FINANCING FOR SLUMS UPGRADATION IN URBAN INDIA

K.V.N.Sandhya*

Introduction: During the last four decades, there has been fast urbanization in our country. The urban population was 18 % of the total population in 1961, which increased to 28 % in 2001. The increase in urban population is mainly due to low employment opportunities and lower wages in rural areas. Migration and fast growth of urban population witnessing numerous problems like over crowdedness increase in more number of slums, shortage of safe drinking water, overburdened public health centers, insufficient infrastructure and housing, poverty and non availability of finance in urban areas. Among the above stated problems, emerging of more and more number of slums has become a challenging issue in urban areas, because about 33% of urbanites live in slums. The proliferation of slums in major urban centers has led to urban environment having ghettos of disease and poverty coexisting with oases of plenty. It is in this context in this paper we made an attempt to study the availability of finance for welfare schemes in urban India. The main objective of the paper is to study the financial allocation for welfare schemes meant for urban development in urban areas in India. Review of literature: N.R.Madhavi, in her article opined that Mumbai is a metropolis and recorded a population of 119.14 Lakhs in 2001. It is a nerve center of India and one of the largest VAS in the world. The problems of the city stem from the excessive activities in a limited space. To decongest Mumbai, Navi Mumbai developed as an alternative urban area as a new metro center opposite the old city. The pressure of Navi Mumbai has reduced the growth rate of population of greater Mumbai. Thus Navi Mumbai absorbs immigrants who would otherwise come to Mumbai as well as

attract some of the Mumbais present population. The present article is related to situation and casual analysis of migration and urbanization in Navi Mumbai. *Research Scholar, Dept of Economics, Osmania University, Hyderabad **Paper Presented at Two Day National Seminar on Urbanization in India Problems & Prospects Held on 24-25th Jan09 at OUCW, Koti, Hyd.

Major issue in urban planning stem from the excessive concentration of population and activities. Greater Mumbai forms a peninsula rather than an island group. The building of Navi Mumbai can be regarded, as one of the most ambitious urban planning projects undertaken in indianite primary purpose was to contain the congestion in greater Mumbai. With the setting up of Navi Mumbai and the nodes in Navi Mumbai were planned to be self-contained in terms of jobs and other services. G.Paramasivan and J.S.Sacrtees in their article entitled The urban crisis- An analysis concentrates on environmental problems associated with the development of urbanization with specific reference to water pollution. Water is the elixir of life. Literally water is a source of life on earth. But fresh water is emerging as one of the most critical natural resource issues facing humanity. The water per capita availability in India is becoming less and less for simple reason that the population is increasing at faster rate whereas total availability of water continues to remain constant. There is no more fresh water on the earth now than it was 200 year ago, when the population was less than 3 percent of its current size in growing number of places people are withdrawing water from lakes, rivers and underground sources faster than they can be recharged.

This paper has covered one aspect of environmental problems in India in many ways. It is misleading to remove a consideration of cities environmental problems from the environmental problems from the environmental with the wider society. The quality of life in towns and cities in degenerating rapidly. The result is very rapidly expanding urban population which despite disproportionate investments still suffers a rapidly declining quality of life and ranged rural system whose productivity is declining everyday and which keeps pushing more people into urban areas. E.John Suriya Kumar in their study on Global Marketing: dominant cause of growing Urbanization: an attempt is made to explain how global marketing (G.M) and Globalization concepts have lead to increased urbanization in India. It is necessary to explain the concepts of global marketing and globalization for a better understanding of this paper. Globalization is a process facilitating global marketing and driving force for urbanization at an increasing phase all over the world. Urbanization has exploded in India in the past two decades. Thus the real cause behind increased urbanization is not only the central governments policies, but also application of the concept Global marketing. Since, global marketing firms say I am not an Athenian or a Greek but a citizen of the world; urbanization has exploded in Indian the past two decades. Thus the real cause behind increased urbanization is not only the central governments policies, but also application of the concept Global Marketing.

Analysis:

Indias Tenth Five Year Plan noted that the urban slum population is growing despite sharp reductions in poverty and rising incomes. The central and several state governments recognized the need for intervention by initiating, or enlarging existing urban housing and other slum subsidy programs. With this in mind, the Government of India has requested a loan from the World Bank to implement a more effective strategy and delivery mechanism for the financing of urban slum improvement and sanitation provision in underserved areas. Working with the states can be taken to improve the performance in developing appropriate monitoring mechanisms to enable the valuation and modification or redesign of the programs which would improve the transparency, efficiency administrative simplicity and targeting of the assistance and developing funding schemes for slum improvement and sanitation and that could provide incentives so that resources are used more effectively and the program reach expanded. In doing so the programs will contribute to poverty elevation in the poorest urban areas in India. Government of Indias policies on slums has undergone a paradigm shift in recent years. In the 1970s and early 1980s, the government emphasized the notion of slum free cities. What this often meant was forced or voluntary resettlement of slums in central cities. However, over time, the weaknesses of such a program became evident. Firstly, the slum dwellers that were being resettled were fully integrated in the economies of the cities. They were economic agents adding to crucial economic output. consequences. Resettling them would have adverse economic Secondly, removing slums from central cities and transportation

nodes often meant that the new settlements on the outskirts of the city were far from jobs, thus further worsening the welfare of slum dwellers. With this realization, the government started focusing on slum upgrading and slum rehabilitation programs. In the initial years of slum upgrading, the focus was on providing Now there is increased stress on infrastructure to the slums through the NSDP.

