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The impact of the Challenging Economic Times on Local Governments: Strategies for coping with the economic crisis(Reflections from India)
Dr Rajiv SharmaDirector GeneralCentre for Good GovernanceRoad No. 25, Jubilee HillsHyderabad – 500 033 INDIAPh: +91-40-23541952; Fax: [email protected] (Presentation on Oct. 22,2009)
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Structure of PresentationImpact of economic crisis Impact of economic Crisis in India Impact of economic downturn on urban local bodiesStrategies for coping with the challenges of economic downturnReform processUse of ICT and e-governanceLessons
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The Impacts of Economic Crisis on the National Governments
Reduced economic growth estimates
Several currencies weakened due to decline in demand
Reduced credit flows due to liquidity problems
Fiscal pressures due to widening of resource gap Source: The Economist
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Impact of Economic Crisis on developing countries
Inter connected global economyReduced exports adversely affecting income of work forceReduced demand for services – hotel, tourism, IT and Software industryReduced off-shore employment
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Decline in Remittances to Mexico
Source: The Economist
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The Impact of Economic Crisis in India
Several companies shutdown or reduced their operations Domestic demand for economic goods and services fell due to job losses in finance, real estate, retail, travel, hospitality etc.Large number of migrant workers returned joblessReduced remittances from abroadNewly created Special Economic Zones (SEZs) developed for export promotion became unviable Growth tumbled from near 9% to 6% per annum
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Urban population and urban local bodiesUrban Population 27.8 %Total Urban Population 285 MillionPopulation of India 1.02 Billion
As per 2001 Census -No. of Census towns – 4368 No. of Class – I towns – 393 Growth rate – 3.42 %Annual growth rate – 2.73 %
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Indian cities with population of more than 5 million (2001 Census)1. Mumbai (12 million)2. Delhi (10 million)3. Kolkata (8 million)4. Chennai (6 million)5. Bangalore (5.5 million)6. Hyderabad (5.5 million)
No. of cities with population of more than 1 Million : 35
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The Impact of economic Crisis on the Local Governments
Decline in the revenues of local governments due to low economic activity other tax collections decline
Capital works involving large expenditure outlays under risk of
abandonment of work by contractors project cost and time escalation
Decline in demand for housing finance real estate employmentlocal businesses
Source: The Economist
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Property Tax Yields in Urban Local Bodies -Indian Case – Low tax base – Dependence on state and federal fiscal transfers
0.22
0.15%
Percentage of GDP
1.88
1.250.68%
Average for Transitional economies
Total Amount of property tax revenue(Billion Dollors)
High Estimate
Low Estimate
Source: Study commissioned by 13th finance Commission of India on Urban Property Tax Potential in India (NIPFP – July 2009)
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Impact of economic downturn on urban local bodies
Inflationary pressure on urban infrastructure projectsReduced availability of financial capital and credit crunchReduced investments into new infrastructure creationReduced resources for revenue and capital expenditure
In Hyderabad Municipal Corporation the capital account deficit has increased from Rs. 22 million in 2005-06 to 645 million in 2006-07
In Mumbai Municipal Corporation revenue account deficit has increased from Rs. 1246 million 2007-08 to 5510 million in 2008-09
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Strategies for urban local bodies to cope with economic downturn
Urban Governance Reform
Mandatory Reforms
Implementing scheme of devolution of powers to local bodies
Public disclosure and community participation laws
Introducing accrual based accounting
Property tax reform
Optional Reforms
Property title certification system
Improving building permit system
Administrative reforms
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Strategies to cope with economic downturnTargeted use of International Development Assistance (IDA) in priority areas like
HealthEducationCapacity buildingLivelihood programmesSelf-help groups of poorAchieving Millennium Development Goals (MDGs)
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Strategies for urban local bodies to cope with economic downturn
Creation of Mission Mode Projects with Government of India funding like
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) with two sub-missions
Basic Services for the Urban Poor (BSUP)
Urban Infrastructure and Governance (UIG)
Other Central Government Schemes
Integrated Development of Small and Medium Towns (IDSMMT)
Integrated Housing and Slum Development Programme (IHSDP)
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How does down-turn affect the urban poor?
