Urban infrastructure financing in India: a proposed framework for ULBs

Infrastructure has been identified as the backbone of any economy as it provides channels of economic growth. For emerging economies like India, with 31% current urban population and contribution of 63% to GDP; the pie is expected to increase to approximately 40 percentages by 2031 with a GDP contribution of 70%-75%. This creates a need for rapid development as well as the strengthening of existing urban infrastructure to accommodate growing demand and to exploit its economic contribution. The extent of urban infrastructure development is delivered at three levels of governance; Centre, State and urban local bodies (ULBs). ULBs being the last level of governance for infrastructure development in urban India, they are grossly under-equipped to effectively generate revenues and raise capital. The present study has identified issues in the existing financing and assessment framework of ULBs and suggests a framework to rationalise their funding patterns and to bring competitiveness. The paper stresses the need of the proposed framework to bring smart city SPV and other ULBs at the equal platform.