Occupying an area of approximately 3.287 million sq. km. and having a population of 136.64 crores, India, although a developing nation, is the fastest-growing economies in the world. According to IBEF, the Government of India has allocated Rs. 111 lakh crore to cover approximately 71% of the projected infrastructural development in India for the years 2019 to 2025. There is no question about the general agreement on the positive relationship between infrastructure and growth. But do they lead to the reduction of inequalities in infrastructure across the nation? The answer is NO.
In spite of many avenues for promoting development, we do not have equitable development across the country. The rural areas and smaller towns of the nation do not accrue the benefits from it. Bajar and Rajeev (2015) identified that infrastructure differences could explain the divergence of economic growth across different states in India. The huge inflow of migrants to urban cities and metropolitan areas for work/employment stands to support the statement (Census 2011).
Given such a scenario, there is a need to tackle the development divide among the urban and rural areas in India. Luckily, the solution to the issue has always been right under our noses. Let us take a closer look at some of the initiatives/schemes that have attempted to bridge this gap in the developmental aspirations of the people.
“Fund Your City” Scheme
The “Fund Your City” Scheme was initiated in Warangal District of Telangana by IAS Officer Mrs. Smita Sabharwal during her tenure as the Municipal Commissioner in the district. The aim of the scheme was to involve the residents of the area in developing public utilities like roads, traffic junctions, parks, etc., through the public-private partnership model. Public utilities can improve transportation facilities, market connectivity, and the general welfare of the people. It is to be noted that Warangal is one of the prominent areas that has been under the radar for the rampant rise in the Naxal movement. The involvement of locals in the development front can aid in addressing socio-economic issues that lead to the rise of Naxalism.
The details of the exact outcomes under the Scheme are hard to come by. But the Fund Your City Scheme has also been adopted and launched by the Municipal Corporation, Vijayawada, in the state of Andhra Pradesh. Funds have been invited from NRIs, corporate houses, philanthropists, and individuals to meet the financial requirements of infrastructure projects and their maintenance under the initiative. Alongside areas to donate for, the funding type can also be chosen by the sponsors, as per the website of the Vijayawada Municipal Corporation.
Overseas Keralites Investment & Holding (OKIH) Limited
The State of Kerala has a vast share of NRIs who contribute to over Rs. 2 trillion in deposits in the State’s banking sector through remittances. These deposits, of over 35% of Kerala’s total bank deposits, were a major source of advances lent to the agriculture and MSME sectors. But according to the Kerala Development Report, the efforts to direct the savings to productive activities have not succeeded. One of the recommendations of the standing committee of the Loka Kerala Sabha was the formation of NRI Investment Company.
The company was set up on a public-private partnership model in 2020 to execute NRI investment projects and fund infrastructure projects of the State through a transparent wealth governance system. The current investment project, RestStop, aims at improving the roads and wayside amenities along National and State Highways in all districts. In addition, verticals such as waste management, agriculture, and skills development have been identified for undertaking future projects. All the projects undertaken by the OKIH are undertaken to create a positive impact on the community. However, they are a work-in-progress with delays due to the COVID-19 pandemic.
ADARSH Model School Scheme, Punjab
The ADARSH Schools scheme has been initiated to provide free and quality education to the people in rural and educationally backward areas through a public-private partnership, with the Punjab Education Development Board at the helm of the implementation. The operations of the schools are undertaken by the private partners like Bharti Foundation, Educomp Solutions, Baba Isher Singh Education Society, Balraj Education Trust, Chief Khalsa Diwan Charitable Society, Shaheed Udham Singh Education, and Welfare Society, etc. with the government sharing 70% of the expenditure for running the schools. There are around 26 ADARSH Schools in Punjab catering to over 1000 students. However, many irregularities in the operations and the employment status of teachers of the ADARSH Schools have been reported.
Improving Development Financing Mechanisms:
One of the common strands that run across these initiatives is the involvement of private players in funding and running development-related projects in different areas. The discussion about financing development infrastructure projects is of relevance because of the presence of financing gaps to cater to all the infrastructural needs across the country. The active participation of public and private players can help formulate a growth strategy to fulfill the development aspirations in the country by addressing the financial barriers. Given below are some strategic measures that can be adapted for engaging the private sector and inducing the proactive role of communities in the development process to tackle the financing gap.
