Capacity Building Brochure

Capacity Building of ULBsAn urgent imperative*

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Capacity Building of ULBs: An urgent imperative*

PricewaterhouseCoopers

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In Summary

The rapid urbanization in the country over the past two decades challenges political leaders and municipal managers to find new and more effective ways of managing their cities. This entails the creation of a conducive and enabling environment for ULBs to effectively perform their functions, and for city managers to acquire the knowledge, skills and expertise necessary to plan, manage and govern their cities.

The general experience with municipal management in India has been that there is a vast pool of personnel of municipal employees but most of them lack proper education and training for doing justice to their functional responsibilities. It is widely accepted that professionalisation of ULBs is an urgent need to address a wide range of critical issues be they citizen service related issues (such as provision of basic and essential services; complaint redressals, payment of taxes/ user charges, etc.), planning related issues ( such as inclusive planning, environmental considerations, sustainability, etc.) or organisational issues (such as organizational structure and roles; human resources planning, recruitment, selection and career advancement; employee and labour relations), or financial issues (such as resource availability and utilization; financial sustainability, etc.)

PwC has a long standing and unrivalled experience across the entire spectrum of urban management and municipal reforms including institutional strengthening. PwC is currently assisting the Mission Directorate, Ministry of Urban Development in the programme management of India’s flagship urban sector programme – Jawaharlal Nehru National Urban Renewal Mission (JNNURM). PwC’s role includes - providing technical support; developing and implementing monitoring and evaluation systems for projects and reforms; enabling municipal financial reforms and supporting capacity building initiatives. This comprehensive programme plans to integrate – training and skill development; expansion and improvement in supply side of training in urban sector including certification; reforms in regulation related to staffing and HR management; and hand-holding support in transformation of systems and processes.

This paper discusses various approaches towards capacity building of ULBs based on PwC’s experiences of working in the urban sector.


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The Urbanisation Phenomenon The twenty-first century is being characterized as the first Urban Century with a majority of world population living in cities. Cities in India, especially in the past two decades, have been experiencing rapid growth that is unprecedented. The urban population has increased from 21% in 1971 to around 28% in 2001 (Figure 1). Certain projections indicate that in the next two decades urban population would grow more than fifty percent.

Figure 1: Percentage and growth rate of urban population since 1901

Source: Prof. Amitabh Kundu, Trends in Urbanization, India Infrastructure Report 2006,

Sr. No. Categories of cities / towns based on population

No. of cities/ towns

1 Million plus 35

2 500,000 – 1,000,000 39

3 100,000 – 500,000 323

4 50,000 – 100,000 407

5 Under 49,000 3574

Total 4378

Source: Census of India: 2001

A significant feature of the Indian urbanization scenario has been the increasing concentration of urban population in the million plus cities. For example, , in 1901, Kolkata was the only metropolitan city in the country. The number of metropolitan cities increased to 5 by 1951, 12 in 1981, 23 in 1991 and 35 in 2001. The 35 million-plus cities together account for about 39 per cent of urban population of the country.

The growing urbanization makes the scale and complexity of urban governance daunting. Indian cities have been experiencing rapid change characterised by burgeoning population growth, pressure on urban services and infrastructure, competitive forces driving inward investment into cities and the need to create a socially, economically and environmentally conducive living space. The rapid urbanization in the country over the past twenty years challenges political leaders and municipal managers to find new and more effective ways of managing their cities. Meeting these challenges has not been an easy task and continues to be a major factor in determining the city’s success in overcoming infrastructure, economic and community development issues.

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1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001


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Historically, the states controlled the local government through administrative, fiscal, and planning policies. Local self-government is a state subject under the Constitution. However, the 74th Constitutional Amendment provides a constitutional form to the structure and mandate of urban local bodies to enable them to function as effective institutions of self-government. It aims to empower urban local bodies by the devolution of functions, planning responsibilities, a new system of fiscal transfers and the empowerment of women and weaker sections of society. It envisaged a new era of government-people participation in the field of planning and implementation.

Though political devolution has taken place in most states, fiscal and administrative devolution has not been fully achieved in the true spirit of decentralization. The ULBs which have been specifically mandated to extend basic urban services are experiencing inability to cope with the unprecedented demand due to – 1. insufficient resources

2. limited reach of services

3. deteriorating quality of existing urban infrastructure

4. rising service demand and short fall in investments and

5. inadequate capacity of staff including their inability and unwillingness to adapt to changing needs.

