Urban Renewal, Fiscal Deficit and the Politics of Decentralisation: The Case of the Jawaharlal Nehru Urban Renewal Mission in India

Abstract

Decentralisation is seen as a panacea for a host of problems of governance thrown up by economic globalisation the world over. In the vast body of literature across disciplines, the term decentralisation refers both to the vertical devolution of power in political, administrative, regulatory and fiscal spheres and to the horizontal redistribution of activities away from the centre. Shortly after India embarked upon structural reforms in 1991, the Government of India made the first formal attempt at decentralisation through the 73rd and 74th (Constitutional) Amendment Acts of 1992. These two acts aim at decentralisation through vertical devolution of power to rural and urban local governments across the country. While implementation of these acts has been uneven, the Government of India in 2005 launched an ambitious urban renewal programme titled Jawaharlal Nehru Urban Renewal Mission (JNNURM) in 65 cities nation-wide. The JNNURM is designed to release funds to cities on a competitive basis and is conditional upon full implementation of the 74th Amendment Act by state governments. This paper examines the implementation of JNNURM in Andhra Pradesh, a south Indian state, to demonstrate that, in the structure of governance in India, the state government remains the major stumbling block in the devolution of power. Importantly, through a careful analysis of city finances in Vijayawada in Andhra Pradesh in the context of JNNURM, the paper argues that decentralisation qua state restructuring in India is a top–down process of devolving fiscal deficit to the city scale—in other words, urbanising fiscal deficit—which does not allow a coherent city politics to emerge. It documents the efforts under way to build new collective action framings which are driving a bottom–up change forcing city governments to demand a real devolution of power from the state governments but notes that such efforts have not as yet gathered adequate momentum to be effective.

Notes

Author's field notes, 14 february 2011.

All currency conversions in this paper are calculated as on January 1, 2012 the prevailing rupee-dollar exchange rate (0.0185) as compiled by ONDA trading platform.

Elections to ULBs are conducted by the State Election Commission, a constitutional agency which nevertheless reports directly to the state government. GOAP has a long history of indefinitely postponing elections to ULBs due to political and administrative compulsions.

The rural unit of local government in India is known as panchayat, which literally means the village assembly. The total number of elected representatives from this stream all over India is about 3 million. Urban local governments are known as municipalities and nagar (town) panchayats, classified into different tiers depending on the size and incorporation of the cities as corporations, municipalities and nagar panchayatis. There are an estimated 1239 municipal corporations, 1595 municipalities and 2108 nagar panchayats in India.

In the federal structure of the Indian government, local governments fell under the exclusive domain of the state governments. In other words, the central government had no authority to make legislation regarding the powers of local government. However, the 73rd and 74th Constitutional Amendment Acts substantially expanded the central government's ability to shape local governments by giving them constitutional recognition. Even then, historically, state governments have seen local governments as competitors rather than complementary authorities. Due to this, many state governments in India have tended to supersede local governments through executive powers of the state government.

For instance, Citizens Voluntary Initiative for the City (CIVC), a citizens' organisation in Bengaluru in Karnataka, notes that the state has yet to form ward-level committees for local democracy, even 18 years after the central act has been passed (see: http://www.civicspace.in/74th-constitutional-amendment-decentralisation). Similar complaints by citizens' organisations, political parties and elected representatives of ULBs are reported in newspapers from across the country.

See, also, Bombay First and McKinsey & Co. (2003), for an example of how civil society dominated by the middle class and rich people imagine the urban space in exclusionary terms.

Extending the city limits to capture a larger population is a common strategy in India, where the urban extends into the rural seamlessly without regard for the technical boundaries of jurisdiction. This phenomenon is, however, not unique to India or South Asia, as McGee and Robinson (1995) have shown in their research on Asia–Pacific cities.

In the mid 1970s, the GOI enacted two legislations, one for setting a ceiling on individual rural land holdings and the other for setting a ceiling on individual urban land holdings. The goal of both of these laws was to break monopolistic control over land by setting an upper limit on the extent of land that an individual could own. Following this, state governments enacted their own legislation to set upper limits on ownership. Special agencies were set up to seize excess land and redistribute it to poor people. In implementation, the rural land ceiling met with some measure of success, while in urban areas, landowners managed to circumvent the law through claiming exemptions under various pretexts. These laws, while ineffective in practice, are viewed by many as symbolic gestures to restrict private control over land. State governments are generally reluctant to repeal them, fearing popular resentment. However, the GOI, in keeping with the World Bank view, has held that repealing the Urban Land Ceiling Act will galvanise land markets.

M. V. Anjaneyulu, personal interview, 12 December 2010, in Vijayawada.

V. Sambi Reddy, personal interview, 12 December 2010, in Vijayawada.

Additional information

Notes on contributors

Anant Maringanti

Anant Maringanti is an independent scholar based in Hyderabad, India.