided some specific Plan support to improve the access to basic services. During the Eighth Plan, a new Centrally assisted Scheme was introduced in 1996, with an initial outlay of Rs. 250 crore for the year and this amount was raised to Rs. 330 crore for 1996-97. The funds have been provided as additional Central assistance to the States/UTs. The Planning Commission has constituted a Working Group to examine the mechanism for determining the State allocations under this Scheme and to examine, among other issues, the possibility of going beyond the conventional criterion of the share of urban population in the State for funds allocation. The NHB introduced a Slum Redevelopment Scheme during the Plan period to provide financial assistance to the implementing agencies for housing development and upgradation and provision of habitat infrastructure like drinking water and sanitation.

3.7.145 The Environment Improvement in Urban Slums (EIUS) scheme is a high priority programme to provide seven basic amenities to slum households, namely, water supply, storm water drains, community baths and latrines, widening and paving of existing pathways and street lighting and other community facilities. The scheme was introducted in 1972 as a Centrally sponsored scheme but was transferred to the State sector in 1974. The ceiling on per capita expenditure has now been raised to Rs.800/per slum dweller in consultation with the Planning Commission effective from 1.4.1995. The programme is integrated with the existing urban proverty alleviation scheme and seeks the involvement of resident associations.

3.7.146 A scheme for provision of infrastructural facilities in the Displaced Persons (East Bengal refugees) Colonies in West Bengal is in operation. After considering a note submitted by the Ministry of Rehabilitation in 1976, the Cabinet approved the proposal to fund infrastructural development for 1,03,157 plots in 612 colonies at a cost of Rs.23.85 crore. The development components included provision of water supply, drainage, roads and pathways, sanitation and other items. A revised ceiling cost of Rs.17,777/per plot for development, reimbursement of Rs.2.33 crore to the State Government and provision of Rs.78 crore in the Central budget as grant for completing the work on the remaining 44,025 plots (originally approved in 1976) was approved by the Cabinet in January, 1995.

3.7.147 Several programmes are on stream with international assistance and cooperation. The KFW loan and grant assistance to HUDCO is for undertaking housing schemes for EWS, Building Centre Programme, low-cost housing in rural and urban areas, low-cost sanitation, slum improvement, reconstruction in Latur and to HDFC for low cost housing and urban infrastructure. The OECF (Japan) has provided assistance for city water supply project in Sholapur and New Mumbai and some other infrastructure activities. The World Bank has extended a grant of US $ 1.0 million to HUDCO for strengthening its infrastructure-related operations, in particular, technical assistance for the preparation of the proposed Urban Infrastructure Financing Project. The World Bank has also provided a line of credit to the Government of Maharashtra for reconstruction of the housing stock and other infrastructure damaged in the Latur earthquake. According to the latest report, 15,713 houses have been completed and 9,292 houses are under construction. Under the repairs and retrofitting component 57,196 houses have been retrofitted, and 86,999 houses are under development.

3.7.148 The Overseas Development Administration (ODA, UK) supports slum improvement projects in seven Indian cities, in collaboration with the Ministry of Urban Affairs and Employment, Government of India. The Programme started in 1983 in Hyderabad, and since 1988, additional projects have been approved in Vishakapatnam, Vijayawada, Indore, Calcutta, Cuttack and Cochin.The project components include development of physical infrastructure, provision of civic amenities, community development and provision of social, economic and educational inputs to contribute towards raising the standard of living of inhabitants in slum settlements. The Government of Netherlands supports a pilot project, Bangalore Urban Poverty Alleviation Project (BUPP), at an estimated cost of Rs.1.5 crore in phase -I, which commenced in November 1993 and is likely to be completed by the end of March 1997. The second phase is likely to commence soon. The project is being executed jointly by the Central Ministry of Urban Affairs and Employment, HUDCO and the Government of Karnataka.

