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Budget 2022 – 23: Is an Urban Course Correction Possible?  – IMPRI Impact and Policy Research Institute

Budget 2022 – 23: Is an Urban Course Correction Possible?  - IMPRI Impact and Policy Research Institute

Aravind Unni, Tikender Singh Panwar

On February 1, 2022, Nirmala Sitharaman is going to be presenting her 4th annual budget for the union government. The state of the Indian economy is not in the best of spirits, and we are still very much within the pandemic. There are expectations from diverse quarters for numerous measures for infusing ‘buoyancy’ in the markets. This piece aims to re-visit some of them and seek a set of priority actions, urgent allocations, and policy push based on the emerging concerns from India’s urban centers that have been impacted the most in the last two years.  

Indian cities play a critical role in the country and its growth. They are vital and often dubbed as ‘engines of growth – as they offer livelihoods and increased incomes to the many that move to the nearest cities in search of a better opportunity. Even though cities were exclusionary, with inaccessible housing and precarious employment, they offered continuous wages and a chance for many millions to improve their lives. But the pandemic has broken this two-decade-old post-liberalization narrative of trickle-down theory. It is amply clear that the model of development is not working and it was built on enormous inequality and exploitation.

Grim statistics have emerged from numerous quarters highlighting the facts – high urban unemployment hovering near 10%, unemployment figures are well in the 20% and poorest have half of their incomes wiped out. All this in the last few years and India stands out with the dubious distinction of having doubled the number of poor to 134 million in 2020.

The budget comes in a backdrop of heightening inequality, unemployment, and increasing urban poverty levels, a sustained recovery needs to be led by the government with enhanced allocations for the urban. This means investing heavily in the urban infrastructure, creating local jobs within the urban to address the woes of unemployment, improve consumption especially for the lower halves in the society.

Some of which we hope is the following:

First, addressing the challenges of urban unemployment – at least partially – needs an urban counterpart to a robust rural employment scheme like MGNREGA. It is widely recognized that MNREGA proved vital in allaying the rural distress during pandemic lockdowns and helped sustain the rural economy from collapse.

In 2021, the parliamentary standing committee on labor, reviewing the employment crisis, aside from increased allocation to rural jobs had suggested that the union government should roll out a similar scheme for the urban workforce as well. There are also set precedents in the form of state governments like Kerala, Odisha, and Himachal Pradesh, that are implementing urban employment guarantee schemes – albeit limited in scope and scale. According to an estimate, such a program will cost between 1.7 – 2.7 % of GDP per year that can provide work opportunities to more than 50 million workers in the urban areas.

Secondly, for workers on the brink and burdened with debt, there is a need to further formalize, protect, and support their livelihoods. Some of the positive initiatives taken last year like the eShram portal—a national database for unorganized sector workers need to be expanded and consolidated. Fastening the scale of registrations in the portal with linking access to PDS, Insurance schemes and other social security measures needs to be the priority.

Also, considering that the pandemic is far from over, free ration over PDS – under the Atmanirbhar package will most likely continue beyond March 2022 and direct income transfers to informal workers should be explored. Also, the drastically increasing in the pandemic world – yet unregulated and exploited – gig workers regulatory framework has not been delivered upon and awaits a formal announcement, with allocations.

Thirdly, India’s promises in COP26 were well received, but the future commitments cannot be met through our past (in)actions. The budget needs to lay a strong foundation for climate actions, kick staring a policy reform for now redundant National Action Plan on Climate Change (NAPCC), and its subset The National Mission for Sustainable Habitat (NMSH). The Nationally Determined Contributions (NDCs) also stand without a clear articulation of what could/ should be done in urban areas.

Initiating a climate fund and a carbon tax, with incentives for individuals, institutions, and industry alike to contribute positively to climate action should be promoted. We will also have to do a lot more than the Rs 2,217 crore program for air pollution — a mere palliative for cities that are some of the most polluted centers in the world.

Climate action plans for cities need to launch with central funding to build their resilience towards disasters, climate shocks, sustainable transportation, waste management, and urban resource management through water conservation, urban forestry–farming could be the first steps towards bigger challenges that await us.

Fourthly, on transportation and mobility in the cities, the last budget emphasized ‘raising the share of public transport in urban areas through expansion of metro rail network and augmentation of public bus transport services. Most of the resources were allocated to metros. There is a need for urgent re-prioritization of mobility, and it will be better to invest in more public means of transport as opposed to metros that are not viable and accessible in smaller Indian cities.

