Sustainable Financing for Urban Karnataka-Viable Options

Executive Summary

The objective of this study commissioned by the Directorate of Municipal Administration (DMA), Karnataka in conjunction with City Managers Association, Karnataka (CMAK) is to recommend the best possible measures to be taken to improve the revenue and financial status of Urban Local Bodies(ULBs) in Karnataka in a sustainable manner. The ULBs studied are Bangarpet, Bidar, Chamrajnagar, Davanagere, Haliyal, Hubli-Dharwad, K R Nagar, Lingasugur, Sakleshpur, Sira, Ullal and Yadgir.

IIHS has approached this study with the view that cities that reflect adequate local economic development and that are able to contain their local environmental risks, will be better positioned to be financially sustainable in planning, implementing and maintaining their developmental activities. This in turn will enhance the financial buoyancy of these ULBs.

Based on this approach, a holistic profile for each city was prepared from a detailed analysis of primary and secondary data. The parameters looked at included

a) Economic and Social – Regional connectivity, demographic trends, employment and livelihood and human development.

b) Environmental – Natural and man-made risk and resilience.

Diverse inputs from this analysis have further been coalesced into typologies that have helped categorise these cities and towns over their size or administrative class, regional or spatial (territorial), socio-economic, environmental and financial profiles. The typologies included:

  • Need immediate attention: High vulnerable population, low Human Development Index(HDI), those that are mono-economic, water stressed, disaster prone
  • Need offsetting of negative impact: Satellite towns, those seeing urban sprawl, those having large informal labour
  • Need leveraging of advantage: Those having potential for tourism, trading towns, manufacturing towns, education hubs
  • Need attention to negative impact if any: Those seeing transportation based development, high population growth, agriculture economy linkage

Using these typologies, the following recommendations have been provided:

  1. Urban Governance:

Bridging workshops for development of a ‘Municipal Plan’: Curate and conduct workshops regularly between the ULB and the line agencies. The workshops could be conducted at least every three years structured by the CMAK or other identified institutions with expertise in the field of urbanisation. This could be aligned with the district level visioning process and/or the District Planning Committee’s (DPC) plans.

  1. Land Leverage:
  • Inner city redevelopment: Rejuvenate, re-densify and redevelop vacant lands by leveraging their land value and unused or under-utilised infrastructure. This can make better use of already commercially viable areas by increasing density and bringing in mixed land use.
  • Converting slums on ULB Land to rental housing: ULBs give security of tenure to households by signing a ‘land rent’ agreement with the occupying household, in return for rent on the land occupied. Households remain ‘owners’ of the housing unit and become ‘renters’ of the land.
  • Premium on third party transactions on municipal properties: Collect premium, transfer fees and a share of profits over a change of assignment of plots taken on lease from the ULB. This may be extended to cover ULB buildings currently on lease or rent
  1. Green Jobs:

These jobs within various sectors are not only aimed at boosting local economic development but also enhancing service delivery of the ULBs.

  • Green mobility in urban areas: Development of green mobility systems supported by para-transit systems and non-motorised transport (NMT) infrastructure. The potential areas for job creation in green mobility include manufacture of green mobility solutions, servicing, maintenance and management, information systems and banking support
  • Sustainable solid waste and waste water management: Generation of employment in sustainable practices such as Rainwater Harvesting (RWH), shallow well digging, and planning, implementation and management of sewage treatment plants (including decentralised waste water treatment systems).
  • Urban farming: Generation of employment in the following sectors – Permaculture, gardening and nursery management (on ULB lands), soil and nutrient supply and household level service providers (installation and maintenance of roof top gardens, permaculture units etc.)

These recommendations have been prioritised for the 12 ULBs based on the typologies they fit into. They also have the potential to be extrapolated to all the ULBs in Karnataka keeping in mind their specific characteristics

Rekha Test

Amir Bashir Bazaz  | 4 June 2015 

Key Questions

Assumed that a project idea has been finalized, how do we estimate the quantum of money that is required?

From where are we going to raise the required amount of money?

How do we justify the amount identified to be invested in the project conceptualized?

What are therefore; the municipal finance challenges? Can we understand the limitations, opportunities/possibilities?