3.7.149 The Urban Mapping Scheme, a Eighth Plan programme, with an outlay of Rs. 6 crore, was undertaken for preparing, on a pilot basis, base maps for 25 identified towns, using the aerial photographing and remote sensing techniques so that urban maps could be updated with the Geographic Information System (GIS). The Town and Country Planning Organisation (TCPO) is the national nodal agency for this task, which is to be undertaken by the National Remote Sensing Agency (NRSA), Hyderabad. The task ahead is enormous, including preparation of new maps, apart from updating some existing maps in some urban centres. This would constitute an important Ninth Plan activity to provide a strong base for effective implementation of the Constitution (74th Amendment) Act provisions relating to a three-tier planning structure at the local, state and regional level .

3.7.150 Other Programmes include research on urban policy, land use planning and development, municpal governance, housing, etc, with an outlay of Rs. 1 crore per annum during the Eight Plan. Impact assessment of the research output has not been made.The Ninth Plan will review these activities and make the funding of research through this outlay as per an urban research agenda, which will be prepared by sectoral experts, keeping in view the priority concerns in the Ninth Plan. A transparent system of funding policy and research impact assessment will be developed.

3.7.151 The World Bank and the Asian Development Bank have provided external assistance for urban sector projects, the former in Tamil Nadu and Uttar Pradesh and the latter in Karnataka. While Uttar Pradesh Urban Development Project was closed on 31.3.96, Tamil Nadu Urban Development Project is under implementation, with a revised project outlay of Rs.988.50 crore. Negotiations were held with the World Bank for restructuring the existing Tamil Nadu Municipal Urban Development Funds (MUDF) into Tamil Nadu Urban Development Funds (TNUDF) to be set up under the Companies Act.

3.7.152 The ADB is funding the Karnataka Urban Infrastructure Development Project, whose estimated cost is $ 132 million.The project aims to decongest Bangalore through decentralisation of economic activities to four project towns of Mysore, Tumkur, Channapatnam and Ramanagaram to be developed as counter-magnets and maintain the status of Bangalore as a centre for high-tech industry, reduce the pressures on the infrastructure of Bangalore and improve living conditions in the city. Another ADB project in the pipeline is the Development of West Coast Districts of Karnataka. The Department of Economic Affairs, Central Ministry of Finance has recommended to the ADB, the proposal with having an estimated cost of Rs.758 crore and an external assistance component of Rs.430 crore.The Bank has since approved in principle to provide a Project Preparatory Technical Assistance of US $ 800,000 during 1997. Another ADB activity is the India Urban Sector Profile (TA Study), for which an agreement was signed in October, 1994 with ADB for financial assistance of US $ 435,000.The project will review India's Urban Sector policies and programmes and suggest areas/projects for future ADB involvement in urban infrastructure in India. Another Technical Assistance (TA) agreement has been signed between Government of India and ADB to determine the scope of investment in six selected towns in Rajasthan.

Ninth Plan Priorities and Strategies

3.7.153 Urban India presents a classic example of a developing scenario with high concentration of urbanisation and economic growth in certain parts of the country, as well as in certain parts of a State. While the IDSMT scheme, special industrial development programmes in backward regions and fiscal incentives have sought to reduce disparities in regional development, the regional disparities have continued.

The priority concern is not only to stop the growing deterioration in the urban environment, reflected in key urban indicators on housing conditions, pollution levels, traffic congestion, informal sector, among others, but to positively change the trend and ensure an improved, healthy and congenial environment. The wide gap between the demand and supply of basic amenities will be reduced through creation of new assets, upgradation and renewal of existing assets, attaining better operational and managerial efficiency and stimulating flow of resources.

3.7.154 The priority concern is not only to stop the growing deterioration in the urban environment, reflected in key urban indicators on housing conditions, pollution levels, traffic congestion, informal sector, among others, but to positively change the trend and ensure an improved, healthy and congenial environment. The wide gap between the demand and supply of basic civic amenities like potable water, sanitation, transport and housing, which has shown an increasing trend over the last five decades, will be reduced, through creation of new assets, upgradation and renewal of existing assets, attaining better operational and mangement efficiency and stimulating flow of resources into all urban development activities.

