Demand and Issues of Urban Infrastructure

Demand and Issues of urban InfrastructureCase take up of The Financial Model For water supply Supply vagabond1 foundation1.1 Rationale/BackgroundAccording to the RICS recent survey only 4% of the people want to live in urban Area. This shows the revoke in standard of living requirement which was dream of living in the urban ara. What has gone wrong? We know that gypsies utilize to even up were they could come up water. It john be said that water is much(prenominal) an important element for break offment of whatever place irrespective of urban or inelegant neighborhood.In India 30% of the get a pertinacious population live in Urban Area and contri furthere to 60% of the total GDP (Gross Domestic Product). 31% is the add-on in the population in at long last decade compared to 18% in the rural area. So it is necessary to boost urban basis by popular as well as personal intervention institution.Creativity is the renovation of the age that generate Ideas that becom e product and proceeds. The d knowledgeturn of the economies has advantage of invigorated imposture which is overly true in case of maximization profit. With cast up in the demographic of ages, climate, cultures and immigration it is difficult to take the stake of demand of the urban area. The try of controlling the demand moldiness(prenominal) be interpreted by government agency to set ahead the secluded parties for excellence serve well in Infrastructure.1.2 Research rail and Objective1.2.1 AimTo develop financial model for water supply projects using JNNURM toolkit. This can be used to analyze the kindred in the midst of executing and sustainability in uvulopalatopharyngoplasty method of procural.1.2.2 ObjectiveTo discover the preparation of Urban Infrastructure and enthronization plan for the city.To evaluate the feasibility of water supply service in particular.Role of palatopharyngoplasty in Urban Infrastructure.1.2.3 master(prenominal) HypothesisNeed for U rban Infrastructure and their carrying out nether governance of JNNURM scheme. To promote sustainable enthronization and innovative palatopharyngoplasty method of procurance addition in the efficiency at municipality level by vigilance. Freedom should be given to hush-hush parties to make them comfortable.1.3 Outline methodological analysis of tryWe get out first try to figure out what is the read of the curbing population of that particular city. The cities are in a desperate indigence of finance for carrying out the reviving projects. But the previous schemes and projects by the municipalities and state governments use up failed miserably on the grounds of implementation (ie, time focus) and utilization of funds. So in that respect is a need to gather finance for the reviving project for the curbing infrastructure .The story does non quit here, there is in addition a need to govern the utilization of fund.There is a tender scheme which is growing popularity by th e organisation of India along with state government and the municipalities. The buzz countersign in this scheme is the governance of the project because there is a proper channel how to control the funds issued by the government. alike the government of India entrust regularly monitor the implementation of the project. Along with this there is a unique proposal of submitting the CDP (City emergence Plan) for approval.So our approach shot would be to find a method of relating the increase in population and need of the same in coming 20 categorys as well as to musical arrangement and managing finance considering all the factors like inflation, operation and sustainment constitute. For this we would study CDPs of various cities and also study their approach in solving the future infrastructure problems. as well as we would compare various CDPs and chin wag on their efficiency.Since we are talking of CDPs preparation and involvement of secluded parties we result try s ome case study and situate the financial appraisal of the same. We would critically analyze whether the project is financially feasible to a lower place JNNURM (Jawaharlal Nehru National Urban conversion Mission) scheme1.3.1 Literature round and the sail studyThis literature review the following subject of IndiaCity suppuration planFinance scheme for city phylogeny plan palatopharyngoplasty procurementJNNURM SchemePilot Study consists of Theoretical approach. Study of a practical approach to prepare CPD for water supply project under guidelines of JNNURM scheme toolkit.1.3.2 Main StudyCase study- Feasibility of water supply project under JNNURM scheme using Financial appraisal calculation and role of PPP in such project. The call of the city under case study has been changed repayable to sensibility of the case as it is live project. The name of the city leave alone not effect on research subject of festering of financial appraisal model because scenario is well detailed .The approach of this study by Quantitative and analyticalComparison of CPD between diametric states selected 4nos of states for comparison.The approach is Quantitative by reading the CPDs of different states and comparing them.1.3.3 Writing UpChapter-1 -IntroductionChapter-2-City Development PlanChapter-3-Private provideChapter-4- JNNURM SchemeChapter-5- Case StudyChapter-6- Comparison of CPD between different statesChapter-7-Conclusion2 City Development Plan2.1 Geographical Information29 states and 6 juncture territories*Andaman and Nicobar Is disembarks*Lakshadweep*Andhra PradeshMadhya PradeshArunachal PradeshMaharashtraAssamManipurBiharMeghalayaChandigarh*MizoramChhattisgarhNagalandDadra and Nagar Haveli*OrissaDaman and Diu*Pondicherry*DelhiPunjabGoaRajasthanGujaratSikkimHaryanaTamil NaduHimachal PradeshTripuraJammu and KashmirUttaranchalJharkhandUttar PradeshKarnatakaWest BengalKerala* wedding territory2.2 DemographyTable 1 India Development IndicatorAccording to a United Nations study (1995), by the year 2015, ten of the worlds xv largest cities bequeath be in Asia (excluding Japan) three of these will be in India. In 1950, this same region claimed only three of the worlds fifteen largest cities, whilst India claimed only one.These projections suggest that demographic growth in Indias large cities will be full(prenominal), partly due to national population growth and partly due to immigration. The logistic model used by the United Nations, the World Bank, and other international agencies for the projection of urban population world-wide suggests that India is poised for rapid urbanisation, along with some(prenominal)(prenominal) other countries in in the south and East Asia. SIZE As per Census 2001, only 28% of the 1.1 billion Indians live in urban areas. Expected to increase to 40% by 2021. most 60% of the countrys GDP originates from urban areas. Allocation of US$12 billion by the Government of India under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for a period of 7 years for improving urban infrastructure across 63 cities. call tubing cities Mumbai, Kolkata, Delhi, Bengaluru, Chennai, Hyderabad and Ahmedabad allocated 47.5% percent of these funds.STRUCTUREJNNURM functions under the overall guidance of a National Steering Group (NSG) which comes under the purview of Ministry of Urban DevelopmentJNNURM is aimed at fast-track plan exploitation of identified cities. Key highlightsIntegrated development of urban infrastructure projectsRenewal and redevelopment of inner city areasProvision of basic services to urban poorFunds to be channelised through Urban Local Bodies who will be responsible for implementationImplementing agencies to leverage sanctioned funds