The implication of this for ULBs is to continuously upgrade their capacities and capabilities to achieve higher level of organizational effectiveness.

The objective of this paper is to discuss the various approaches for enhancing the capacity of ULBs based on PwC’s experience of working in the area of institutional reforms and capacity building at ULB, state as well as national level.

Need for Municipal Capacity BuildingThe general experience with municipal management in India has been that there is a vast pool of personnel of municipal employees but most of them lack proper education and training for doing justice to their functional responsibilities. Today management of complex urban living is an astounding task requiring a host of qualified personnel. Effective management depends upon adequate availability of administrative, professional and technical personnel.

Capacity building is a process of acquiring new ideas and knowledge to strengthen an organization’s vision, structure, direction and talent and enable it to contribute to common goals. In the case of ULBs, capacity building is expected to make the administrative machinery more efficient, accountable, people-friendly, responsive and transparent with a view to improve the delivery of services to the people. The two important components of capacity building are:

• Human Resource Development: A progressive enhancement of latent capabilities and talents; establishment of optimal staffing incentives, structures and appropriate monitoring and development of skills to ensure the organization’s growth from within to achieve its objectives.

• Training: Systematic instruction and practical experience in a profession or occupation with a view to achieving the greatest proficiency in it.

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Figure 2: Components of Capacity Building

History of Municipal Training in IndiaThe Committee on Training of Municipal Employees (Nuruddin Committee), in its Report in 1963 appreciated the need for providing training to municipal employees and recommended setting up of training institutes at the central and regional/state levels for imparting comprehensive advanced training to all levels of municipal employees as well as to elected political leaders of Municipal bodies. Besides, these training institutes were expected to set training standards and conduct research in municipal management and other related sectors. The Committee’s recommendation was accepted in a modified form. Training centres and institutes were established in New Delhi and also at Lucknow, Hyderabad, and Mumbai. Later on, several other institutes were established in other parts of India for imparting training on a regular basis.

The training for municipal personnel in India was first initiated by the Local Self-Government Institute (later renamed All-India Institute of Local Self-Government) in Mumbai in the year 1926. Later some universities started diploma courses in Municipal Administration. Indian Institute of Public Administration, New Delhi, has been extensively involved in training of municipal personnel since the 1960s. This was followed by the RCUES (Regional Centres for Urban and Environmental Studies) in Mumbai, Lucknow, Hyderabad and Kolkata in the 1970s and 1980s.

Based on our understanding of the sector, capacity building of ULBs needs a holistic approach beyond regular training (see Figure 2) to include strengthening of:• Managerial capacity: Recruitment, performance appraisal,

day-to-day operations, efficiency, accountability, responsiveness.

• Technical capacity: Improved skills, to perform regular functions and to design and implement new projects.

• Financial capacity: Resource generation, investment efficiency, rules, regulations.

• Institutional capacity: Institutional arrangements, organizational reforms and restructuring, autonomy.


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enhancement programs. Capacity building of ULBs is an area of immediate concern and it has to be looked at beyond the usual training programmes. Human resource development of ULBs need to address a wide range of critical issues such as organizational structure and roles; human resources planning, recruitment, selection and career advancement; employee and labour relations; clarity on authority and responsibility between the ULB and the parastatals involved in service delivery; capacity and capability of the personnel in the local bodies; resource availability and utilization; performance management; etc. Only a handful of states such as Maharashtra, Andhra Pradesh, Tamil Nadu and Madhya Pradesh have made attempts, in recent years, to look more systematically at the needs for staff development.

Assessing the training demandIn JNNURM the first step taken in capacity building of ULBs was to develop a preliminary database to map the profile of existing staff and their skill development needs within the 63 Mission cities (including the parastatal agencies involved in infrastructure development and service delivery). A TNA template was designed and circulated to the Mission cities. Although the information from cities was slow, incomplete, and unclear in parts, perhaps evidence in itself of low capacity; it revealed definite trends. The exercise also made cities recognize the weaknesses in their system and need for skill upgradation and more systematic HR planning.

National Training PolicyThe National Training Policy and its operational guidelines issued in 1996 are an important development aimed at capacity building in ULBs for responsiveness, awareness and commitment to reform. Some states are attempting to restructure their services and training arrangements in accordance with the National Training Policy. However, the imperatives of these changes have yet to percolate down as less than half of the departments/agencies have any continuing arrangements for administrative improvements or provisions for training their employees. The National Training Policy provides the framework for the development of the human resources of government. The policy, inter-alia, emphasizes the need for training all employees so as to increase the professionalism of the administrative services at all levels.