3.7.155 Regional development, strengthening of the rural-urban continuum and development of new centres of human settlements and economic activities as an alternative to the highly congested metro and mega cities will be among the priority tasks in the Ninth Plan. An increasing proportion of these actvities will be financed from outside the Plan resources.The Eighth Plan had initiated a few innovative practices, most notably the use of Plan funds to leverage non-Plan resources from the financial system, through leveraging funds from financial institutions and the capital market. Conceptually, the strategy is well-founded; how effective it has been in the Indian urban situation has to be ascertained. The instrument has been effectively used in the industrial sector for a considerable period, though the leverage base has been the equity capital that has to be serviced and not a grant. If the impact assessment of the urban infrastructure leverage instrument brings out a performance that is lower than anticipated, the reasons should be identified so that the Government, as a facilitator, would be in a position to take appropriate steps to ensure the effectiveness of the leverage strategy. Fiscal instruments, legal provisions and strengthening ofprofessionalism in the municipalities and urban local bodies will be some illustrative areas for suitable intervention with the aim of formulating financially viable projects, undertaking rigorous techno-economic appraisal and facilitating efficient implementation of projects.

3.7.156 The matching of the Central Plan outlays with State finances was another positive particpatory endeavour. These activities will be strengthened and the observed operational constraints would be removed. The new approaches to urban finance, initiated during the Eighth Plan, together with an integrated approach to planning and management, should be supported by an equally strong system of monitoring the project and periodic assessment of its impact, to ensure the reachout, especially of the subsidised non-remunerative projects to the specific target groups. The much-required sustainability in financing urban development is expected to be attained through this route. A composite approach to urban development that encompasses inter-dependent urban basic services will further strengthen the development process. These, indeed, are the challenges for the Ninth Plan.

3.7.157 In the context of a regional approach to urban development, the activities of NCR Planning Board are critical to contain deterioration of the environment of Delhi and the participatory efforts of the States should be effectively mobilised. At the same time, development of small and medium towns should gather further momentum and there is clear need to improve the package of remunerative and non-remunerative projects in IDSMT scheme to go beyond the conventional activities like shopping plaza and bus terminal to take up also activities that would bring in sustainability to the urban environment. Critical among them are drinking water, sanitation and waste management as the sustainability of small and medium towns has to be ensured not only in terms of the economic viability parameter but also the environmental sustainability parameter. The standard of cost-benefit analysis to assess the viability of projects, introduced during the Eighth Plan, will be improved through capacity building for inductingt a high level of professionalism in the project contents. It is equally important to improve the composition of the projects under the Mega City scheme and shift the focus to development of urban fringe, urban renewal, sanitation, sewerage and drainage, ring-roads in preference to the Eighth Plan activities like housing, truck terminal, market, shopping and office complexes, which should be given lower priority in the product mix, as they can be supported through commercial and privatisation routes. The slow pick-up of the Mega City scheme was to an extent due to the teething problems but in view of its significant potential to become a catalyst of infrastructure development, the Plan will seek to accelerate project development and implementation processes. It would be desirable in the Ninth Plan to evolve the criteria for funds allocation under the scheme and going beyond the present population criterion to give weightage to indicators like decadal population growth rate, performance in project implementation, resource mobilisation, credibility of the nodal agency and development needs. More emphasis will also be given to promote integrated land use development planning with regard to mapping, use of remote sensing and Geographic Information System (GIS) for preparation of city maps and city/town, metropoiltan and district 3-tier Development Plans, covering the annual, five year and long-term perspectives (20-25 years).