to bring in common soldier welkin coronations through PPP contractsOutlookInvestments of more than US$50 billion would be required in the adjoining 5 years to improve and prepare urban infrastructureJNNURM is the single largest opening night of Government of India for planned development of citiesOpportunity for tete-a-tete players to partner with Urban Local Bodies (ULB) in development of urban infrastructure such asWater supply and sanitizationSlum redevelopmentUrban transportation including roadstead, highways, expressways, Mass Rapid Transport Systems (MRTS) and underground projectsSolid waste managementPOTENTIAL A large component of development work will be through state-supported-private partnership. Water supply and sanitation in urban areas to attract investments over US$30 billion.POLICY100% FDI under the automatic route permitted for townships, housing, built-up infrastructure and reflexion-development based projects subject to tokenish scale normsJNNURM will offer grants/viability transgress funding for projects2.3 worrysUrban Local Bodies (ULBs) of India are the constitutionally provided administrative units that provide basic infrastructure and services in cities and towns. According to Census of India 1991, there are 3255 ULBs in the country classified into four major categoriesNagar NigamsNagar PalikaaNagar PanchayatsLarge urban areas are governed by Nagar Nigams, often plain called corporations. The area under a corporation is further divided up into wards. Individual wards or collections of wards within a corporation sometimes have their own administrative body cognize as ward committees.Smaller urban areas are governed by Nagar Palika, which are often referred to simply as municipalities. municipalities are also divided into wards, which may be rooted together into ward councils. One or more re exemplifyatives are elected to represent each ward.What is worse, many ULBs have accumulated large debts and present serious problems in servicing them. Besides the restriction to a small resource base poor planning extremity, wishing of periodical revision of municipal tax rates / user charges, and poor information placement and records management are some of the bas ic weaknesses in the present municipal administration. TheInfrastructure Problem In spite of its prominent role in Indian economy, urban India faces serious problems due to population pressure, deterioration in the physical environment and prime(a) of life. According to estimates nearly one third of the urban India lives below poverty line. About 15 percent of the urbanites do not have access to prophylactic drinking water and about 50 percent are not covered by sanitary facilities. There is a huge and widening gap between demand and supply of essential services and infrastructure. 2.4 Schemes for development of urban developmentThe ongoing schemes of Urban Infrastructure Development in the mega cities, and Integrated Development of Small and Medium Towns (IDSMT) do not meet the requirement of infrastructure development of all cities/towns in the country. There is, therefore, need to have a omnibus(prenominal) scheme for infrastructure development of all cities/towns in the coun try. some other scheme like Urban Reforms Incentive Fund (URIF) also needs to be subsumed in the said comprehensive scheme. Funding is unifyed to reforms which are classified into mandatory and optional as detailed below needed Reforms solid ground level nobble of Urban Land Ceiling and Regulation ActReform of Rent Control Laws so as to stimulate private investment in letting housing schemes.Rationalisation of Stamp Duty to bring it down to no more than 5 per cent within the next five years.Introduction of autarkical regulators for urban services.Mandatory Reforms Core (at ULBs level)Double entry system of accounting for Urban Local BodiesAdoption of frequent manifestation law disclosure of medium-term monetary plan and quarterly executing reports.Passage of community participation law.All special agencies currently regard in delivering urban civic services to be brought under the supervision of ULBs, thus creating a uniform accountability platform.A Bangalore Action Task Force (BATF) kind of citizens technical advisory group should be constitute for each city to guide the serve up of urban reforms.Urban development authorities discharging city intend functions and the new city development function should associate the ULBs more closely.Introduction of e-governance, Global Information System (GIS) and Monitoring Information System ( MIS)Reform of property Tax laws.Levy of rational user charges.Optional ReformsRevision of byelaws to streamline the approval process.Simplification of legal and procedural frameworks for conversion of agricultural land for non-agricultural purposesIntroduction of Property Title hallmark System in ULBs.Earmarking at least 20-25 per cent of developed land in all housing projects for the poor.Introduction of computerized process of registration of land and proportionRevision of bye-laws to make rain water harvesting mandatoryBye-laws for reuse of reclaimed waterAdministrative reforms, i.e. right surface of the ULBs.I t is important to note that the function of urban celestial sphere to GDP is currently expected to be in the range of 60 percent. In this context, enhancing the productivity of urban areas is now central to the polity pronouncements of the Ministry of Urban Development. Cities hold tremendous potential as engines of economic and social development, creating jobs and generating wealth through economies of scale. They need to be prolong and augmented through the high urban productivity for countrys economic growth. National economic growth and poverty reduction runs will be increasingly dictated by the productivity of these cities and towns. For Indian cities to become growth oriented and productive, it is essential to achieve a world class urban system. This in turn depends on attaining efficiency and equity in the delivery and financing of urban infrastructure.Resource GapThe India Infrastructure, give notice (of), 1996, assessed the total annual investment needs of water sup ply, sanitation and roads welkins at Rs. 28,036 crores per year on an average during 1996-2006. Where as funds to that extent are not available. To overcome these constraints and challenges, the Ministry of Urban Development has initiated institutional, fiscal and financial reforms. commencement generation urban sector reform known as the 74th Constitutional Amendment Act of 1992, recognizes the principles of topical anesthetic self governments and empowers urban local bodies with financial resources through of import Finance Commission and narrate Finance Commissions. Subsequently, in order to strengthen these local bodies, second generation reform have also been started. In the last decade, enormous progress has been do in removing impediments to efficient investment.Resource Mobilization EffortIn August, 1996, the substitution Government guidelines entitled Urban Development Plans homework and Implementation were circulated to all introduce Governments for adoption. The se guidelines, apart from other issues, suggest innovative approaches for fiscal resource militarisation. In the backdrop of the New Economic Policy, it was suggested that the traditional system of funding based on Plan and budgetary allocations be reduced and ultimately withdrawn due to fiscal deficit.Subsidies need to be rationalized and urban development plans and projects need to be move on a commercial format by aiming commercially viable urban infrastructure services and area development