View: India urbanisation critical for getting developed tag
urban transformation will play a critical role in realizing its ambition of becoming a developed country by 2047, the 100th year of Independence.
Indeed, building the necessary infrastructure will be key for creating livable, climate-resilient, and inclusive cities that drive the economy forward. Since nearly 70 % of the urban infrastructure needed by 2047 is yet to be built, sizeable investments will be required. By 2036, India will need to invest $840 billion in infrastructure — an average of $55 billion or 1.2 % of GDP per annum.
However, estimates suggest that between 2011 and 2018, the country's total capital expenditure on urban infrastructure averaged only 0.6 % of GDP, half the required quantum of investment.
Clearly, private financing will need to play a significant role. Yet, while more than 160 Indian cities have been classified as investment grade, reliance on government funding remains high.
Central and state governments finance 72 % of urban infrastructure, with commercial financing providing a meagre 5 %. Recognising these challenges, the government has taken measures to enable commercial financing, but its use remains extremely limited, even in financially strong cities. To tap into private capital, urban local bodies (ULB) will need to comprehensively build their capacity and focus on executing bankable projects.
It will also be important for the country to develop the municipal bond market and introduce innovative financing structures.
To increase the productive potential of citizens, cities will also need to invest in public services to improve their quality of life. Building human capital by improving access to health care and upgrading skills — with the private sector playing an important role —