3.7.158 Planning and development of urban infrastructure in mega cities as well as elsewhere should be properly structured and the basic requirement is a comprehensive city agenda which would estimate the current infrastructure requirements as also the projections for the next two decades, covering new assets as well as renewal of existing assets. The operational plan, particularly the activities to be undertaken by the key actors should be formulated at the city level and participatory approach should be adopted to earmark the tasks of implementation of tasks among the various agencies, including the private sector. The massive investment activity should be broken up into a well-defined time schedule so that the physical and financial targets are attained and the anticipated impact realised. Cost recovery has to be a major concern though in certain cases, the concept may have to be gradually introduced and subsidy in the provision of certain services may have to be continued during the Plan.

3.7.159 A process of rapid urbanisation invariably places pressures on land, resulting in an increase in land cost, and consequent impact on cost of all land-based activities and services required for sustainable urban development and environment. A choice has to be often made between high-rise and low-rise urban planning strategies. Within each of the alternatives, there is the planning option to promote high or low densities, though the tendency, a priori, is to relate high density with high-rise planning and low density with low-rise planning.

3.7.160 It will not be desirable in this perspective, to recomment a single strategy in the planning of cities. There has to be a different approach in urban planning in small and medium towns, where land may not be a scarce resource as compared to that in metro and mega cities. Several parameters should be given appropriate weightage in conceptualising and developing the city plans and these may include, for example, the affordability of the people to absorb the high-rise and low-rise housing solutions, the impact on the urban environment and quality of life, the implications on energy consumption, travel time from home to workplace, recreation facilities, open spaces, linkage with habitat-related services, etc. Equally important is the financial implication and the cost of funds that might be required for different types of city development programmes.

3.7.161 It was in this context, that the National Commission on Urbanisation had recommended Low-Rise High Density (LRHD) development to be the pre-dominant built up form in urban India. The adoption of this strategy would require a good understanding of the socio-economic conditions of the city dwellers and often modification in existing building bye-laws, zoning regulations, developments codes and land use and management systems. The advantage of low-rise settlements is the low cost of construction, efficiency in energy consumption, socially and psychologically more acceptable and environment-friendly neighbourhoods. From the operational point of view, a high density component in low rise structures might give rise to management challenges. Operational and financial implications of spread of essential utilities and services, including transport, have to be taken into consideration.

3.7.162 The Ninth Plan will follow up on the progresss made during the Eighth Plan in creating an urban development-friendly planning and fiscal environment. The Constitution (74th Amendment) Act and the liberated economic policies have ensured an era of democratic decentralisation of the planning and a greater degree of involvement of the private sector. In this changed operational scenario, the urban planning system in vogue should be made more dynamic and participatory and the process of decentralisation has to be extended from the State to the urban local government. The institutional framework for financial and other intermediation, including planning and project development and management, has to rcognise the key role assigned to the elected urban local bodies. The Plan will seek to promote and strengthen this approach. It will, for example, encourage the constitution of the District Planning Committees (DPC), with an elected official as chairperson. The roles and functions of the DPC would include the consolidation of the plans of the panchayats and the municipalities to prepare the development plan for the district, coordination of all inter-related activities and funds, and monitoring the implementation of the district plans, schemes and projects and related activities. The Plan funds would be increasingly decided on the feedback from the DPC.

3.7.163 The Town Planning, Municipal and urban Development Authority and other State Parastatals Acts and regulations should be speedily amended and legal framework strengthened to assign the planning and development functions to the urban local bodies, facilitate planning reforms, permit schemes like land adjustment, for example, to promote the use of land as a resource and include all the emerging needs of planning and development in the light of the Consitution (74th Amendment) Act. The municipal/ city/town development plan will form a key component of plan financing at the local level and seek to maximise the linkages between infrastructure, land use, urban growth and economc growth.

3.7.164 The massive tasks of development and renewal of housing, urban infrastructure and civic amenities requires their integration into the urban and metropolitan planning system as well as in the broader State and city economic and financial plans.There should be complete integration of spatial, economic and financial planning at the city and regional levels. This has been a weak part in the urban development agenda. The Ninth Plan will take positive steps in this direction.