projects. This can be achieved by restoring a proper match between functions and source of r in timeue by giving additional tax measures. Other innovative resource mobilization measures include using land as resource, increase in the non-property taxes and using customary private partnership in service delivery.2.4.1 Second Generation Reforms regulative FrameworkThe participation of the private sector in financing and the delivery of infrastructure at the municipal level, especially in the water and sanitation sector, require a regulatory framework to protect consumers, apply environmental standards and gestate the delivery to the poor. As there are a variety of models of regulation from change to decentralized systems, guidelines will be developed at the National level to ensure consistency across the country. Appropriate facts of life programme and capacity support to regulators will also be developed in partnership with the private sector and urban research institutions.Model jurisprudenceThe Central Government is in the process of preparing model legislation for facilitating private sector participation in urban infrastructure. This is necessary as the present legislative scenario does not encourage private sector participation in this field. A model municipal Act which will be recommended to the State Governments would include change and simplification of municipal bylaws, cookery for enhanced borrowing, allowing the entry of private sector and authorizing concessionaires to penalize users for non payment of tariffs.Municipal Accounting SystemThe Task Force constituted by the O/o CAG of India had recommended for introduction of assemblage basis of accounting system for the urban local bodies (ULBs) and suggested model budgeting and accounting formats for that purpose. The Task Force topic was circulated to all States/UTs for adoption of accrual basis of accounting system as well as the budget and accounting formats. Further to provide a change tool kit to the ULBs for recording the accounting entries, Ministry of Urban Development in cooperation with the Office of CAG of India has prepared a National Municipal Accounting Manual (NMAM) and circulated to all States/UTs in January, 2005.The Manual comprehensively details the accounting policies, procedures, guidelines designed to ensure correct, complete and timely recording of municipal operations and produce accurate and relevant financial reports. The NMAM would help the States p repare their state-level accounting manuals in accordance with their own requirements for use by the ULBs. This initiative is expected not only to enhance the capacities of ULBs in municipal accounting ahead(p) to increased transparency and accountability of utilization of unrestricted funds for the development of urban sector but also will help in creating an environment in which urban local bodies can play their role more effectively and ensure better service delivery. general private partnership guidelinesCentral Government will develop guidelines for involvement of the private sector in infrastructure, which will ensure competitive biding process in a transparent manner. These guidelines will not only protect the consumers but also ensure integrity of the process. This would support municipalities in designing the PPP process on the lines of the BOT Centre in Philippines or the PPP in the Ministry of Finance in South Africa. Chapter4 include the issues related to PPP.2.4.2 Fi scal incentivesForeign direct investment (FDI)Hitherto Foreign Investment Promotion Board (FIPB) allowed direct investment in providing urban services on a case to case basis. This scenario has changed with the purpose of the Central Government removing restrictions on FDI in urban infrastructure facilities which are now open both under FIPB and the automatic route as per sector specific guidelines. Guidelines have since even issued for FDI in development of integrating township including housing and building material.External assistanceSince independence, outsidely assisted urban sector projects have accounted for US$ 2300 million. A review of these projects indicated a need to adopt a programme approach rather than a project approach for availing external assistance. It also indicated the need to encourage a denary donor scenario and tapping low cost funds for urban infrastructure.Tax free municipal bondMunicipal bonds were successfully issued by some(prenominal) Municipal ra fts like, Bangalore, Ahmadabad, Ludhiana, Nagpur, Nasik, and Madurai for raising resources for urban infrastructure. The Central Government had announced tax exemption in case of bonds issued by Municipal / Local Governments. Guidelines were issued by this Ministry on 8.2.2001 for regulating issue of tax free municipal bonds. Under the guidelines, such bonds will be issued for raising resources for crown investment in creation of new infrastructure as well as augmentation of existing systems. Tax free bonds worth Rs. 100 crore by Ahmadabad Municipal Corporation have been permitted for improving infrastructure. Hyderabad Municipal Corporation has also been permitted to issue tax free municipal bonds for Rs. 82.5 crore.Pooled financing for municipal infrastructureTraditionally, municipal corporations and urban local bodies have relied on support funds for providing urban services which constraints the constraints the introduction of user charges and efficient project operation and m aintenance. In view of the huge resource gap, direct access to capital market would now be an accepted viable option. However, access to capital market requires financial discipline and enhanced conviction rating. It has been the experience that only large municipal corporations are in a position to take the advantage of the resources available in capital market.Medium and small municipalities are unable to do so due to weak financial position and lack of capacity to prepare viable project proposals. A State level pooled financing apparatus is being proposed for smaller and medium municipalities. The objective of a State level pooled finance mechanism is to provide a cost effective and efficient approach for smaller and medium sized ULBs to access the domestic capital markets for urban infrastructure and to introduce new institutional arrangements for mobilising Urban Infrastructure Finance.City RestructuringGovernment of India is also encouraging citywide reforms and restructur ing so as to ensure that cities are managed efficiently and become creditworthy (to attract private finance ) which will modify them to prepare long term plans for infrastructure investments and implement poverty alleviation programmes.Citywide reforms and restructuring will, however, result in significant trans litigate costs during the period of transition. going cities to finance these costs by themselves will delay and make it difficult to implement these reforms. It is to partly offset this disadvantage that the Ministry of Urban Development is proposing to set up a cognitive process based City Challenge Fund for catalyzing city level economic reform programmes. The resources from the Fund would be given as grants but should ideally be matched by equal allocations either from the cities themselves or from the respective State governments. Access to the fund would be on a competitive basis. nerve of an urban academyThe proposed Urban Academy is visualized as a centre of excel lence in Urban Matters such as urban water supply, sanitation, urban transport, urban governance, municipal finance, etc. It will be a n ideal town-planning habitat, wherein experts from India and abroad can