NIPFP/March 13, 2006

NIPFP/March 14, 2006

Nagpur: City Development Plan (CDP) and

City-Level Reform Agenda

An Appraisal Report

City Development Plan

1. The Nagpur Municipal Corporation (NMC) has submitted a copy of the City
Development Plan (CDP) accompanied by the city-level Reform Agenda. It has been prepared
with assistance from the USAID and CRISIL. The CDP consists of a brief history of the city, the
institutions that are responsible for service provisioning and city’s administration, land use
pattern, a vision statement for Nagpur, strategies and an action plan, an analysis of the finances
of NMC, and an investment plan – in this sequence. The section on strategies and action plan
contains a brief account of the service levels and service/infrastructure gaps. What is worth
noting is that the vision and strategies are largely a product of stakeholders consultations;
according to the CDP, four consultations wee organised and rapid assessments (SWOT) were
done to assess the city’s strengths and weakness.

2. The CDP has been prepared by following three steps : -

(a) Defining vision and mission statements (based, inter-alia, on past studies and
data)
(b) Identifying priority actions to achieve missions.
(c) Feasibility assessments and investment scheduling

An another place and it is very relevant to note, the CDP claims that it addresses
the following three questions:

(a) How will the Nagpur Municipal Corporation (NMC) guarantee basic level of
services to all citizens, and make urban planning responsive to emerging needs;
(b) How will the NMC manage public finance in a modern and transparent way and
execute urban planning and governance in line with an established framework;
and
(c) How will the NMC increase the revenues and expand its tax base, and improve its
creditworthiness for sustaining urban service delivery.

3. Nagpur’s population growth of 26% during 1991-2001 is lower than the national average;
the city’s population growth has been registering a decline over successive decades. The CDP
attributes this decline to stagnating economic opportunities and neglect of Nagpur – indeed, the
whole of Vidharbha. At the same time, the CDP is built on the economic importance and
potential of Nagpur (discussed at length); the CDP presents in this connection the MIHAN

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project under which it is proposed to develop an airport with a capacity to carry 14 million
passengers a year in about 30 years time (based on a Techno-Economic Feasibility Study of the
Proposed Multi-Modal International Passenger and Cargo Hub Airport at Nagpur), a rail-road
terminal, SEZ, IT parks, health city, other manufacturing and value added units and residential,
open spaces, hotels, roads etc. What is not clear from the CDP is (i) the current status of this
proposal, and (ii) whether the proposed CDP takes MIHAN as a reality, or whether it leaves it
out of reckoning. Given the size of the project, it is important that its status and the feasibility of
MIHAN becoming a reality are adequately explained and their possible impact on the vision also
brought out.

4. The infrastructural status of Nagpur is not entirely clear from the CDP. On page 11
para1.3.3, the CDP points out that “the city of Nagpur has decent urban infrastructure both
physical and social in terms of quality and quantity to support large industries and services set
up. The assessment has indicated that it is of standards comparable with other cities in the
country. Under JNNURM, these infrastructures are poised for a quantum change that will
support the aspiration of Nagpur emerging as the growth nucleus of central India”.

Subsequent reference to the status of infrastructure, however, do not support the above.
Noticeable services inadequacies are noted. Also pointed out are the problems in e.g., non-
revenue water (62%), limited sewerage treatment facility, disposal of industrial effluent into the
city rivers, limited road space (land use table), shortage of public transport system etc. In the
case of water, the status of metering is unclear. There is no discussion on the factors that might
explain the problems of inadequate service levels. Then, there are basic data gaps. The CDP
does not given even the status of lpcd or the number of hours water is available in the city, and
how it affects the quality of life and efficiency of industrial plants. There is no discussion on the
% of population who resort to open defecation.

5 Over 8 lakh persons or 40% of the city’s population live in slums. The CDP has
described the number of slum redevelopment projects and low-cost sanitation projects that have
been completed. The Nagpur Municipal Corporation (NMC) has under the Slum Rehabilitation
Act, initiated a slum upgradation plan to make Nagpur a slum-free city. The Slum
Redevelopment Authority (clarify – is it the NMC or the SRA) has proposed housing projects
worth Rs. 250 crore under JNNURM and balance on a PPP model (explain – what is to be done
by the private sector and what is to be done by the public sector).

6. The finances of the Nagpur Municipal Corporation (NMC) have been analysed, with the
main message emerging that the finances are in a satisfactory state. The NMC has a surplus on
revenue account; nearly 48% of revenue income is derived from octroi. For the past two years,
the NMC has not taken any loan for financing infrastructure. This section does not explain
where the problems in NMCs finances are – at other places, it talks of low coverage of properties
by property taxes, low collection efficiency, inefficient user charge etc. Also, 48% of municipal
expenditure is on establishment. The CDP, in the earlier part, has stated that one of the purposes
of CDP is to ascertain creditworthiness of NMC. Some conclusions on this aspect are necessary
and so are the identification of the areas of concern. Merely having a surplus does not guarantee
a good credit performance.

