Tata Steel's Jamshedpur model: A blueprint for Indian city governance

By adding a staggering 270 million people to its current population of over 500 million in just 15 years, India faces a daunting growth prospect, often viewed with apprehension. A key issue in these burgeoning cities is the lack of effective administration to meet current demands and future planning. Financial resources are usually not the problem.

In India's public administration hierarchy, IAS officers often avoid city administration roles, viewing them as punishment posting. In any case, they and their counterparts in most cities amount to just a handful. These officers prefer roles as district magistrates or positions in state and central government ministries, finding them more rewarding.

The same applies to politicians. Despite the 74th Constitutional Amendment introducing municipal self-governance, municipal councillors lack executive powers. State-level counterparts wield more influence, and chief ministers are reluctant to empower mayors, especially in financially powerful metro cities.

This creates a city administration of officers, without any skin in the game and a band of ineffectual political administrators. The consequences, such as the devastating impacts of Covid, pollution, and poor living conditions, are stark indicators of a faltering growth narrative.

In this context, the decision to transform Jamshedpur into an industrial township under special constitutional provisions is significant. With a population of 1.69 million, this change, pending a Supreme Court verdict on a public interest litigation, will create a municipal council including Tata Steel representatives, government nominees, and local residents.

The approach differs from the industrial townships of yore, which were state-run but had minimal local representation, with officials from the companies largely filling in all administrative roles. The model delivered an impressive range of cities from Rourkela to Salem, but is clearly no longer effective.

Regardless of perspective, the Jamshedpur model promises a substantial improvement over the current situation, where only three cities have an accrual-based accounting system. This limitation has prevented rating agencies from offering municipal bonds. Without an accrual-based system, determining a municipal system's revenue stream for sequestration is challenging. The government's Smart Cities initiative also struggles with accountability and modern accounting issues. Empowered municipal governance is crucial for success.

If successful, and other state governments willing, more companies will be happy to follow suit, combining corporate efficiency with democratic accountability. This could be a highly beneficial approach. Let Jamshedpur show the way again.