Annual Operating Plan (AOP)

BRIEF RESUME OF THE DEPARTMENT

It is important to note that the contribution of urban sector to GDP is currently expected to be in the range of 50-60 percent. Cities hold tremendous potential as engines of economic and social development, creating jobs and generating wealth through economies of scale. They need to be sustained and augmented through the high urban productivity for state's economic growth. State’s economic growth and poverty reduction efforts will be increasingly determined by the productivity of these towns. This in turn depends on attaining efficiency and equity in the delivery and financing of urban infrastructure.
The total annual investment needs of sanitation, roads sectors ,housing facility of masses, proper drainage system, maintenance of traffic and parking areas, maintenance/beautification of parks/open spaces, etc, are huge whereas funds to that extent are not available. To overcome these constraints and challenges, the Ministry of Urban Development has initiated institutional, fiscal and financial reforms. First generation urban sector reform - known as the 74th Constitutional Amendment Act of 1992, recognizes the principles of local self governments and empowers urban local bodies with financial resources through Central Finance Commission and State Finance Commissions. Subsequently, in order to strengthen these local bodies, second generation reform have also been started. In the last decade, enormous progress has been made in removing impediments to efficient investment.
Citywide reforms and restructuring will, however, result in significant transaction costs during the period of transition. Leaving cities to finance these costs by themselves will delay and make it difficult to implement these reforms. It is to partly offset this disadvantage that the Ministry of Urban Development is proposing to set up a performance based City Challenge Fund for catalyzing city level economic reform programmes. The resources from the Fund would be given as grants but should ideally be matched by equal allocations either from the cities themselves or from the respective State governments. Access to the fund would be on a competitive-basis.
In conclusion, it is evident that the New Economic Policy launched in India, did see several important initiatives in the urban sector designed to encourage private sector participation in urban infrastructure projects. These initiatives would need to be taken to their logical conclusion. A series of new Reform Measures are being put together for implementation during the period. On the line action the state Govt. will support the initiatives taken by the Central Govt. under different programmes.



Annual Operating Plan (AOP)

BRIEF RESUME OF THE DEPARTMENT

It is important to note that the contribution of urban sector to GDP is currently expected to be in the range of 50-60 percent. Cities hold tremendous potential as engines of economic and social development, creating jobs and generating wealth through economies of scale. They need to be sustained and augmented through the high urban productivity for state's economic growth. State’s economic growth and poverty reduction efforts will be increasingly determined by the productivity of these towns. This in turn depends on attaining efficiency and equity in the delivery and financing of urban infrastructure.
The total annual investment needs of sanitation, roads sectors ,housing facility of masses, proper drainage system, maintenance of traffic and parking areas, maintenance/beautification of parks/open spaces, etc, are huge whereas funds to that extent are not available. To overcome these constraints and challenges, the Ministry of Urban Development has initiated institutional, fiscal and financial reforms. First generation urban sector reform - known as the 74th Constitutional Amendment Act of 1992, recognizes the principles of local self governments and empowers urban local bodies with financial resources through Central Finance Commission and State Finance Commissions. Subsequently, in order to strengthen these local bodies, second generation reform have also been started. In the last decade, enormous progress has been made in removing impediments to efficient investment.
Citywide reforms and restructuring will, however, result in significant transaction costs during the period of transition. Leaving cities to finance these costs by themselves will delay and make it difficult to implement these reforms. It is to partly offset this disadvantage that the Ministry of Urban Development is proposing to set up a performance based City Challenge Fund for catalyzing city level economic reform programmes. The resources from the Fund would be given as grants but should ideally be matched by equal allocations either from the cities themselves or from the respective State governments. Access to the fund would be on a competitive-basis.
In conclusion, it is evident that the New Economic Policy launched in India, did see several important initiatives in the urban sector designed to encourage private sector participation in urban infrastructure projects. These initiatives would need to be taken to their logical conclusion. A series of new Reform Measures are being put together for implementation during the period. On the line action the state Govt. will support the initiatives taken by the Central Govt. under different programmes.