Estimates of Urban Infrastructure financing requirements in India 2006-2031

By Ramesh Ramanathan and Shubhagato Dasgupta
1 August 2009

The paper describes the estimation exercise, i.e. the Urban Infrastructure Per Capita Investment Cost estimation and projection of urban finance requirements for the period 2006-2031 referred to as the 2006-2031 Urban Infrastructure Finance Estimation Exercise (2006-2031 UIFEE). The 2006 – 2031 UIFEE is special as it the first one in more than a decade of its nature, covering all urban infrastructure sectors. These new estimates covering the period 2006-2031 will add on to the Rakesh Mohan Committee estimates that projected investment requirements till 2006. This estimation exercise is unique as compared to the earlier estimation exercises for a host of reasons including the level of granularity of the projections and its reliance on real project data, which has been appraised by a variety of expert institutions. The demand driven nature of the projects also ensure that the projects are essential to the requirements of the citizens. The outputs on financing requirements are very closely driven by the service standards and the 2006- 2031 UIFEE, has benefited from the recent effort of the Government of India of creating Standard Service Level Benchmarks for many of the urban services estimated. The grand aggregate for all services estimated for India for the period of 2006-2031 has emerged to be 71620 billion rupees at 2009 prices and for the period of 2009- 2031 the requirement would be 71250 billion rupees at 2009 prices, given the JNNURM investments that have already been chandelled into the sector so far. Given that the Government of India total revenue receipts in 2008- 09 is Rs. 5621.73 billion represents less than 8 percent of the capital expenditure requirements for the period 2009- 2031 ie. 71250 billion rupees. This revelation, though not a surprise in itself raises fundamental policy questions on how the Government needs to address urban infrastructure provision. It is hoped that this analysis will get the serious attention of policy makers and that it will raise and help address the key policy and institutional questions that need to be addressed urgently in the urban infrastructure and service delivery sectors today.