3.7.165 Within this macro framework, an integrated urban planning approach would require integration of planning and development of inter-dependent infrastructure components such as, for example, water supply, sewerage and sanitation, and wastes collection and disposal, which in their totality, determine the quality of the urban environment. A total package should be prepared, which would also facilitate the financing of the programme as it would have a judicious mix of projects that have the potential to provide commercial returns, recover full-cost user charges and provide zero return on certain critical social services. While the commercial projects would notbe eligible for any subsidy, the user-charge projects should recover O and M and debt servicing cost, though subsidy through the financial package and other facilities may be provided on case-to-case basis, related to the extension of the services to the disadvantaged groups in the urban society.

Financing of urban infrastucture is bound to pose new challenges to the differenrt constituents of the financing system. Innovative mechanisms and practices will have to be encouraged and supported to stimulate the flow of finances such as the municipal bond system, municipal financial reforms, fiscal and monetary incentives for the creation of envirenment-friendly environment, participation of cooperatives, community groups and NGOs etc

3.7.166 The massive urban growth and the resource constraints would, together, result in a situation where the availability of funds would not keep pace with the growing demand. The State Government's efforts would have to be supplemented with larger participation by the private sector. Financing of urban infrastructure is bound to pose new challenges to the different constituents of the financing system. Innovative mechanisms and practices will have to be encouraged and supported to stimulate the flow of finances such as the municipal bond system, municipal financial reforms, fiscal and monetary incentives for the creation of investment-friendly environment, specialised infrastructure development and financial institutions, participation of cooperatives, community groups and NGOs, and public-private partnership in the development and management of urban services and social infrastructure facilities.

3.7.167 The fiscal provisions at the Central, State and local level should be made investment-friendly and conducive towards the flow of funds for urban infrastructure assets creation and renewal. Privatisation of activities in the social service sector as well as projects with long gestation period should be stimulated through the fiscal route rather than through direct subsidy in term loans and other development inputs. This will make the subsidisation of programmes not only transparent but will also speed up the development work and ensure the creation/renewal of the assets, as the fiscal instrument is ex-post and not ex-ante. Monitoring the effective reachout and periodic impact assessment would be also facilitated.

3.7.168 The Ninth Plan will strengthen the activities relating to data base, monitoring and evaluation as the existing system has been found to be inadequate. There is no single agency that is responsible for compiling and maintaining data and information and undertaking regular monitoring and evaluation work at the national, regional, state or city/town levels. Even the Plan provisions have not been fully utilised. By way of illustration, the outlay of Rs. 1 crore to Central Public Health Engineering and Environmental Organisation (CPHEEO) and State/UTs during the Seventh Plan for creating a monitoring and MIS Cells was not utilised due to technical problems and procedural delays, and a similar provision in the Eighth Plan did not lead to the establishment of these Cells. .For development of the data base for housing and undertaking housing census, the Eighth Plan outlay was under-utilised . In the case of the Urban and Regional Information System (URIS), the TCPO as a nodal agency for many Centrally Sponsored Programmes like the IDSMT, has taken up the task of developing the urban data bank. These activities will be further strengthened and the scope for privatisation of certain components of the activity within the overall supervision of the TCPO would be explored.

3.7.169 Apart from these activities, where the Plan provisions for data base, monitoring and MIS were provided but were not effectively utilised, in all other major urban sector programmes, the Plan will seek to develop a strong data base and monitoring and impact assessment systems. This is a key requirement for efficient urban management . Regular feedback on the reachout of activities of all the actors, some of whom may not be subject to normal administrative monitoring, becomes crucial for the Government to decide when, where and how to intervene and the extent of the intervention. An effective partnership of the government and non-government agencies in this activity would be promoted and the UNCHS housing and urban indicators would be adopted to build up this activity.