- Municipal Level Fund Mobilisation Schemes:
The government at the municipal or local body level is one of the primary stakeholders in the developmental agenda. It must not depend on the funds from the Centre and the States to undertake infrastructural projects. A separate municipal body can be constituted to identify various infrastructural shortcomings and bring all the regional level stakeholders together to fund for enabling improvement in the identified sectors. Such initiatives at the ground level can help promote transparency and solve the issue of the lack of reliable data mechanisms. Instead of a separate body, a targeted scheme, like ‘Fund Your City’ can also be introduced to source crowdfunding, tap into CSR funds, and facilitate coordination between various actors.
- Public-Private Partnership to provide “Public/Social” Goods: The spending and management of public goods solely by the government creates inefficiencies in its functioning. A public-private model can ensure effective management of public resources by bringing the expertise of private and public sectors together. The state-owned enterprises in the fields of health, education, manufacturing, transportation, etc., can be supplemented by the private sector by increasing access to technology, expert personnel, and management skills. The ADARSH Model Schools in Punjab and Rajiv Gandhi Superspeciality Hospital in Karnataka are examples of the PPP model for improving access to public facilities.
- Increasing Investor Confidence through “Software as a Service” Model: The cities and investments need to adapt to the rapidly evolving technological arena. The Software as a Service (SaaS) can be coded by software companies for meeting the various needs of the government, on-demand, to ensure optimal use of available resources and faster service delivery. It can also form a part of the Corporate Social Responsibility of the firms in the country. The engagement of the public sector with IT solutions can streamline the functioning of service delivery systems, foster trust in the system among the investors, and help the public sector become globally competitive. It can help in inviting more investment channels for bridging the infrastructural gap.
- Tapping into the Financial Markets: At the national level, the Indian Green Bond Market has been rapidly growing, and funds from the Green Bonds are being utilised to finance projects focused on renewable energy. There is a need to diversify the components under the Green Bonds to include ocean protection, sustainable agriculture, promoting national parks, etc. Furthermore, at local body levels, green municipal bonds can be introduced across the country, in urban and rural areas, to finance the municipal-level sustainable and green developmental projects. The Pune Municipal Corporation Bond is an apt example of the successful utilisation of municipal bonds.
All these initiatives are relevant to the Indian context, with the need for financial and technical assistance arising with the ‘developmental’ agenda of the country. They provide glimpses into various possibilities available to bridge the infrastructural gaps in the country to undertake last-mile delivery of developmental projects to benefit all people. For the successful involvement of private players in the development financing to bridge the financing gap, investor confidence needs to be strengthened. Furthermore, to create transparency in the processes of the government, clear and precise institutional mechanisms should be formulated to create a level playing field and build investor confidence, to act as drivers of both domestic and international investors.
Moreover, with the 73rd and 74th Amendments to the Indian Constitution, the Local Self Governments would have a greater role to play in the development set of the country. Educating people and creating awareness about the Panchayats and Municipalities can help utilise resources to meet the development aspirations at the local levels through a bottom-up approach. The communities can take up their initiatives towards meeting their infrastructural requirements by involving all stakeholders in the decision-making process. It could also address the issue of information asymmetry in a centralised, top-down developmental approach and pave for developmental change at a larger scale.
- Bajar, S., & Rajeev, M. (2015). (working paper). The impact of infrastructure provisioning on inequality: Evidence from India (Ser. 35). International Labour Organisation (ILO). Retrieved from http://hdl.handle.net/10419/121445
- FSCI. (n.d.). FINANCING SUSTAINABLE CITIES INITIATIVE. Financing Sustainable Cities Initiative. http://financingsustainablecities.org/.
- Govt. of Kerala. (2021). (rep.). KERALA DEVELOPMENT REPORT: INITIATIVES, ACHIEVEMENTS, AND CHALLENGES.
- Motkuri, Venkatanarayana (2012): Conflicts and Development: A Case of Naxal Movement affected Warangal District in Andhra Pradesh. Retrieved from https://mpra.ub.uni-muenchen.de/49332/