7. The CDP has a vision of developing Nagpur as “the growth nucleus of central India”.
Further elaboration of the vision is described as under:: “an eco-city that provides adequate,
equitable, sustainable access of urban services for all cities - a city that is safe, liveable, and that
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promotes growth of its citizens”. For this, the CDP has indicated that NMC should (or will)
support the following:

(a) The city should attain a key position in IT, ITES and health services related
industries
(b) Support industrialization in its hinterland
(c) Promote education, culture and tourism
(d) 100% coverage in water supply and improved service levels
(e) 100% coverage in sewerage collection
(f) Improved road safety and better traffic management through provision of
flyovers, bridges, parking facilities etc.
(g) 100% solid waste collection efficiency and disposal of waste in environmentally
friendly manner.

The CDP has given sector–specific mission statements. Given the extent of service levels
and the problems that the different services face, it will be useful to ascertain if 100% coverage
in respect of water supply, sewerage, or waste collection is achievable within the tenure of
JNNURM.

8. The CDP has given sector-specific strategies, with focus on both service augmentation
and remedying the sector-specific problems. The remedies proposed are not backed by specific
proposals. For instance, the CDP suggests “adoption of principles of full cost recovery” – how
will it be translated is not discussed. Similarly, it says that NMC will have autonomy in tariff
fixation (p.62); how will it secure autonomy in tariff fixation when any tariff revision is to be
approved by the Government of Maharashtra is not given. In short, there is a lot that needs to be
reworked.

9. The financing plan too is not clear – (Table 25). It suggests that JNNURM grants from
the central government will be of the order of Rs. 1013 crore for the duration of the JNNURM,
but no explanation of where will these be used is given.

City-Level Reform Agenda

1. The city-level reform agenda is very weak. Reform agenda is not a mix of statements
that the NMC will do this or that; it is a specific time-bound reform agenda with proper annual
phasing and explanation. For example (para 12.1.4), the CDP suggests that NMC plans to
gradually increase the user charge to collect full cost of operation and maintenance. Will the
NMC use increased tariff as the main reform strategy, or work on reduction of non-revenue
water and plugging the leakages – none of this is explained in the reform agenda. On internal
earmarking, the NMC has been earmarking (is it earmarking or spending level) for the provision
of services for the urban poor. A subsequent paragraph indicates that it is planned from 2006/07
(page 103). Issues of tenurial security to the poor have not been brought out as a part of the
provision of basic services.

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 (a) Adoption of modern accrual-based accounting system.

The Nagpur Municipal Corporation has initiated the process of change-

over to accrual-based accounting, and this process is expected to be completed by
March 2007.

(b) E-Governance application

This initiative began in 1998 and today covers a number of areas – citizen
felicitation centers, computerization of octroi and property tax department, water
billing, biometrics system. GIS etc.

(c) Reform of property taxation

The NMC plans to begin the process of revaluing properties in 2006/07.

The overall collection efficiency is 60%. About 55% properties are under tax
net. The NMC needs to spell out a strategy of efficiently using property taxation,
covering the inadequacies of the existing system. The viability of the present
system is questionable.

(d) User charge

A proper explanation of how the NMC plans to cover the O & M costs is
needed.

(e) Internal earmarking of budget

The NMC plans to set aside (it claims earlier that 5% of the budget is
earmarked for the urban poor) 5% for the urban poor. The Ministry may take a
view if it is adequate in light of the fact that roughly 40% of the city’s population
live in slum.

(f) Provision of basic services to the urban poor.

The NMC needs to provide a proper strategy of extending services to the

poor; the approach to providing tenurial security needs to spelt out.

On the optional reforms too, there are serious weaknesses. The CDP
states that reform of bye-laws have been undertaken and bye-laws has been
simplified. What that simplification is, has not been stated. Same weaknesses
with the other reforms are noted.

2. The main areas of concern are:

(a) Use of the existing baseline data and situation in developing the vision and
strategies. Rapid assessments are not adequate.

(b) Identification of factors that have impeded infrastructure improvement

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 (c) Feasibility of achieving sector mission goals

(d) No examination of institutional problems faced by city.

(e) Re-examination of the city-level reform agenda – to what extent are the
constituents of the reform agenda the problems faced by the city-level
institutions?

Recommendation
The CDP of Nagpur needs substantial revision.

The city-level reform agenda requires to be reworked and redrawn.

The Ministry may, at best, give a conditional approval, with clear directives that the
NMC will be required to revise the CDP. The Ministry will need to negotiate and rework on the
city-level reform agenda with city-level officials.

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