Urban Transport

Performance Review

3.7.170 Urban transport has been a sector whose development and investment requirements have been largely overlooked in the past. The Central Plan allocation till the Eighth Plan was a modest Rs.4.6 crore, as urban transportation system was essentially perceived in the Plans to be an appendage to inter-city rail/road transport systems.It was not recognised that the development programmes in urban transportation were critical to the sustainability of the urban systems.This basic need has been acknowledged now as the rapidly deteriorating transport systems have been seen to affect the urban lifeline.Recent urban transport indicators have shown that the average travel time between home and work place is as much as 44.34 minutes in Delhi, 33.37 minutes in Mumbai, 21.62 minutes in Chennai and 17.60 minutes in Bangalore. The transport indicators also show that transport services utilise 13.6 per cent of the total land area in urban agglomerations, with 11.0 per cent in megacities and 20.0 per cent in metro cities and 17.1 per cent in secondary towns.

3.7.171 A review of the mass transport modes in metropolitan cities has brought out that except in Mumbai, Chennai and Calcutta, which have suburban rail systems, the bus has been the main mode. Some metropolitan cities do not even have an intra-city bus system. Except for mega cities, modal split in favour of mass transport is poor and generally less than 20 per cent. Share of walk trips and mechanised non-motorised modes in total transport demand is quite high in metropolitan cities. Measures to promote non-motorised modes through provision of footpaths and other pedestrian facilities, cycle tracks and priority treatment at intersections should be an integral part of city transport plans. Land use and transport are strongly inter-related. Integrated Land Use-Transport Plans should be prepared for all metropolitan cities during the Ninth Plan period.

3.7.172 During the Eighth Plan, Central assistance was mainly confined to support the preparation of feasibility and other studies relating to urban transport systems in metro cities, DPR for Delhi MRTS project and contribution towards equity capital of Hyderabad LRT project.The total expenditure,as on March 31, 1996, was Rs. 18.32 crore and Rs.16.80 crore was spent during the Eighth Plan period.

3.7.173 The major urban transport projects that were approved or proposals were initiated during the Eighth Plan are in Delhi,Mumbai, Calcutta,Chennai and Bangalore. The Modified Phase I of the Delhi MRTS project was approved by the Union Cabinet in September, 1996. It consists of 11 kms of underground and 44.3 kms of surface/elevated railway tracks. The total cost of the modified Phase-1 project is estimated at Rs. 4,860 crore at April, 1996 prices. The project is to be implemented by Delhi Metro Rail Corporation Limited, a joint venture of Government of India and Government of National Capital Territory of Delhi. The OECF (Japan) has agreed to provide loan assistance upto about 60 per cent of the project cost. Initially, a loan of Rs.478.78 crore (14.76 billion Yen)will be provided at 2.3 per cent rate of interest per annum.

3.7.174 The Mumbai Urban Transport Project-II consists of construction of fly-overs, roads,bridges, optimisation of suburban railways, and is being planned by the Government of Maharashtra and the Mumbai Metropolitan Regional Development Authority (MMRDA) in consultation with the Ministry of Railways. Studies on relocation and resettlement, community environmental management plans, among others, are being conducted by the Government of Maharashtra and further activities will be taken up by the State Government on completion of these studies. The Calcutta Metro Rail System, covering a length of 16.5 kms. from Dum Dum to Tollygunge, is operational. The system has been constructed by the Ministry of Railways out of their own budgetary sources. Government of West Bengal have proposed extension of this facility by 8.4 kms., from Tollygunge to Garia. As the Central Government's budgetary resources would not be adequate, the Government of West Bengal has been requested to meet 50 per cent of the project cost.

3.7.175 The Government of Karnataka has mooted a proposal for introduction of a Light Rail Transit System in Bangalore, covering a length of about 90 kms. at an approximate cost of Rs. 4,200 crore. A rail-based surface-cum-elevated MRT system already exists in Chennai from the Beach to Chepauk (5.05 kms.) This system is being extended upto Luz (3.5 kms.)by the Ministry of Railways. A proposal for construction of rail-based MRT system from Luz to Velacherry has also been approved and will be funded jointly by the Government of Tamil Nadu and Government of India (Ministry of Railways).