The policy also stipulates that training should be imparted to all civil servants at the time of entry into service and at suitable intervals in the civil servants’ career. It emphasizes the need for development of suitable infrastructure for training. It mentions the desirability of using distance learning methods, providing opportunities for development of knowledge and skills of trainers and evaluation of training. State Governments were separately requested to formulate their own State level training policies, and some of the states like Karnataka, Kerala have framed such state specific policies.

Our Understanding of ULB Capacity BuildingIt has been observed that the overall demand for capacity building and HRD services among the ULBs is limited, sporadic and event based with no evidence of systematic planning, resource allocation or execution of skill

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• The proportion of Class I and II officers tends to be low. With the exception of a couple of cities, the average of proportion of Class I and II to overall staff was as low as 1.2%. This indicates very thin top management and technical staff, affecting the efficiency of the ULB. In the smaller cities not only were the proportions very thin, often several positions were lying vacant for long periods.

Figure 3: Class wise staffing pattern in ULBs

Class I Class II Class III Class IV

1% 2%

24%

73%

• The proportion of staff that had accessed trainings appeared to be sporadic and event based. There seemed a lack of systematic HR planning or training calendars for all staff and, most often, training was accessed by the higher level staff only. Further there were some ULBs that had not accessed any training for the past two years.

• The traditional pattern of staff intensive services reflected a focus on sanitation, sewerage and solid waste management; engineering and public works had a second level of priority. Very limited staff was deployed for property tax and revenue generation. Understandably, computers/MIS had the least proportion of staff, hovering around 0.2%.

• An interesting element of the TNA was a self assessment by the ULBs of their competency across key functional areas on a 3 point scale (where level 1 indicated the lowest rating and level 3 the highest competence). Although the data was not precise, it was noted that with the exception of few cities, most ULBs rated themselves at mid / low levels of competence.

Source: www.jnnurm.nic.in

Some highlights of the TNA are summarized below:


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The first attempted large scale TNA in 2006 highlighted the enormity of the task. The task is particularly challenging as there are very limited number of ongoing capacity building programmes with adequate scale and coverage in the country. A handful of institutions offer a limited number of “conventional” courses which are highly inadequate to meet the requirements of skills in the current urban management environment. The exercise was useful in planning activities to address the emerging issues.

Capacity Building Approach PwC’s experience of working with the urban sector has shown that professionalisation of urban management capacity requires a two pronged approach namely, lateral infusion and/or capacity upgradation (refer Figure 4).

Figure 4: Capacity Building Approach

Lateral entry of qualified personnel from industry / private sector into municipal management can improve municipal capacity building in certain skill areas in the functions of accounts, public health, and engineering departments etc. of the ULBs. Outsourcing of technical services can also prove crucial in improving municipal capacity through improved efficiency of services. Capacity upgradation can be brought about either by outsourcing or contracting the municipal services. Alternatively, the capacity of the existing municipal staff can be enhanced through regular certified training programs.

PwC took the opportunity to test this approach in JNNURM. A comprehensive Framework for Action (FFA) for Capacity Building was formulated after due consultations. The FFA aimed to collectively enhance knowledge and skills of municipal staff, promote greater cross learning and provide resources for lateral recruitment of well qualified professionals from the open market in the interim, with the long term

objective of encouraging states to professionalize municipal service by establishing a dedicated municipal cadre. Capacity building of elected representatives who play a critical role and expansion and strengthening of training delivery institutions was also given due priority. The long term strategy however aimed to systematize and energize both demand and supply sides to achieve sustained access to quality capacity building services, based on individual city needs, rather than a blue print across all cities.

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Skill development through training Based on discussions with cities and findings of the TNA exercise undertaken, a Rapid Training Programme (RTP) was rolled out in Sept 2007 to address training needs for skill upgradation of Mission cities. The objective of the RTP was to address core competencies in the following three prioritized areas of Governance and Reforms, DPR Preparation and Project Management and implementation, to start with.