experiment with new layouts, building materials, landscaping, hereditary pattern preservation etc., and it will have Synergic links with all other institutions specializing in urban matters. This will coordinate all teaching and Capacity Building Initiatives and effort of change management forums.ConclusionIn conclusion, it is evident that the New Economic Policy launched in India in 1991-92, did see several important initiatives in the urban sector designed to encourage private sector participation in urban infrastructure projects. These initiatives would need to be taken to their logical conclusion. A serial of new Reform Measures are being put together for implementation during 10th Plan Period. Through these, we hope to reverse the declining standards of urban infrastruct ure in the country. earthly concern Private Partnership procurement addresses how the patience organizes itself to deliver construction projects. Contracts define the rules governing the relationships between the many organizations involved in each project. body structure exertion clients are faced with a perplexing array of skills and resources which must be combined effectively to develop a building (or other constructed facility) that will fulfill their needs. All but the simplest of buildings involve the management, design, assembly and commissioning of large amounts of raw materials using appropriately-skilled labor provided by multiple organizations over a long period of time. The flow of money between Organizations must be formally organized, as must the distribution of responsibility and adventure among them.While the technical complexities of the design solution itself are addressed by the specialized skills of construction industry members, the interaction of these orga nizations must be structured by the selection of an appropriate procurement route and the effective administration (i.e. day to day running) of the associated form of construction contract. At the project outset, clients will usually undertake advice on the selection of a procurement route to bring the required organizations together.Figure 1 Example of a cost and Time Overruns in Public Sector Projects.In repartee to these problems, two observe joint industry and government reports were published to stimulate innovation in construction industry serve the Latham Report in 1994 and the Egan Report in 1998.In the first report Constructing the Team Sir Michael Latham commentedImplementation begins with clients. Clients are at the core of the Process and their needs must be met by industryRethinking Construction proposed five drivers for change in the construction industry1. Committed leadership2. A focus on the node3. Integrated processes and teams4. A tone driven agenda5. Comm itment to peopleIn the public sector, HM Treasury launched the Achieving Excellence in Construction initiative in 1999 to improve the performance of Government in its client role by publishing Achieving Excellence in Construction Procurement Guides 11 which addresses the following issues1. Initiating action2. Project organization3. Project procurement lifecycle4. Risk and value management5. The integrated project team6. Procurement and contract strategies7. Whole-life costing8. Improving performance9. Design quality10. wellness and safety11. SustainabilityPublic sector clients are generally concerned with certainty of budget and quality and, to a higher place all else, ensuring public accountability as they are spending public money.Clients who build regularly perhaps continuously can be considered experiencedConstruction projects can be structured in a variety of ways as No single procurement route is suited to all situations and so is required to link the Clients trading requir ements before an appropriate project structure can be recommended.The Office of Government Commerce defines these terms as follows 1Procurement schema The procurement strategy identifies the best way of achieving the objectives of the project and value for money, taking account of the risks and constraints, leading to decision about the funding mechanism and summation ownership for the project. The aim of a procurement strategy is to achieve the optimum balance of risk, control and funding for a particular project.Procurement route The procurement route delivers the procurement strategy. It included the contract strategy that will best meet the Clients needs. An integrated procurement route ensures that design, construction, operations and maintenance are considered as a whole it also ensures that the delivery team work together as an integrated project team.Figure 2 The relationship of procurement strategy to procurement routeA Public Private Partnership (PPP) is an umbrella term for arrangements agree often with legal force between public and private sector organisations to their mutual benefit.The Private Finance Initiative (PFI) is one form of PPP developed by the Government in which the public and private sectors join to design, build or refurbish, finance and operate new or improved facilities and services to the general public. PFI schemes generally involve a mob of private sector companies, who meet to form a Special Purpose Vehicle (SPV) which then contracts with the public sector to provide services such as hospitals, schools and roads to specifications provided by public sector bodies.3.1 Procurement method issuesConstruction industry has complex analysis mere by dual component of land and building. It has fuzz boundaries. The fragmentation of the industry between contractor, consultant, project management etc creates the industry highly volatile. It can also be argued the reduction of professionalism if it is at only contractor. So it is expe cted to carry army of negative aspects of Investment which is derived from present consumption. In Economics term Investment is the process of trading present consumption for new capital. Present trading can be alternative to investment in other than the construction industry.Individual participant have significant approach to expense and quantity.This definition illustrates several key characteristics of PFI schemesA service, rather than capital assets, is purchased.PFI schemes run for a long time. The public sector typically requires procures the provision of a service over a 25 to 35 year period.Buildings or other infrastructure is usually constructed by the private sector as a minute of the need to provide the agreed service. The PFI agreement will define the level of service required (such as providing a maintained, lit, warm, clean and catered hospital, for example) and the private sector will finance the design and construction of new or adapted facilitates as necessary to accommodate that service.Because the public sector is purchasing a service, rather than assets, it will not own those assets unless the impart of their ownership is agreed when setting up the scheme (see Section 6.6.5).Subject to any specification imposed by the public sector client, the private sector is free to use whatever means it considers appropriate when constructing the assets. This can lead to design quality and performance shortcomings (see Section 6.6.4).The private sector puts itself at risk when securing the finance required to construct any capital assets required by the scheme. In return, it will expect to be paying(a) for managing this risk. This raises the overall cost of PFI schemes above that of non-PFI procurement where financing risks are minimal as they are borne by the public sector with funding traditionally provided and underwritten by the Treasury.3.2 Role of PPP in InfrastructuresIn the projects from the Public Private Partnership (PPP) and Private Fina nce Initative (PFI) programmes, the public sector contracts to purchase services rather than any particular building from the private sector in the long term. The deliveryDemand and Issues of Urban InfrastructureDemand and Issues of Urban InfrastructureCase Study of The Financial Model For Water Supply Project1 Introduction1.1 Rationale/BackgroundAccording to the RICS recent survey only 4% of the people want to live in Urban Area. This shows the reverse in standard of living requirement which was dream of living in the urban area. What has gone wrong? We know that gypsies used to settle were they could find water. It can be said that water is such an important element for development of any place irrespective of urban or rural area.In India 30% of the total population live in Urban Area and contribute to 60% of the total GDP (Gross Domestic Product). 