Ninth Plan Priorities and Strategies

3.7.176 It is now widely recognised that as cities grow in population and size, the demand for transport increases more than proportionately. A good network of roads, coupled with an efficient mass urban transport system makes a substantial contribution to the ``working efficiency" of the cities and enables them to become catalysts of economic, social and political development. An efficient transportation system is, thus, critical for productivity and economic growth in cities. It has been estimated that inefficient traffic and transportation system in the urban areas currently results in an annual loss of Rs. 20,000 crore in vehicle-operating costs and travel time costs.

3.7.177 Recognising the inter-dependence between the sustainability of urban systems and the transport network, the Ninth Plan would have a major focus on planning and development of a viable mix of transportation systems including road transport, MRTS and LRT, making full use of all travel modes that would utilise underground,surface and elevation systems.

3.7.178 The development activities in the Ninth Plan would give a thrust to multi-modal transport programmes in order to meet the requirements of all categories of passengers, rather than giving priority to single modal transportation systems such as exclusive expressways which would primarily benefit only a small segment of the population, even though, these activities may be commercially viable through the levy of high user charges. The Ninth Plan strategy would, in this context, seek to reduce the role of private modes, owned by individuals and promote public transportation system, keeping in view the road density, pollution, travel time, parking facilities and other operational concerns.

3.7.179 There is also a need to regulate the entry of private vehicles in the central business districts as part of a demand management strategy. Disincentive measures may be introduced to restrict the entry of low passenger occupancy vehicles. The operational policy instruments may include high entry and parking charges and special levies for low occupancy.This has been already demonstrated as an efficient transport management strategy in several countries.The annual registration of new vehicles should keep in mind the holding capacity of the cities and the availability of the parking spaces. Proliferation of personalised modes like cars and scooters needs to be contained by measures such as penal registration rates.

3.7.180 Equally important is the strengthen the organisational and institutional systems to provide for planned and efficient intra-urban transportation system in the cities. A series of initiatives are required, such as, the setting up of an urban transport unit in the nodal ministry and in the Planning Commission, along with similar units at the State level.

3.7.181 The financing of transportation programmes is a critical issue.The initiatives of the Eighth Plan in regard to financing of urban infrastructure programmes should be made an integral part of the financing strategy for urban transportation. Effective public-private partnership will be promoted through appropriate fiscal and other stimulating initiatives so that the massive investment requirements, which are definitely beyond the capacity of the Plan can be mobilised from other sources as well as the domestic and international capital markets. These financing systems may include different types of leasing finance.

3.7.182 It must be recognised that the high costs, low profits and long-gestation periods of rail-based mass urban transportation projects do not make them financially viable nor do they yield commercial returns that would be as attractive as in the surface-based/elevated urban MRT projects. The Central/State Governments would have to necessarily participate in the equity of such projects and also consider making certain provisions for interest-free/low interest subordinate debt, incentives for property development, tax exemptions/ concessions, freedom to fix fares, etc. Budgetary and Plan support from the Central and State Governments will be required for these purposes.The resource mobilisation strategy that the Central and State Governments may adopt for financing these activities may include a mix of dedicated levies and taxes on user and non-user beneficiaries of mass transport systems, which may be in the form of additional excise duty/sales tax on petrol/diesel, surcharge on motor vehicle tax, entry fee on motor vehicles entering metropolitan areas, passenger terminal tax (rail, road, sea and air), surcharge on property tax and a mass transportation tax. The proceeds from these levies may be used to finance the capital costs of MRT projects, and also to discharge part of the long-term loan liabilities. The exploitation of air space above and around the metro stations, depots, sheds etc, for commercial and residential purposes could generate a substantial amount towards the project cost, which can form a part of the State Government's capital contribution to MRT projects. Keeping in view these possible developments, there is a need to set up a National Urban Transport Development Fund during the Ninth Plan. This Fund would provide financial assistance for mass urban transport projects in the country, preparation of feasibility studies and project reports and training and R and D activities. Similar Funds at the city level may also be encouraged to meet the share of contribution of the State and the Urbal Local Governments in urban transport projects.