local body’s
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Strategies for urban local bodies to cope with economic downturn
Creation of Special Purpose Vehicles for attracting private and institutional finance
State Urban Finance and Infrastructure Development Corporations at State level such as
TUFIDCO (Tamil Nadu)KUIDFC (Karnataka)APUFIDC (Andhra Pradesh)
Urban Development FundTamil Nadu Urban Development FundWater & Sanitation Pooled Fund
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About JNNURM (Jawaharlal Nehru National Urban Renewal Mission)
JNNURM is a novel programme with reforms as investment catalyst for development for 63 mission citiesIt has a total investment outlay of over Rs 150,000 crores ($30 billion) spread over 2005-2012JNNURM focuses on
Governance reformsInfrastructure improvement Basic services to the poor
JNNURM provides Central funding together with the State & Local Body contribution (10% to 50%) envisaged under
City Development PlanDetailed Project Report
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How reforms improve infrastructure and service delivery to the Poor?
Reforms at urban local body level can lead to:Improved access to physical infrastructure Improved access to social infrastructureImproved financial position for:
Better service delivery performance More investment on capital assets
Equitable distribution of resourceslocal governments, nearer to people, can do better
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Dimensions of Reforms Capacity Building
Technology
RE FORMS
Better Service Delivery
Improved Resources
Efficiency & Effectiveness in resource utilization
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Strategies for urban local bodies to cope with economic downturn
Attracting private partnership through innovative PPP models
Level playing field for private players through user charges/ toll fees for cost recovery
Service contracts for operating a particular serviceNavi Mumbai Municipal Corporation
Joint Venture Development Projects Metro rail development in Bangalore and Delhi
Land leasing & sale as infrastructure financing optionAuction of land by Hyderabad Urban Development Authority
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Strategies for urban local bodies to cope with economic downturn
Pro-poor approach to service deliveryPro-poor budgeting (or, P-budgeting) through internal earmarking of 25% of municipal funds for urban poor
Internal earmarking of land and housing units for urban poor
Providing subsidized credit to urban poor Pavala vaddi (3% interest loans) scheme in Andhra Pradesh
Bringing poor under comprehensive health insuranceAarogyasri scheme of Andhra Pradesh
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What can e-Governance do?
• Better management of emergency health care services
• Tele Medicine • Comprehensive health care : Health Insurance
Scheme with GPS managed Ambulance service with a common Call Centre in the State of Andhra Pradesh
5. FACILITATING HEALTH CARE
• Matching labour demand with skill set • Better targeting of subsidized programmes like
Housing, Public Distribution System, Food and education subsidy, etc.
4. PRO – POOR APPROACH
• Use of GPS based technologies • Better Water Management• Improved waste disposal
3. REDUCING WASTAGE
• Improved grievance redress and user satisfaction
• Better tax compliance and cooperation from citizens
2. BETTER CITIZEN INTERFACE
• Improved collection of arrears of Taxes 1. IMPROVED EFFICIENCY
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Why ICT in Urban Local Bodies?Facility to pay taxes through citizen centers across the stateTransparency in Tax levying - self assessment of property taxIssue of Birth & Death certificates through citizen serves centers Redressal of Grievances through a call centreSwitching over to Double entry accounting system Digital Record of Slum profiles – periodical surveys and analysisTrends and projections for planningPlanning and Management of Poverty alleviation schemesImproving energy efficiency – street lightingImproving efficiency in thorough better project managementOnline Access by citizens themselvesDigitized data on demand
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IT based strategies for improvements in Urban Local Bodies – Case studies from India
IT enabled Solid Waste ManagementDelhi, Hyderabad,
Enterprise Resource Planning for most of the Municipal functions
Mumbai
Citizen Service Centers (e-Seva), Online Grievance Redressal Tracking System (OGRTS)
ULBs of Andhra Pradesh
Property and financial ManagementHaryana Urban Development Authority
House Tax collection, Lease rent collection etc.Goa
Grievance Redress System, Property Tax, e-Procurement
Pune
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Some more case studies
Municipal Corporation of Pune: Grievance RedressalSystem, self assessment of property tax, and e-tendering catering to 3.5 million people.