A total of 51 programs were conducted which were attended by over 1800 participants from municipalities and parastatal of the 56 Mission cities. Over 2000 Elected representatives of 45 cities participated in two day orientation on Governance and Reforms. Except for a few cities which did not participate, by and large, the response was good especially the high participation from North East (in Shillong and Itanagar) and an exceptional number (around 75) from Puducherry. With a few exceptions all programs were conducted at the city level for Module on Governance and Reforms and in clusters close to cities for the remaining programs. Many cities have expressed the need to nominate their staff for training to some of the institutions and have agreed to bear the training costs as well. The institutions have identified a group of “Change Agents” in each cluster to act as local resources for future training. Thus we clearly see an emerging shift in the attitude of the ULBs towards training of staff.

The RTP was a first consolidated effort to address the issues of low capacity to prepare and implement projects and institute the mandated reforms in JNNURM cities. The program targeted staff from ULBs, parastatals and the elected representatives. For the first time attempts were made to cover all cities as close to their doorsteps as possible to expand access on one hand and capture the views of the field staff and elected representatives.

The processes involved some radical changes in the delivery mechanisms and greater financial discipline in contracting, linked to deliverables.

Overall, the RTP had succeeded in filling a significant void in systematic efforts to develop skills across the board among municipal staff and elected representatives. It has also set the scene for some radical changes in operating procedures to bring about greater financial discipline to capacity building grants which have tended to be fairly open ended. More specifically, the key lessons are:• A remarkable increase in the access to quality skill

development opportunities is one of the most evident and desired outcomes of RTP. The orientation of elected representatives who play a critical role in ULB management had special emphasis and mobile teams travelled to almost all of the selected cities to ensure maximum participation of councillors, particularly the female members.

• The field reality validates the strategic decisions of implementation of three prioritized modules; use of mobile teams to deliver training close to the cities.

• ULBs in general, saw the merit in the RTP and clearly there appears to be an emerging shift in the attitude of the ULBs towards training of staff. Several ULBs have subsequently allocated an annual budget for capacity building.

• RTP was instrumental in bringing the municipal and parastatal staff and the training institutions in close touch with each other. Even after the completion of the training programs, the ULBs continue to send queries to the Virtual Help Desks set up at the Hub Institutions.

• The RTP was a litmus test of the capacity of institutions as well and clearly there is evidence that that the existing institutions do not have the capacity and the bandwidth to meet the increasing demand for skill up gradation in the urban sector.

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• There is a need for greater synergy between institutions for cross learning and knowledge sharing.

• There is a need to conduct “training of trainers” for local Institutions/ ULBs etc, to build a local trainer base for future capacity building for all levels, in the local language

• While the RTP resulted in quality control of curriculum and training materials, there remains tremendous scope for further improvements; as well as translation of material into local languages, particularly for elected representatives.

The PwC team took the initiative to document the RTP experiences and lessons learnt in form of a short video film of 15 minute duration, which has been provided in the pouch at the end of the brochure. The film aims to trigger greater interest in skill development and addressing HR issues systematically among local bodies and parastatal agencies.

Lateral RecruitmentPwC’s recommendation of lateral infusion of skill sets to enhance the capacity of ULBs was accepted by the Ministry of Urban Development. In the long run, MoUD is encouraging states to professionalize municipal services by creating a dedicated state municipal cadre. Two meetings of state secretaries were held in 2007 to discuss the subject. However, in the interim it was proposed to provide financial support for establishing PIUs and PMUs at the ULB and State level Nodal Agency (SLNA) levels respectively. The Programme Management Units and the Project Implementation Units, were conceptualized by the PwC team as institutional support structures at the state and city level for improving the pace of implementation of reforms and projects. The team further assisted the Mission Directorate in drafting toolkits to guide the states and cities for setting up PMUs and PIUs.

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Cross LearningPwC believes that networking is an important tool for knowledge sharing. To support our work in the area of Urban Management, we have an internal network of urban sector practitioners, the PwC Global Cities and Local Government Network, who lead our work with major municipalities / city governments across the globe, delivering a wide range of financial support and advice as well as performance improvement, procurement and policy advice and project development support. This network includes partners from United Kingdom, Sweden and other Scandinavian countries, Japan, Australia, Canada, South Africa, India, China, North and South America and much of Europe and provides us with an opportunity to share our detailed working knowledge of major municipalities in a range of economies across the world. The network meets approximately 2 to 3 times a year to share emerging and best practice in local government finance and management, and to commission and conduct original research on common issues and trends. The network exchanges its work products, experiences and ideas around the world through PwC’s internal knowledge management systems.