Financial Resource Mobilisation

3.7.183 The wide range of activities that have to be undertaken in the sectoral programmes relating to urban development, housing, water supply, sanitation and transport would require not only a large quantum of financial resources but also their mobilisation on varying terms with respect to their cost and servicing conditions. The funds should be available in such a quantum and on terms that would meet the capacity/ potential of the user sectors in absorbing and servicing them. In some cases, such as housing development and urban transport, there is a strong case for mobilising funds at market cost and then adopting a strategy of cross-subsidisation through different market segments. New housing construction has a good potential to absorb market-sourced/cost funds, especially for the upper market segments, as also public transport services. The lower end of the housing market would need subsidised funds, which should be provided through cross-subsidisation within the housing market. A large part of the rental housing market is also in a position to absorb market-sourced funds. Fiscal incentives such as income tax and property tax would, of course, be a good stimulant.

3.7.184 In the case of other sectoral activities like those relating to water supply, some portion of the funds may have to be mobilised at less than market cost, especially for augmentation of capacity of water supply, but for distribution, which generates immediate income flows, market-sourced funds are likely to be a feasible proposition. This is an activity suitable for privatisation and for accessing funds from thee private sector. The Ninth Plan would promote this route of resource mobilisation.

3.7.185 Plan resources by themselves cannot be expected to meet all the requirements. The well-structured financial sector reforms during the Eighth Plan have opened up the urban sector to a wide range of financial instruments including leasing finance and bond issues, even to urban local governments. International financial institutions are now keen to provide long-term credit, including on soft terms, to urban sector programmes. The Asian Development Bank has provided this type of assistance for the first time in India for some urban projects in Karnataka during the Eighth Plan. Specialised financial institutions have developed a range of term assistance programmes in the areas of housing, urban development, water supply, sanitation and urban transport. A strong financial system has been put into place which can play a significant role in providing the large quantum of financial resources on different terms and conditions to meet the requirements of the sector during the Ninth Plan.

3.7.186 Apart from mobilisation of funds from the domestic and global capital market, it would be necessary during the Ninth Plan for the implementing agencies to reduce the cost of their projects through careful planning of the details of the project, propermonitoring of the implementation so as to minimise, if not totally eliminate, time and cost overruns and ensuring efficiency in operational management. It is important to optimise the utilisation of the assets created, eliminate operational losses and play special attention to recovery of user charges and other tariffs, which also require a significant degree of rationalisation in terms of base and rate. The guiding principle should be full-cost recovery. There is a point of view that full-cost recovery in the initial period may have to be restricted in some sectors to O and M and it may be gradually extended over the Ninth and Tenth Plan periods. The important policy issues are to reduce project cost, optimise utilisation of assets and introduce a realistic pricing policy. These major steps would generate significant amount of internal resources, which could finance the developments in the sector, as well as reduce the total investment requirement.

3.7.187 The implementation of the Constitution Amendment Acts that empower urban local governments and panchayati raj institutions, has to be followed up by reviewing the resource-base of the local governments, both urban and rural, improving tax/revenue administration and rationalising some of the major income sources that have not kept in tune with developments in their areas as well as other economic realities. Active participation of the people in the planning and management of the sectoral programmes is also likely to improve the financial management system and thereby contribute to generation of internal funds for investment.

3.7.188 In this emerging economic and financial scenario, the Plan funds and other subsidised funds should be effectively used as a leverage to mobilise funds from other sources and for very specific programmes included in the Basic Minimum Services (BMS) and those that are targetted to identified priority groups. The leverage strategy was specifically introduced during the Eighth Plan in the Megacity project and the IDSMT scheme. It would be necessary to assess its impact, and if necessary, remove the operational constraints and then extend the strategy to all other sectors.

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