The mission, launched to beef up medieval infrastructures across 63 identified cities, is just the beginning The mission is firmly on track in terms of implementation The JNNURM is a hesitant first step towards private public partnership in urban planning. If implemented well, it could help alter the landscape of our towns and cities

URBAN PLANNERS are finally beginning to breathe a little easier. But just a little. India's municipal corporations municipal corporations remain among the world's most underpowered and poor service providers. Responsible for the upkeep of India's urban environment, they have neither the financial muscle nor technical wherewithal to bring about a significant change. The parliament has debated and state legislators have enacted laws, but sadly, things have remained pretty much where they have been. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) launched in 2005, is the first step towards making a dent in that creaky structure and three-and-a-half years down the line, it remains a shaky step ahead.

Aware of poor finances, private companies are joining hands with municipalities to bring about changes and the first results appear promising.

Consider the following. The Indian economy is growing at an average rate of 7 per cent annually and planners are agreed that cities remain the main drivers of this economic growth. About 60 per cent of India's GDP is produced in urban agglomerations, which in itself presents challenges posed by rapid and unplanned growth of cities. The projections tell a story.

The 2001 census says 28 per cent of India lives in cities; by 2021 it is expected to increase to 39 per cent and by 2051, half of the country and by 2051, half of the country will be urbanised. An awesome thought.

Union urban development minister Jaipal Reddy told FC Estate: ``The biggest challenge we face is managing urban space. The involvement of private sector will go a long way in helping the situation.'' (SEE INTERVIEW) There is merit in what the minister is saying.

For private sector companies seeking opportunities in India's municipal services, it is a sound beginning. The JNNURM, launched to beef up medieval infrastructures across 63 identified cities, is just the beginning. With a budgetary allocation of Rs 50,000 crore to be spent over five years, the project has for the first time seen urban local bodies roping in the private sector in creating new assets, refurbishing old structures and assist in day to day operations and maintenance. If exploited well, the volume of the business could be substantial.

As would be the task of doing business. For the private sector, the main areas of interest are in water supply or waste management, no mean tasks both. According to estimates provided by the Central Pollution Control Board, 26,254 million liters per day (mld) of waste water is generated in these cities and towns. Against this, the capacity for waste water treatment is a measly 7,044 mld. The task would appear difficult, if not downright impossible.

Then the question of management of solid waste. An estimated 1,15,000 million tonnes of municipal solid waste is generated daily.

Pitched against this, collection efficiency is about 70 per cent in metros, but below 50 per cent in smaller towns. Urban local bodies spend Rs 500 to Rs 1,500 per tonne on solid waste collection, transportation, treatment and disposal. Of this, about 70 per cent is spent on street sweeping, 20 to 30 per cent on transportation and less than 5 per cent on final disposal, revealing in the process that very little attention - if at all - has been paid to scientific and safe disposal of waste.

Cities such as Chennai, Tirupur and Jamshedpur have shown the way when it comes to encouraging private participation in municipal services. CES Onyx, an arm of the French water and waste management giant Veolia Group, recently completed a seven-year contract for collection, street sweeping and transportation of waste in Chennai. Veolia has since won contracts to improve water supply in three towns in Karnataka -- Belgaum, Hubli-Dharwad and Gulbarga -- and Nagpur in Maharashtra.

In Tirupur, near Chennai, Mahindra Water Utilities--a joint venture between Mahindra & Mahindra and United Utilities International of the UK--maintain the town's water supply and sewerage project. Ditto Jamshedpur.

Here, the Jamshedpur Utilities and Services Company (Jusco), a Tata Steel town division unit, has been providing the township with munic ipal services for many years now. In fact, Tata Steel corporatised the division into a fully-owned subsidiary in August 2003 to help transform this profit centre into a commercial customer-oriented organisation. The company now hopes to leverage its experience in the city and is reportedly close to finalising a deal in Kolkata.

"The real challenge in municipa services is not creation of assets, rather the management of service.

Globally, many countries recycle about 50 per cent of their waste water and use garbage as compost or fuel for generating power. In India, other than some five-star hotels, only a few cities have a three-stage waste water treatment facility. It is estimated that 30-40 per cent of the treated water is unaccounted for due to leaky underground pipes, unauthorised connections, illegal tapping and sheer official negligence. Even in New Delhi, about 20-30 per cent of treated water remains unaccounted for. This is a common problem that can be contained if there is some degree of accountability in the system,'' explains Keshav Varma, head, global urban programme, World Bank Institute, and an expert in urban development, water and disaster management.