The call is for a focus on green and active mobility infrastructure in the cities, with a framework to expand the public transport systems like buses and promote non-motorized transport. Also, emphasis is on faster adoption and manufacturing of electric vehicles, including battery manufacturing and deployment of charging infrastructure should be incentivized in the expected support to be offered to the auto-manufacturing sector.

Fifthly, there needs to be sustained focus on the urban governance of city government. The ULBs in India, even after 25 years of the 74th Constitutional Amendment stand as the weakest in the world in terms of capacities, resource generation, and financial autonomy. This is being furthered with the re-centralization of governance, led by central missions and state control over functions.

It is in this context that increased pressure of performing and improving national rankings leads to forced land monetization measures and Public-Private Partnerships (PPP) leading to projects that are not citizen-centric and participatory. Thereby leading to many cities focusing on quick fixes with consultants, as expert agencies as opposed to developing long term capacities, revenue generation, and sustainable governance.

It was markedly visible during the covid pandemic, where ULBs were empowered, they stood as much better at handling a crisis like COVID. Thus, there needs to be increased funding, long-term plans for technical assistance to state governments, and ULBs in planning, financing, monitoring, and operation of urban programs. Also possibly start thinking of a ministry for urban governance.

Sixthly, in the urban centers, most of the spaces are putrefying with the municipal solid waste. Not just smaller towns even large cities are finding it difficult to manage their waste. The push from the center is for more capital-intensive technologies and IT-enabled monitoring. This is not working. A separate allocation must be made for this important area ensuring that decentralized waste management is promoted and developed. Stop giving subsidies to large companies for building waste to energy plants.

Lastly, with regards to housing and urban development schemes, usually, the approach would view urban schemes as ‘infrastructure’ with a need to promote single-window clearance, inviting private investment and PPP models, and so on, but in the climate where consumption is the lowest, there is not much that can be expected unless the schemes are government-led, and people implemented.

The Pradhan Mantri Awaas Yojana-Urban (PMAY-U) provides central assistance for enabling access to affordable housing for the urban poor, but those living in slums and other informal settlements are still mostly outside the ambit of the scheme. It is amply clear that the private-led AHP and CLSS verticals have mostly benefited the middle class. The most effective vertical of the BLC is restricted due to a lack of land titles. It is here that PMAY allocation needs to be more focused on the BLC component and aiding framework to award land title and overall slum improvement proposals for the community.

The development should be led by people themselves and supported by ULB planning cells. JAGA mission of Odisha offers a stellar model to replicate and add value to urban poor communities. Also increased allocation and focus on rental housing and migrant housing is needed for a considerable impact on the workers in need of housing. As for other schemes, like AMRUT 2.0 and SBM 2.0, a more comprehensive approach to being people-led, inclusive, and sustainable will help make cities more liveable. Thereby promoting green jobs, local innovations, and economies that are vital in the coming years.

Concluding, it is to be understood that the crisis in the urban is unprecedented. The established budgets frameworks of tax subsidies, incentives for investment will not work and impetus on government leading the investment is now more imperative than ever. There is also a need to re-articulate a long-term perspective switch to adjust to pandemic reality and push policy ideas through this budget and at least in the coming years to squarely focus on critical aspects such as health, education, livelihoods.

Also, realize that this budget is not a budget for recovery, but this is the one to ensure that people do not starve, a bid to create jobs and pull people out of poverty. This then is not a wish list – but a life-or-death situation of the poorest in Indian cities and a possibility to re-imagine our cities.

Read more by the authors on Urbanisation in India titled India’s Cities need to be Sustainable, not Smart in IMPRI insights

Read more by Tikender Singh Panwar on Democratic Governments titled Need for Democratic and Empowered City Governments in IMPRI Insights

Youtube: View the Full YouTube Playlist for Rural Realities | Catastrophic Second Wave COVID-19 | Practitioners Experiences in India Villages

About the Authors

Aravind works with the homeless in Delhi and has done his master’s in urban planning from Berkeley.

tikender singh panwar

Tikender Singh Panwar is a former deputy mayor of Shimla, adviser Samrudh Bharat and visiting senior fellow with IMPRI.

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