31% is the increase in the population in last decade compared to 18% in the rural area. So it is necessary to boost urban infrastruc ture by public as well as private intervention institution.Creativity is the service of the age that generate Ideas that become product and service. The downturn of the economies has advantage of new invention which is also true in case of maximization profit. With increase in the demographic of ages, climate, cultures and immigration it is difficult to take the risk of demand of the urban area. The risk of controlling the demand must be taken by government agency to encourage the private parties for excellence service in Infrastructure.1.2 Research Aim and Objective1.2.1 AimTo develop financial model for water supply projects using JNNURM toolkit. This can be used to analyze the relationship between performance and sustainability in PPP method of procurement.1.2.2 ObjectiveTo study the preparation of Urban Infrastructure and Investment plan for the city.To evaluate the feasibility of water supply service in particular.Role of PPP in Urban Infrastructure.1.2.3 Main HypothesisNeed fo r Urban Infrastructure and their implementation under governance of JNNURM scheme. To promote sustainable investment and innovative PPP method of procurement increase in the efficiency at municipality level by vigilance. Freedom should be given to private parties to make them comfortable.1.3 Outline Methodology of StudyWe will first try to figure out what is the need of the curbing population of that particular city. The cities are in a desperate need of finance for carrying out the reviving projects. But the previous schemes and projects by the municipalities and state governments have failed miserably on the grounds of implementation (ie, time management) and utilization of funds. So there is a need to gather finance for the reviving project for the curbing infrastructure .The story does not end here, there is also a need to govern the utilization of fund.There is a new scheme which is growing popularity by the Government of India along with State government and the municipalities . The buzz word in this scheme is the governance of the project because there is a proper channel how to control the funds issued by the government. Also the government of India will regularly monitor the implementation of the project. Along with this there is a unique proposal of submitting the CDP (City Development Plan) for approval.So our approach would be to find a method of relating the increase in population and need of the same in coming 20 years as well as to arranging and managing finance considering all the factors like inflation, operation and maintenance cost. For this we would study CDPs of various cities and also study their approach in solving the future infrastructure problems. Also we would compare various CDPs and comment on their efficiency.Since we are talking of CDPs preparation and involvement of private parties we will try some case study and prepare the financial appraisal of the same. We would critically analyze whether the project is financially feasible u nder JNNURM (Jawaharlal Nehru National Urban Renewal Mission) scheme1.3.1 Literature review and the pilot studyThis literature review the following subject of IndiaCity Development planFinance scheme for city development planPPP procurementJNNURM SchemePilot Study consists of Theoretical approach. Study of a practical approach to prepare CPD for water supply project under guidelines of JNNURM scheme toolkit.1.3.2 Main StudyCase study- Feasibility of water supply project under JNNURM scheme using Financial appraisal calculation and role of PPP in such project. The name of the city under case study has been changed due to sensibility of the case as it is live project. The name of the city will not effect on research subject of development of financial appraisal model because scenario is well detailed.The approach of this study by Quantitative and AnalyticalComparison of CPD between different states selected 4nos of states for comparison.The approach is Quantitative by reading the CPD s of different states and comparing them.1.3.3 Writing UpChapter-1 -IntroductionChapter-2-City Development PlanChapter-3-Private PartnerChapter-4- JNNURM SchemeChapter-5- Case StudyChapter-6- Comparison of CPD between different statesChapter-7-Conclusion2 City Development Plan2.1 Geographical Information29 states and 6 union territories*Andaman and Nicobar Islands*Lakshadweep*Andhra PradeshMadhya PradeshArunachal PradeshMaharashtraAssamManipurBiharMeghalayaChandigarh*MizoramChhattisgarhNagalandDadra and Nagar Haveli*OrissaDaman and Diu*Pondicherry*DelhiPunjabGoaRajasthanGujaratSikkimHaryanaTamil NaduHimachal PradeshTripuraJammu and KashmirUttaranchalJharkhandUttar PradeshKarnatakaWest BengalKerala* Union territory2.2 DemographyTable 1 India Development IndicatorAccording to a United Nations study (1995), by the year 2015, ten of the worlds fifteen largest cities will be in Asia (excluding Japan) three of these will be in India. In 1950, this same region claimed only three of the wor lds fifteen largest cities, whilst India claimed only one.These projections suggest that demographic growth in Indias large cities will be high, partly due to national population growth and partly due to immigration. The logistic model used by the United Nations, the World Bank, and other international agencies for the projection of urban population world-wide suggests that India is poised for rapid urbanisation, along with several other countries in south and East Asia. SIZE As per Census 2001, only 28% of the 1.1 billion Indians live in urban areas. Expected to increase to 40% by 2021. About 60% of the countrys GDP originates from urban areas. Allocation of US$12 billion by the Government of India under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for a period of 7 years for improving urban infrastructure across 63 cities. Key metro cities Mumbai, Kolkata, Delhi, Bengaluru, Chennai, Hyderabad and Ahmedabad allocated 47.5% percent of these funds.STRUCTUREJNNURM func tions under the overall guidance of a National Steering Group (NSG) which comes under the purview of Ministry of Urban DevelopmentJNNURM is aimed at fast-track planned development of identified cities. Key highlightsIntegrated development of urban infrastructure projectsRenewal and redevelopment of inner city areasProvision of basic services to urban poorFunds to be channelised through Urban Local Bodies who will be responsible for implementationImplementing agencies to leverage sanctioned funds to attract private sector investments through PPP contractsOutlookInvestments of more than US$50 billion would