Learning from the experience of PwC Global Cities and Local Government Network a recommendation was made to initiate such networks among JNNURM cities. This new idea was readily accepted by the highest authorities in the Ministry. Thus “Peer Experience and Reflective Learning” (PEARL) was launched by Hon’ble Union Minster to encourage JNNURM cities to actively pursue activities for cross learning and sharing best practices on urban reforms and city governance so that objectives of the mission are successfully achieved.

The following five groups were created after discussions with the JNNURM cities:1. Mega Cities with Global Character

2. Major Industrial Cities

3. Mixed Economy Cities

4. Cultural and Religious Cities

5. Hill and Environmentally sensitive cities

The National Institute of Urban Affairs (NIUA) was appointed as the National PEARL Coordinator for creating interest among cities by conducting a series of thematic workshops, publishing newsletters and developing a PEARL website to share best practices.

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Learning and Knowledge Management Our experience shows that in addition to formal training there are a range of activities that could be explored for updating skills. There are innovative ways of capacity building hitherto not followed routinely such as: • Creation of “forums” to deal with specific challenges/

problems can help with the development of staff as well as exposing staff to other ideas through multi-media, hands on group exercises, use of internet sites, etc.

• Periodic (two-monthly) in-house seminar/meeting series, targeting developments in issues relevant to ULB/parastatal institutions that allow for greater dissemination of information and increases the effectiveness of communication channels. These seminars may be delivered by in-house staff or by external speakers.

• Creation of Incentive Fund within the ULB to motivate staff to take initiatives for self development with specific time-bound projects. Development opportunities could include overseas visits, conferences, research on the job and full time study in urban management etc.

• Development through working with other organizations. Acknowledging the need to minimize disruption to operations, the ULB/parastatal may develop a placement program whereby staff may be posted out to other relevant organizations/ULBs for a short period with the aim of gaining knowledge and experience on a focused subject. For example, the accountant of a relatively small ULB may work with a more advanced system of a larger ULB that has migrated to the double entry accrual based accounting system. Although there will be issues of sparing staff time off the job, it is also true that there is a huge pool of unutilized time due to staff idling.

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Strengthening the Demand side• Leveraging existing premier and credible national

institutions and private sector agencies, to develop courses, such as a Diploma in municipal finance, management of municipal services. IT for urban governance, participatory approaches with special attention to meeting needs of urban poor etc.

• Further, with the advancement in the IT sector, the development of virtual universities to meet rapidly expanding needs of the urban sector offer tremendous scope for E-courses, particularly for in-service personnel.

• There is also an unmet demand for Certification Programmes of longer duration for officials with opportunities for sustained mentoring and technical support to officials attending the certified courses by the Institute that conducts them. Such courses in urban management spread over six months, with a combination of course work at the institute, field studies, cross visits and contact programs are being conducted by some institutes. In the long run certification should be linked to incentives and career progression to encourage staff to develop skills and perform more efficiently on the job.

• The ULBs should be encouraged to earmark budgets for certification courses by creating an Incentive Fund to encourage greater interest and participation in skill enhancement.

Finally, a demand based competitive market for supply of training is expected to emerge which is likely to ensure higher quality. It is hoped that in the long run, ULBs would be willing to nominate staff and bear the cost of training.

Lessons learnt and way forward Based on the experience of programme managing the capacity building initiatives at national level it is quite evident that the demand for comprehensive skill development of staff is an urgent imperative for efficient functioning of ULBs. However, the range of competent institutes providing training and HRD support to the urban sector in the country are limited in number and scope of operation to match the extensive demand. It is recommended to systematize and energize both demand and supply sides to achieve sustained access to quality capacity building services.

Expanding the Supply side• It has been widely acknowledged that there is clearly

a need to move beyond a purely public sector supply response to in-service training demand, given its limitations in terms of scale, innovation, and efficiency. Our recommendation is to continually examine ways to increase the involvement of existing public sector institutions, private sector, NGOs, professional bodies, university and technical institutions in enhancing the capacity to train credible professionals for the urban sector.

• Traditional training institutions should collaborate with technical institutions of national or international repute such as IITs, IIMs, Regional Engineering Colleges etc to prepare subject specific, good quality training curriculum and course material.

• The training institutions should focus on creating a local pool of trainers through extensive Training of Trainers (ToT) programmes.

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