Municipal Administration System in Goa: Transactions pertaining to house tax collection, lease rent collection, occupation licenses are performed online.
Transaction time reduced drastically from a few days to 20 minutes
Improved revenue collection
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e HUDA – Case of initiative by Haryana Development Authority
Property Management system Financial and accounting system Provides online services to users of property and maintains payment data, delays, penalties, etc., 100,000 users can log on simultaneouslyImproved management of services and increased revenues
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eSeva – IT enabled Citizen Service Centers in Andhra Pradesh, India
About 300 centers across stateNumber of transactions upto 120 thousand per day –collections up to of Rs.200 millionMany services under single roof8.00 AM to 8.00 PM Maximum 20 to 30 minutes of transaction timeSerene atmosphere No corruption
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eSeva – IT Enabled Citizen
Service Centers of Andhra Pradesh
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Call Centre design to handle citizen grievances in urban local bodies
Classify Complaints
Multiple Channels
Fixing Responsibility & Accountability
• Area-wise• Subject-wise• Functionary-wise
• Telephone• email • Web-based application• Post
• Citizen charter • Automatic Escalation• Online Tracking Status
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HOW TO REGISTER
GRIEVANCES
Multiple Channels
HOW TO TRACK STATUS
SMS, Web
HOW TO FORWARD
SMS, Web
HOW TORECORD ACTION
SMS, Web
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IT - enabled management of grievances for improved municipal services
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3rd Tier3rd Tier
Operator Terminals With Printers
2nd Tier2nd Tier
1st Tier1st Tier
Call Centre Operator
LevelLAN 1
INTERNETLeased Line
ISDN
AplnServer
DB Server
LAN 1
LAN 1
Central ServerLevel
FunctionaryLevel
Data Centre
GSM PhoneGSM Phone
All level Functionaries
Citizens/ All level functionaries
Dial Up
SMS MediaSMS Media
Router
Web Appln./ SMS
Internet MediaInternet Media
Online Grievances Redressal Tracking System -Network Diagram
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Using Technology for Solid Waste Management : Case of Delhi (2008)
Daily generation of Solid Waste - 6000 TonnesElectronic Monitoring of Refuse Removal Trucks (RRTs), Loaders and Bulldozers to dragWeigh and move – GPS based Solid Waste Transport Management SystemProper event-logging and alerts on performanceImproved profitability of waste collection by private operators and increased revenues for the local governmentImproved public health, control of disease vectors and reduced disease burden
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IT - enabled services in Municipal Corporation of Greater MumbaiCovers 70% of functionsERP based IT Services:
Health Services Shops and Establishments Licenses Building and Factory Garden and Trees MaintenanceWater Works Market Department Check Application Status Complaints
Handles more than $ 4 billion worth financial transactions per year
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Green initiativesEnergy generation from sewage –Surat Municipal Corporation
Energy Audit: Surat Municipal Corporation saved 1.54 million kwh/year by changing to FL lamp –60% recovery of investment in the same year
Bangalore Municipal Corporation – Energy saving measures in street lighting using an Energy Services Company (ESCO)
Gas storage system
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Lessons for future
Ring fencing of the poor by adequate resource allocation to take care of their vulnerabilitySpecial emphasis on affordable housing to reduce the risk of mortgage crisisEfficient resource mobilization and creation of specific funds to take care of vulnerable sectionsConstant reforms to improve services, efficiency and engaging citizens in participatory governanceImproving resource base and assets managementUpgradation of technology and consolidating e-GovernanceHelp to Local bodies from federal government in a substantial manner with incentives for governance and economic reforms
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Thank You