be required in the next 5 years to improve and build urban infrastructureJNNURM is the single largest initiative of Government of India for planned development of citiesOpportunity for private players to partner with Urban Local Bodies (ULB) in development of urban infrastructure such asWater supply and sanitationSlum redevelopmentUrban transportation including roads, highways, expr essways, Mass Rapid Transport Systems (MRTS) and metro projectsSolid waste managementPOTENTIAL A large component of development work will be through public-private partnership. Water supply and sanitation in urban areas to attract investments over US$30 billion.POLICY100% FDI under the automatic route permitted for townships, housing, built-up infrastructure and construction-development based projects subject to minimum scale normsJNNURM will provide grants/viability gap funding for projects2.3 ProblemsUrban Local Bodies (ULBs) of India are the constitutionally provided administrative units that provide basic infrastructure and services in cities and towns. According to Census of India 1991, there are 3255 ULBs in the country classified into four major categoriesNagar NigamsNagar PalikaaNagar PanchayatsLarge urban areas are governed by Nagar Nigams, often simply called corporations. The area under a corporation is further divided up into wards. Individual wards or collections of war ds within a corporation sometimes have their own administrative body known as ward committees.Smaller urban areas are governed by Nagar Palika, which are often referred to simply as municipalities. Municipalities are also divided into wards, which may be grouped together into ward councils. One or more representatives are elected to represent each ward.What is worse, many ULBs have accumulated large debts and face serious problems in servicing them. Besides the restriction to a small resource base poor planning process, lack of periodical revision of municipal tax rates / user charges, and poor information system and records management are some of the basic weaknesses in the present municipal administration. TheInfrastructure Problem In spite of its prominent role in Indian economy, urban India faces serious problems due to population pressure, deterioration in the physical environment and quality of life. According to estimates nearly one third of the urban India lives below povert y line. About 15 percent of the urbanites do not have access to safe drinking water and about 50 percent are not covered by sanitary facilities. There is a huge and widening gap between demand and supply of essential services and infrastructure. 2.4 Schemes for development of urban developmentThe ongoing schemes of Urban Infrastructure Development in the mega cities, and Integrated Development of Small and Medium Towns (IDSMT) do not meet the requirement of infrastructure development of all cities/towns in the country. There is, therefore, need to have a comprehensive scheme for infrastructure development of all cities/towns in the country. Other scheme like Urban Reforms Incentive Fund (URIF) also needs to be subsumed in the said comprehensive scheme. Funding is linked to reforms which are classified into mandatory and optional as detailed belowMandatory ReformsState levelRepeal of Urban Land Ceiling and Regulation ActReform of Rent Control Laws so as to stimulate private investmen t in rental housing schemes.Rationalisation of Stamp Duty to bring it down to no more than 5 per cent within the next five years.Introduction of independent regulators for urban services.Mandatory Reforms Core (at ULBs level)Double entry system of accounting for Urban Local BodiesAdoption of public disclosure law disclosure of medium-term fiscal plan and quarterly performance reports.Passage of community participation law.All special agencies currently involved in delivering urban civic services to be brought under the supervision of ULBs, thus creating a uniform accountability platform.A Bangalore Action Task Force (BATF) kind of citizens technical advisory group should be constituted for each city to guide the process of urban reforms.Urban development authorities discharging city Planning functions and the new city development function should associate the ULBs more closely.Introduction of e-governance, Global Information System (GIS) and Monitoring Information System ( MIS)Refo rm of Property Tax laws.Levy of reasonable user charges.Optional ReformsRevision of byelaws to streamline the approval process.Simplification of legal and procedural frameworks for conversion of agricultural land for non-agricultural purposesIntroduction of Property Title Certification System in ULBs.Earmarking at least 20-25 per cent of developed land in all housing projects for the poor.Introduction of computerized process of registration of land and propertyRevision of bye-laws to make rain water harvesting mandatoryBye-laws for reuse of reclaimed waterAdministrative reforms, i.e. right sizing of the ULBs.It is important to note that the contribution of urban sector to GDP is currently expected to be in the range of 60 percent. In this context, enhancing the productivity of urban areas is now central to the policy pronouncements of the Ministry of Urban Development. Cities hold tremendous potential as engines of economic and social development, creating jobs and generating wealth through economies of scale. They need to be sustained and augmented through the high urban productivity for countrys economic growth. National economic growth and poverty reduction efforts will be increasingly determined by the productivity of these cities and towns. For Indian cities to become growth oriented and productive, it is essential to achieve a world class urban system. This in turn depends on attaining efficiency and equity in the delivery and financing of urban infrastructure.Resource GapThe India Infrastructure, Report, 1996, assessed the total annual investment needs of water supply, sanitation and roads sectors at Rs. 28,036 crores per year on an average during 1996-2006. Where as funds to that extent are not available. To overcome these constraints and challenges, the Ministry of Urban Development has initiated institutional, fiscal and financial reforms. First generation urban sector reform known as the 74th Constitutional Amendment Act of 1992, recognizes the pri nciples of local self governments and empowers urban local bodies with financial resources through Central Finance Commission and State Finance Commissions. Subsequently, in order to strengthen these local bodies, second generation reform have also been started. In the last decade, enormous progress has been made in removing impediments to efficient investment.Resource Mobilization EffortIn August, 1996, the Central Government guidelines entitled Urban Development Plans Formulation and Implementation were circulated to all State Governments for adoption. These guidelines, apart from other issues, suggest innovative approaches for fiscal resource mobilization. In the backdrop of the New Economic Policy, it was suggested that the traditional system of funding based on Plan and budgetary allocations be reduced and ultimately withdrawn due to fiscal deficit.Subsidies need to be rationalized and urban development plans and projects need to be placed on a commercial format by designing co mmercially viable urban infrastructure services and area development projects. This can be achieved by restoring a proper match between functions and source of revenue by giving additional tax measures. Other innovative resource mobilization measures include using land as resource, increase in