Improving lives: Urban Infrastructure

4 Years agoTo improve the quality of life, the Indian government has launched several urban development schemes.

According to the Ministry of Urban Development, ‘Urban Infrastructure’ should be equipped with all the necessary facilities. It should give a decent quality of life to its residents, promising clean and sustainable environment by applying smart solutions in the domain of sanitation, waste management, public transport and governance.


Why India needs improvement in Urban Infrastructure?


Nearly 31% of India’s current population lives in urban areas contributing to 63% of India’s GDP (Census 2011) and with increasing urbanisation, urban areas are expected to house 40% of India’s population and contribute to 75% of India’s GDP by 2030.1 India’s urban growth is largely concentrated in large cities with a population of 100,000 or more, the number of cities with a population exceeding 1 million has increased from 35 in 2001 to 53 in 2011, accounting for 43% of India’s urban population, and is expected to be 87 by 2030.

With an aim to improve the quality of life and attract investments to the City, setting in motion a virtuous cycle of growth and development, the government of India has launched various urban development schemes, such as:


Smart Cities Mission2:


It is an urban renewal and retrofitting program by the Government of India with a mission to develop 100 cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘smart’ solutions. The focus is on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will be an example for other aspiring cities.

The core infrastructure elements in a Smart City would include:

  1. Adequate water supply,
  2. Assured electricity supply,
  3. Sanitation, including solid waste management,
  4. Efficient urban mobility and public transport,
  5. Affordable housing, especially for the poor,
  6. Robust IT connectivity and digitalization,
  7. Good governance, especially e-Governance and citizen participation,
  8. Sustainable environment,
  9. Safety and security of citizens, particularly women, children and the elderly, and
  10. Health and education.

The core infrastructural requirement to develop Smart cities can be achieved with Smart solutions like E-Governance and Citizen Services, Energy Management, Waste Management, Urban Mobility, Water Management etc. The central Government proposes to give financial support to the Mission to the extent of USD 7.77 billion in the next five years (FY2015-16 to FY2019-20). In the first year, Government proposes to give USD 30.77 million to each selected Smart City to create a higher initial corpus, followed by USD 15.38 million every year for the next three years.

The strategic components of area-based development in the Smart Cities Mission are city improvement (Retrofitting), city renewal (Redevelopment) and city extension (Greenfield development) plus a Pan-city initiative in which Smart Solutions are applied covering larger parts of the city. Smart Cities will feature urban development and expansion of housing opportunities under different schemes like Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Pradhan Mantri Awas Yojana and Swachh Bharat Mission.


Atal Mission for Rejuvenation and Urban Transformation (AMRUT)3


The purpose of (AMRUT) is to:

  • Ensure that every household has access to a tap with assured supply of water and a sewerage connection
  • Increase the amenity value of cities by developing greenery and well maintained open spaces (e.g. parks)
  • Reduce pollution by switching to public transport or constructing facilities for non-motorized transport (e.g. walking and cycling)

The total outlay for AMRUT is USD 7.77 billion for five years from FY 2015-16 to FY 2019-204 and 500 towns will receive benefits.5 The scheme based on Public Private Partnership (PPP) model will be integrated with Housing for All by 2022.


Pradhan Mantri Awas Yojana- Housing for All (Urban):


The Mission is being implemented during 2015-2022 and provides central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for:

  1. In-situ rehabilitation of existing slum dwellers using land as a resource through private participation
  2. Credit-Linked Subsidy
  3. Affordable housing in partnership
  4. Subsidy for beneficiary-led individual house construction/enhancement.

Total housing shortage envisaged to be addressed through the New Mission is 20 million. This scheme will be implemented across 4041 statutory towns with the initial focus on 500 Class I cities in India. 3 phases of the PMAY will cover 500 cities around the country by 2022, in Phase-I (April 2015 – March 2017), 100 Cities will be selected from States/UTs, in Phase – II (April 2017–March 2019) PMAY will be implemented in additional 200 Cities and in Phase-III (April 2019–March 2022) other remaining cities will be covered. The government has approved USD 6.7 billion for the implementation of the scheme.6


Swachh Bharat Mission (SBM) Urban:


Mission Objectives:

  • Modern and scientific Municipal Solid Waste Management
  • To effect behavioural change regarding healthy sanitation practices
  • Generate awareness about sanitation and its linkage with public health
  • Capacity Augmentation for Urban Local Bodies (ULBs)
  • To create an enabling environment for private sector participation in Capex (capital expenditure) and Opex (operation and maintenance)

With an outlay of USD 9.54 billion, it covers 4,041 statutory towns, close to 8 million households. A total amount of USD 433 million has been sanctioned for 2016-17 under this scheme.7


Foreign Direct Investment (FDI) policy:


Construction Development: Townships, Housing, Built-up Infrastructure Sector8

  • 100 % FDI through automatic route is allowed in construction-development projects (which would include development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships)
  • Each phase of the construction development project would be considered as a separate project for the purposes of FDI policy. Investment will be subject to the following conditions:
  • The investor will be permitted to exit on completion of the project or after development of trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage. a foreign investor will be permitted to exit and repatriate foreign investment before the completion of project under automatic route, provided that a lock-in-period of three years.
  • The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/Municipal/Local Body concerned.
  • The Indian investee company will be permitted to sell only developed plots and shall be responsible for obtaining all necessary approvals.
  • The State Government/Municipal/Local Body concerned, which approves the building/development plans, will monitor compliance of the above conditions by the developer.
  • No minimum land area requirement in case of development of serviced plots.
  • In case of construction-development projects, minimum floor area of 20,000 sq. mts.
  • 100% FDI is allowed under the automatic route for urban infrastructure areas like urban transport, water supply, sewerage and sewage treatment subject to relevant rules and regulations.
(Note: FDI is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm houses and trading in transferable development rights (TDRs). Condition of lock-in period at above will not apply to Hotels &Tourist Resorts, Hospitals, Special Economic Zones (SEZs), Educational Institutions, Old Age Homes and investment by NRIs. It is clarified that 100% FDI under automatic route is permitted in completed projects for operation and management of townships, malls/ shopping complexes and business centres.)

Incentives in Urban Infrastructure:


Promoting Affordable Housing9

  • 100% deduction for profits to an undertaking in housing project for flats up to 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years.
  • Extend excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete.

National Investment and Infrastructure Fund (NIIF)10

  • To maximise economic impact mainly through infrastructure development in commercially viable projects, both Greenfield and Brownfield, including stalled projects. The initial authorized corpus of NIIF would be USD 3.08 billion, which may be raised from time to time, as decided by Ministry of Finance.


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