Репост из: Upsc DIAGRAMS ( Champions camp)
#25 Nov 2025 Editorial ( Indian Express)
Financial challenges in urban infrastructure development, we can use the mnemonic “F.I.N.A.N.C.E.S.”:
F - Funding Gap
• India needs ₹70 lakh crore for urban infrastructure by 2036, but current annual government investment is only ₹1.3 lakh crore, far short of the required ₹4.6 lakh crore.
I - Inadequate GDP Share
• Municipal finances have stagnated at just 1% of GDP since 2002, despite the growing urban population and increasing infrastructure demands.
N - Neglect of Tax Revenues
• Cities like Bengaluru and Jaipur collect only 5-20% of potential property taxes, and total property tax revenue is just ₹25,000 crore (0.15% of GDP).
A - Absence of Self-Sufficiency
• Municipalities’ self-generated revenue share has dropped from 51% to 43%, increasing dependence on grants and transfers from state and central governments.
N - Non-Utilization of Funds
• About 23% of municipal revenues remain unspent, with cities like Hyderabad and Chennai using only 50% of their budgets in 2018-19.
C - Cost Recovery Gaps
• Services like water supply and waste management recover only 20-50% of their costs, leading to financial shortfalls in basic infrastructure maintenance.
E - Erosion of PPP Investments
• Public-private partnership (PPP) investments in urban infrastructure plummeted from ₹8,353 crore in 2012 to ₹467 crore in 2018, limiting private sector contributions.
S - Stagnant Revenue Growth
• Municipalities have failed to scale revenues in line with urban needs, reflecting limited capacity to fund infrastructure development sustainably.
Way forward -- needed reforms for sustainable urban development,
we can use the mnemonic “S.U.S.T.A.I.N.”:
S - Strengthen Municipal Autonomy
• Empower municipalities with greater financial and administrative authority to manage resources effectively, addressing low revenue generation (currently only 43% self-generated).
U - Utilize Project Pipelines
• Develop and manage 600-800 projects annually with a focus on sustainable public-private partnerships (PPPs) to meet the ₹70 lakh crore infrastructure investment target.
S - Separate Project Planning from Funding
• Decouple project preparation from financial assistance to ensure sustainable and efficient execution, addressing low capital budget utilization (e.g., Hyderabad and Chennai).
T - Transform with Digital Public Infrastructure
• Leverage modern digital tools to improve public services, especially transportation systems, enhancing urban efficiency and citizen satisfaction.
A - Align Land Value with Transport Projects
• Capture land value around metro and rail projects, integrating urban development with transportation to maximize efficiency and city design benefits.
I - Innovate Financing Models
• Encourage innovative and diversified funding sources, including better PPP frameworks and improved self-generated municipal revenues.
N - Nurture Sustainable Development
• Focus on long-term urban planning that aligns environmental, social, and economic goals for inclusive growth and sustainable urban living.
Financial challenges in urban infrastructure development, we can use the mnemonic “F.I.N.A.N.C.E.S.”:
F - Funding Gap
• India needs ₹70 lakh crore for urban infrastructure by 2036, but current annual government investment is only ₹1.3 lakh crore, far short of the required ₹4.6 lakh crore.
I - Inadequate GDP Share
• Municipal finances have stagnated at just 1% of GDP since 2002, despite the growing urban population and increasing infrastructure demands.
N - Neglect of Tax Revenues
• Cities like Bengaluru and Jaipur collect only 5-20% of potential property taxes, and total property tax revenue is just ₹25,000 crore (0.15% of GDP).
A - Absence of Self-Sufficiency
• Municipalities’ self-generated revenue share has dropped from 51% to 43%, increasing dependence on grants and transfers from state and central governments.
N - Non-Utilization of Funds
• About 23% of municipal revenues remain unspent, with cities like Hyderabad and Chennai using only 50% of their budgets in 2018-19.
C - Cost Recovery Gaps
• Services like water supply and waste management recover only 20-50% of their costs, leading to financial shortfalls in basic infrastructure maintenance.
E - Erosion of PPP Investments
• Public-private partnership (PPP) investments in urban infrastructure plummeted from ₹8,353 crore in 2012 to ₹467 crore in 2018, limiting private sector contributions.
S - Stagnant Revenue Growth
• Municipalities have failed to scale revenues in line with urban needs, reflecting limited capacity to fund infrastructure development sustainably.
Way forward -- needed reforms for sustainable urban development,
we can use the mnemonic “S.U.S.T.A.I.N.”:
S - Strengthen Municipal Autonomy
• Empower municipalities with greater financial and administrative authority to manage resources effectively, addressing low revenue generation (currently only 43% self-generated).
U - Utilize Project Pipelines
• Develop and manage 600-800 projects annually with a focus on sustainable public-private partnerships (PPPs) to meet the ₹70 lakh crore infrastructure investment target.
S - Separate Project Planning from Funding
• Decouple project preparation from financial assistance to ensure sustainable and efficient execution, addressing low capital budget utilization (e.g., Hyderabad and Chennai).
T - Transform with Digital Public Infrastructure
• Leverage modern digital tools to improve public services, especially transportation systems, enhancing urban efficiency and citizen satisfaction.
A - Align Land Value with Transport Projects
• Capture land value around metro and rail projects, integrating urban development with transportation to maximize efficiency and city design benefits.
I - Innovate Financing Models
• Encourage innovative and diversified funding sources, including better PPP frameworks and improved self-generated municipal revenues.
N - Nurture Sustainable Development
• Focus on long-term urban planning that aligns environmental, social, and economic goals for inclusive growth and sustainable urban living.