New Approach to World Bank Urban Projects In India: Performance Driven-Incentive Based

1. Strengthening Urban Management: IndiaAdministrative Staff College of India – Hyderabad January 20-24, 2003 New Approach to World Bank Urban Projects In India: Performance Driven-Incentive Based The World Bank’s overarching goal is poverty reduction Richard M. Beardmore Senior Urban Specialist World Bank

2. Assumptions • Economic growth in India is increasingly dependent on towns and cities • More growth requires better functioning cities • India’s urban poverty, while generally on the decline, is still significant: 80 million people • Appropriate urban development is one avenue for urban poverty reduction • The urban poor require empowerment, security, and opportunities in order to improve their quality of life

3. What are India’s current urban problems? • Inadequate urban services • Weak urban governance and management • Lack of conducive infrastructure finance systems • Wrong incentives created by current system of devolution of funds • Ineffective land management

4. How can Bank help address problems? • Work with reform-minded States • Work at State and Local level at the same time • At State level, assist with policy reform • At local level, link access to Bank resources to achievement of implementation of policy reforms • Target investments largely at low-income communities

5. What kind of typical State-level activities required? • Legislative reform: repeal of ULCA, reform RCA, rationalize stamp duties • Financial management: establish ULB borrowing framework • Benchmarking system : municipal performance measurement • Streamline land management system • Establish cadre of urban managers

6. What kind of typical local level activities required? • Human resource development • Property tax reform • Expand computerized registration processes throughout all ULBs • Develop citizen charters to increase accountability to local population • Strengthen capacity of community groups to play role in selection/management of services • Invest in priority infrastructure services

7. What kinds of infrastructure services? • Area upgrading, incl water supply and sanitation • Access: roads, foot paths, bus stops • Storm water drainage • Solid waste management • Street lighting • Serviced areas for markets • Parks and green spaces • Off-site links to city wide network services

8. What criteria to be used to determine who gets the funds? Tentatively….. • Measure of severity of poverty within jurisdiction • Benchmarked level of property tax collection • Operating ratio less than 1 • Debt service less than 30% • others

9. What’s the Process? • State and local level reforms introduced, giving priority to URIF reforms • Consultative planning process for priority services at community level proceeds in parallel • ULBs identify further administrative reforms and critical city-wide infrastructure • All ULB proposals put in form of action plan for review by State agencies • Approved items are funded for eligible ULBs

10. What’s in it for whom? • Need for financial support to local level from State reduced • ULBs gain financial strength, increased creditworthiness, more autonomy as a result of policy reform • Urban poor receive benefit of investments at community level and greater role in urban decision making