the non-property taxes and using public private partnership in service delivery.2.4.1 Second Generation ReformsRegulatory FrameworkThe participation of the private sector in financing and the delivery of infrastructure at the municipal level, especially in the water and sanitation sector, require a regulatory framework to protect consumers, apply environmental standards and support the delivery to the poor. As there are a variety of models of regulation from centralized to decentralized systems, guidelines will be developed at the National level to ensure consistency across the country. Appropriate training programme and capacity support to regulators will also be developed in partnership with the private sector and urban research institutions.Model legislationThe Central Government is in the process of preparing model legislation for facilitating private sector participation in urban infrastructure. This is necessary as the present legislative scenario does not encourage private sector participation in this field. A model Municipal Act which will be recommended to the State Governments would include modification and simplification of Municipal bylaws, provision for enhanced borrowing, allowing the entry of private sector and authorizing concessionaires to penalize users for non payment of tariffs.Municipal Accounting SystemThe Task Force constituted by the O/o CAG of India had recommended for introduction of accrual basis of accounting system for the urban local bodies (ULBs) and suggested model budgeting and accounting formats for that purpose. The Task Force Report was circulated to all States/UTs for adoption of accrual basis of accounting system as well as the budge t and accounting formats. Further to provide a simplified tool kit to the ULBs for recording the accounting entries, Ministry of Urban Development in cooperation with the Office of CAG of India has prepared a National Municipal Accounting Manual (NMAM) and circulated to all States/UTs in January, 2005.The Manual comprehensively details the accounting policies, procedures, guidelines designed to ensure correct, complete and timely recording of municipal transactions and produce accurate and relevant financial reports. The NMAM would help the States prepare their state-level accounting manuals in accordance with their own requirements for use by the ULBs. This initiative is expected not only to enhance the capacities of ULBs in municipal accounting leading to increased transparency and accountability of utilization of public funds for the development of urban sector but also will help in creating an environment in which urban local bodies can play their role more effectively and ensur e better service delivery.Public private partnership guidelinesCentral Government will develop guidelines for involvement of the private sector in infrastructure, which will ensure competitive biding process in a transparent manner. These guidelines will not only protect the consumers but also ensure integrity of the process. This would support municipalities in designing the PPP process on the lines of the BOT Centre in Philippines or the PPP in the Ministry of Finance in South Africa. Chapter4 included the issues related to PPP.2.4.2 Fiscal incentivesForeign direct investment (FDI)Hitherto Foreign Investment Promotion Board (FIPB) allowed direct investment in providing urban services on a case to case basis. This scenario has changed with the decision of the Central Government removing restrictions on FDI in urban infrastructure facilities which are now open both under FIPB and the automatic route as per sector specific guidelines. Guidelines have since even issued for FDI in dev elopment of integrating township including housing and building material.External assistanceSince independence, externally assisted urban sector projects have accounted for US$ 2300 million. A review of these projects indicated a need to adopt a programme approach rather than a project approach for availing external assistance. It also indicated the need to encourage a multiple donor scenario and tapping low cost funds for urban infrastructure.Tax free municipal bondMunicipal bonds were successfully issued by several Municipal Corporations like, Bangalore, Ahmadabad, Ludhiana, Nagpur, Nasik, and Madurai for raising resources for urban infrastructure. The Central Government had announced tax exemption in case of bonds issued by Municipal / Local Governments. Guidelines were issued by this Ministry on 8.2.2001 for regulating issue of tax free municipal bonds. Under the guidelines, such bonds will be issued for raising resources for capital investment in creation of new infrastructure as well as augmentation of existing systems. Tax free bonds worth Rs. 100 crore by Ahmadabad Municipal Corporation have been permitted for improving infrastructure. Hyderabad Municipal Corporation has also been permitted to issue tax free municipal bonds for Rs. 82.5 crore.Pooled financing for municipal infrastructureTraditionally, municipal corporations and urban local bodies have relied on subsidized funds for providing urban services which constraints the constraints the introduction of user charges and efficient project operation and maintenance. In view of the huge resource gap, direct access to capital market would now be an accepted viable option. However, access to capital market requires financial discipline and enhanced credit rating. It has been the experience that only bigger municipal corporations are in a position to take the advantage of the resources available in capital market.Medium and smaller municipalities are unable to do so due to weak financial position and l ack of capacity to prepare viable project proposals. A State level pooled financing mechanism is being proposed for smaller and medium municipalities. The objective of a State level pooled finance mechanism is to provide a cost effective and efficient approach for smaller and medium sized ULBs to access the domestic capital markets for urban infrastructure and to introduce new institutional arrangements for mobilising Urban Infrastructure Finance.City RestructuringGovernment of India is also encouraging citywide reforms and restructuring so as to ensure that cities are managed efficiently and become creditworthy (to attract private finance ) which will enable them to prepare long term plans for infrastructure investments and implement poverty alleviation programmes.Citywide reforms and restructuring will, however, result in significant transaction costs during the period of transition. Leaving cities to finance these costs by themselves will delay and make it difficult to implement these reforms. It is to partly offset this disadvantage that the Ministry of Urban Development is proposing to set up a performance based City Challenge Fund for catalyzing city level economic reform programmes. The resources from the Fund would be given as grants but should ideally be matched by equal allocations either from the cities themselves or from the respective State governments. Access to the fund would be on a competitive basis.Establishment of an urban academyThe proposed Urban Academy is visualized as a centre of excellence in Urban Matters such as urban water supply, sanitation, urban transport, urban governance, municipal finance, etc. It will be a n ideal town-planning habitat, wherein experts from India and abroad can experiment with new layouts, building materials, landscaping, heritage preservation etc., and it will have Synergic links with all other institutions specializing in urban matters. This will coordinate all Training and Capacity