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Plan to increase urban renewal spend by 71%

Plan to increase urban renewal spend by 71%
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First Published: Fri, Dec 14 2007. 12 01 AM IST

Urban development secretary M. Ramachandran
Urban development secretary M. Ramachandran
Updated: Fri, Dec 14 2007. 12 01 AM IST
New Delhi: The government proposes to raise by 71%, allocations in the current fiscal year for its ambitious programme to improve urban infrastructure in 63 large cities and more than 5,000 small towns.
The annual budget for the Centrally-sponsored Jawaharlal Nehru National Urban Renewal Mission, or JNNURM, will be raised to Rs6,009 crore from the initially budgeted Rs3,509 crore for 2007-08. The Planning Commission, which decides the allocations, has already recommended to the finance ministry that the increased pay out be made.
Urban development secretary M. Ramachandran
“We have been asking for additional allocations for a long time,” said urban development secretary M. Ramachandran. “The Prime Minister had also directed the Planning Commission to increase allocations.”
JNNURM was launched in December 2005 with an outlay of Rs50,000 crore to be spent over a seven-year period. The ministry has so far approved more than 1,100 projects worth an estimated Rs43,000 crore under the scheme.
The scheme provides grants between 35% and 90% of the cost of a project, depending on the size of the city, provided states agree to set in motion a set of mandatory reforms.
The spurt in demand for funds from civic bodies in states and towns implies that not only is the programme doing well, but that many more parts of the country are buying into the reforms agenda, which, among other things, augurs well for the organized real estate market.
“The programme is doing well and a large number of small and medium towns have been able to raise their urban infrastructure through this assistance; the commission feels there is a need for enhancing allocation, as it was decided that programmes that do well should be given better opportunities for higher allocation,” a Planning Commission official, who did not wish to be identified, said.
However, Ramachandran said he was not sure if the allocations meant an increase over the originally mandated corpus of Rs50,000 crore, or an increase in the year’s budget but still part of the original sum. “It doesn’t matter that much right now because there is still money left in the original corpus,” he added.
“Earlier, cities have never implemented large-scale projects,” said an analyst with a consulting firm who works with the ministry on the mission. “Under this mission, the projects are larger, which means the run up to the projects, in terms of tendering and project reports, are longer,” the analyst added.
“Now the expenditure is beginning to kick in and some cities are coming for the second instalment. At the same time, more cities are submitting project reports,” the analyst added. Under the mission, Central assistance is given out in four instalments once projects are approved.
“Ideally, the demand for funds should be like an inverted pyramid, peaking gradually, instead of only in the last year of the mission,” the analyst said. “Next year, the demand will be more.”
rahul.c@livemint.com
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First Published: Fri, Dec 14 2007. 12 01 AM IST