According to Varma, to improve accountability, there is need to separate the asset owner from the service provider, particularly if the private sector has to be involved more deeply. In addition, the interest of the consumer has to be kept in mind. But most experts are agreed that the reforms menu prescribed under the JNNURM may address the problem only partially. To find a more long term solution to the urban infrastructure deficit, technology is key along with management expertise. It is here where the private sector role becomes pivotal.

V Suresh, former Housing and Urban Development Corporation (Hudco) chairman, estimates that India would need to invest at least Rs 3,50,000 crore over the next 10 years to upgrade urban infrastructure. "Thus, Rs 50,000 crore, together with an equivalent contribution from the state governments, which will be spent in the 63 cities is, but, a small drop in the ocean,"

he says. Of this, 75% of the money is to be spent on urban infrastructure, it would have to be spread neatly across various utilities like urban transportation and parking lots.

The private sector could be engaged through various modes--service contracts, man agement contracts and longterm lease agreements.

Other ways of implementing this public-private partnership, such as the build-operate-transfer and build-own-operate-transfer mechanisms, could also be used.

No one at the moment though, is suggesting full privatisation of water. Only two countries--the UK and Chile--have privatised water as an asset. Incidentally, the $10billion Veolia Water has emerged as a significant player in China's water management business. So far, it has won 23 major contracts for complete management of drinking water service and the operation of wastewater treatment plants at Shenzhen, Kunming, Liuzhou and Lanzhou, some of which would run for the next 50 years.

India, in comparison, remains far behind. Most contracts handed over to the private sector for water supply and waste management run for five years. But experts say that private sector participation in water and waste management would build up over the next few years.

Many big players are expected to jump in the fray as the policy becomes friendlier and more amenable to private participation.

Going forward, the policy framework should provide enough incentives for the private sector to be in business for the long-term. That would require concession agreements that would leave enough on the table for the company. "In activities such as waste management, you need a concept of `tipping fees' for a venture to become successful," says Pooja Kumar, a Torontobased urban planner. The fee charged to individuals, businesses and waste haulers to dump trash in the landfill is fairly common in many countries, including the US and Canada, and it helps subsidise waste management programmes, she says.

Mushrooming townships across the country also would open doors for private players. But for large corporations, much of the expansion would depend on how the urban renewal programme rolls out. Of course, critical to the success of JNNURM is the role played by state governments in putting up a counterpart fund. And the state governments are, apparently, responding.

"We have received a lot of demands from various state governments for including more cities in JNNURM, but there are no immediate plans for accepting them," housing and urban poverty alleviation minister, Selja Kumari, told Rajya Sabha recently. But an official in her ministry said on background that the World Bank might lend $500 million for those cities, which are not covered under JNNURM. The demand for better amenities in urban areas is going up and that can be considered good news.

But until that happens, a handful of contracts awarded in water and waste management remain pure pilot projects. But there yet remains hope. ranjitbhushan@mydigitalfc.com People constantly harp on urban chaos and decay. What is your view?

When a billion people are moving inexorably and inevitably towards urban centres without much planning, such expressions come into play. There is no question of decay. It is a problem of economic development.

How has the JNNURM progressed?

Three-and-a-half years after its launch, progress under the mission is commendable. In terms of physical and financial achievements, under component of urban infrastructure and governance, the mission has approved 463 projects totalling to Rs 49,743 crore with an additional central assistance commitment of Rs 23.543 crore till June 2009. The mission is firmly on track in terms of implementation after the initial teething problems and capacity issues. As of March 2009, over Rs 9,100 crore worth of physical works in various projects have been implemented. The pace of implementation has picked up significantly with utilisation of funds having doubled in the last financial year, as compared to the previous year.

Out of the 463 sanctioned projects, 32 projects have been succesfully completed and 68 projects are in fairly advanced stages of implementation.

What has happened so far is just the tip of the iceberg, while urban problems are gargantuan.

In terms of the size of investment, population coverage and the broad-spectrum reforms that it seeks to put in place, JNNURM is the single-largest government initiative in the sphere of urban development.

Since its inception, JNNURM has created a profound impact on urban landscapes nationwide through several reforms in infrastructure, urban services, and governance. It has also augmented the revenue stream of municipalities so as to encourage the suppliers of capital to change their ways of financing urban infrastructure and basic services to urban poor.