Building Initiatives and effort of change management forums.ConclusionIn conclusion, it is evident that the New Economic Policy launched in India in 1991-92, did see several important initiatives in the urban sector designed to encourage private sector participation in urban infrastructure projects. These initiatives would need to be taken to their logical conclusion. A series of new Reform Measures are being put together for implementation during 10th Plan Period. Through these, we hope to reverse the declining standards of urban infrastructure in the country.Public Private PartnershipProcurement addresses how the industry organizes itself to deliver construction projects. Contracts define the rules governing the relationships between the many organizations involved in each project.Construction industry clients are faced with a perplexing array of skills and resources which must be combined effectively to develop a building (or other constructed facility) that will fulfill their needs. All but the simples t of buildings involve the management, design, assembly and commissioning of large amounts of raw materials using appropriately-skilled labor provided by multiple organizations over a long period of time. The flow of money between Organizations must be formally organized, as must the distribution of responsibility and risk among them.While the technical complexities of the design solution itself are addressed by the specialized skills of construction industry members, the interaction of these organizations must be structured by the selection of an appropriate procurement route and the effective administration (i.e. day to day running) of the associated form of construction contract. At the project outset, clients will usually seek advice on the selection of a procurement route to bring the required organizations together.Figure 1 Example of a cost and Time Overruns in Public Sector Projects.In response to these problems, two key joint industry and government reports were published t o stimulate innovation in construction industry practice the Latham Report in 1994 and the Egan Report in 1998.In the first report Constructing the Team Sir Michael Latham commentedImplementation begins with clients. Clients are at the core of the Process and their needs must be met by industryRethinking Construction proposed five drivers for change in the construction industry1. Committed leadership2. A focus on the customer3. Integrated processes and teams4. A quality driven agenda5. Commitment to peopleIn the public sector, HM Treasury launched the Achieving Excellence in Construction initiative in 1999 to improve the performance of Government in its client role by publishing Achieving Excellence in Construction Procurement Guides 11 which addresses the following issues1. Initiating action2. Project organization3. Project procurement lifecycle4. Risk and value management5. The integrated project team6. Procurement and contract strategies7. Whole-life costing8. Improving perform ance9. Design quality10. Health and safety11. SustainabilityPublic sector clients are generally concerned with certainty of budget and quality and, above all else, ensuring public accountability as they are spending public money.Clients who build regularly perhaps continuously can be considered experiencedConstruction projects can be structured in a variety of ways as No single procurement route is suited to all situations and so is required to link the Clients business requirements before an appropriate project structure can be recommended.The Office of Government Commerce defines these terms as follows 1Procurement strategy The procurement strategy identifies the best way of achieving the objectives of the project and value for money, taking account of the risks and constraints, leading to decision about the funding mechanism and asset ownership for the project. The aim of a procurement strategy is to achieve the optimum balance of risk, control and funding for a particular proje ct.Procurement route The procurement route delivers the procurement strategy. It included the contract strategy that will best meet the Clients needs. An integrated procurement route ensures that design, construction, operations and maintenance are considered as a whole it also ensures that the delivery team work together as an integrated project team.Figure 2 The relationship of procurement strategy to procurement routeA Public Private Partnership (PPP) is an umbrella term for arrangements agreed often with legal force between public and private sector organisations to their mutual benefit.The Private Finance Initiative (PFI) is one form of PPP developed by the Government in which the public and private sectors join to design, build or refurbish, finance and operate new or improved facilities and services to the general public. PFI schemes generally involve a consortium of private sector companies, who collaborate to form a Special Purpose Vehicle (SPV) which then contracts with the public sector to provide services such as hospitals, schools and roads to specifications provided by public sector bodies.3.1 Procurement method issuesConstruction industry has complex analysis mere by dual component of land and building. It has fuzz boundaries. The fragmentation of the industry between contractor, consultant, project management etc creates the industry highly volatile. It can also be argued the reduction of professionalism if it is at only contractor. So it is expected to carry multitude of negative aspects of Investment which is derived from present consumption. In Economics term Investment is the process of trading present consumption for new capital. Present trading can be alternative to investment in other than the construction industry.Individual participant have significant approach to price and quantity.This definition illustrates several key characteristics of PFI schemesA service, rather than capital assets, is purchased.PFI schemes run for a long time . The public sector typically requires procures the provision of a service over a 25 to 35 year period.Buildings or other infrastructure is usually constructed by the private sector as a consequence of the need to provide the agreed service. The PFI agreement will define the level of service required (such as providing a maintained, lit, warm, clean and catered hospital, for example) and the private sector will finance the design and construction of new or adapted facilitates as necessary to accommodate that service.Because the public sector is purchasing a service, rather than assets, it will not own those assets unless the transfer of their ownership is agreed when setting up the scheme (see Section 6.6.5).Subject to any specification imposed by the public sector client, the private sector is free to use whatever means it considers appropriate when constructing the assets. This can lead to design quality and performance shortcomings (see Section 6.6.4).The private sector puts itse lf at risk when securing the finance required to construct any capital assets required by the scheme. In return, it will expect to be paid for managing this risk. This raises the overall cost of PFI schemes above that of non-PFI procurement where financing risks are minimal as they are borne by the public sector with funding traditionally provided and underwritten by the Treasury.3.2 Role of PPP in InfrastructuresIn the projects from the Public Private Partnership (PPP) and Private Finance Initative (PFI) programmes, the public sector contracts to purchase services rather than any particular building from the private sector in the long term. The delivery