provision of shelter to urban slum dwellers through VAMBAY. The sheer volume of resources required to address the needs of the urban poor threatens the sustainability of current efforts. Unless a sustainable framework for

financing urban slum improvement is implemented, successful scaling up of these initiatives would be difficult to undertake; and without successful large-scale poverty reduction in India, it would be impossible to achieve the Millennium Development Goals. In India to address the needs of the urban poor, Indian financial system in general and money market in particular are very strong. The Indian Money market is not an integrated unit, it is broadly divided into two parts viz organized and unorganized. There is compartmentalization between the two markets and as such the rates of interest differ in the unorganized sector from those in the organized sector. The organized sector of the Indian money market comprises of RBI, Commercial Banks, Foreign Banks, Co-operative Banks, and Finance corporations, Mutual Funds and the Discount and Finance House of India Ltd (DFHI). The organized sector on the other hand is fairly integrated. Both nationalized the private sector commercial banks constitute core of the organized sector. Development finance institutions like IDBI & IFCI and investment finance companies like the LIC, GIC, UTI and Mutual Funds are the other institutions, which operate, in the organized sector of the Indian money market. The following welfare schemes implementing by the central and state governments in association with the financial system, which is there in Indian economy. Analysis on some of the important schemes presented in the following: Valmiki Ambedkar Awas Yojana (VAMBAY), introduced in 2001, focuses on shelter for the urban poor, with 20 percent of total allocation for community sanitation facilities under the Nirmal Bharat Abhiyan (NBA) program. VAMBAY has been implementing with 50% Central subsidy, 50% matching funds from State. From Government of India routed through HUDCO. 80% of total amount received from GOI spent on housing of which: 50% given as subsidy, 50% as loan. National Slum Development Program (NSDP), launched in 1996, provides funds for physical and community infrastructure as well as shelter upgrading to. It uses the community structures developed first under UBSP, and later under SJSRY.

Accelerated Urban Water Supply Project (AUWSP) is not strictly for the poor, but provides funding for water related infrastructure in small towns with less than 20,000 in population. GOI started this program in 1993-94. Urban Low Cost Sanitation (LCS). GOI initiated this program in 1980 and it aims at liberation of scavengers through subsidies for conversions of dry latrines into low cost pour flush latrines. 20% to be invested in the provision of water supply and sanitation (toilets) within the assisted slums Urban Ashraya Government of India takes loans from HUDCO. Housing loans ranging from Rs. 25,000 to 40,000 provided per the size of city, excluding Rs. 5,000 upfront deposit. 100% loan Bhavanashree Programs From various financial institutions. Loans between Rs. 30000/- to Rs. 40000/- No subsidy in loan interest rates (between 7% to 8% interest rates).

Program NSDP VAMBY IAY Urban Ashray Bhavana Shree

Loan 70% 50% 8% 100% 8%

Grant 30% 80% 80% Nil Nil

Subsidy Nil 50% Nil Nil Nil

Investment 10% 20% Nil Nil Nil

Rating of Housing and Sanitation Programs

VAMBAY

NSDP

Urban Ashraya

Mythri

Bhavanashre e

Targeting Transparency Efficiency Administrativ e Simplicity Sustainability Total Rating

1.67 2 1 1

1.33 2 1 1

1.5 2 2 2

3 1 2 2

3.5 2 3 3

1 6.67

1 6.33

1 8.5

1 9

2 13.5

(Key: 4 Excellent, 3 Good, 2 Fair, 1 Poor) All subsidy programs should be evaluated on how well they improve the welfare of the beneficiaries. For instance, there are four possible outcomes from a housing subsidy program: they could increase or decrease the quantity of housing consumed by the beneficiary; and they could increase or decrease the cost of housing services as experienced by the beneficiary. When economists talk about efficiency of subsidies, they have in mind two kinds of efficiencies. Consumption efficiency measures whether the valuation the beneficiary places on the subsidy is equal to the cost of providing the subsidy. Production efficiency measures how the market value of the subsidy compares to the cost of providing the efficiency. Taking both these efficiencies in aggregate gives us the program efficiency. Needless to say, to even get a summary measure of these inefficiencies one needs data on the real cost of the subsidy as well as the market price of the subsidy and the valuation that the beneficiary places on the subsidy. It is therefore, very hard to pin down the program efficiency in developing country subsidy programs. Conclusion: At the outset, it is clear from the above, discussion, that there are hard realities in terms of incidence of housing, sanitation etc shortages in urban areas experienced

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