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Editorial Explained

AMRUT: A way to transform the urban reforms [Editorial Explained]

Recently, MoUD modified the AMRUT reform matrix, creating a template that enables States and cities to go beyond incrementalism and implement transformational changes over three years. AMRUT rightly puts states and ULBs in the driver’s seat. By prioritising five core areas, AMRUT sharpens focus in the right areas.
By IASToppers' Editorial Board
June 01, 2017

Contents

  • Background
  • About AMRUT scheme
  • Modifications in AMRUT
  • Conclusion

For IASToppers’ Editorial Explained Archive, click here

GS (M) Paper-1: “urbanization, their problems and their remedies.”
GS (M) Paper-2: “Government policies and interventions for development in various sectors and issues arising out of their design and implementation.”

 

Background:

  • India’s tryst with comprehensive urban reforms started with the 74th Constitutional Amendment Act in 1992 to empower cities.
  • Thirteen years later, in December 2005, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was launched.
  • JNNURM scripted a comprehensive agenda for seven years through 23 reforms (13 mandatory and 10 optional), to be implemented by States and urban local bodies (ULBs).
  • But an evaluation of JNNURM in 2013 found States and ULBs unable to stick to reforms, delays in release of additional central assistance and manifold hindrances to project completion.
  • Then in June 2015, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) programme was launched by the Ministry of Urban Development (MoUD), which included 11 reforms dotted with 54 milestones, to be implemented by all 500 mission cities in four years.

 

About AMRUT scheme:

The scheme was launched by Prime Minister Narendra Modi in June 2015 with the focus of the urban renewal projects is to establish infrastructure that could ensure adequate robust sewerage networks and water supply for urban transformation.

ias-toppers-amrut-scheme

  • Rajasthan was the first state in the country to submit State Annual Action Plan under Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
  • AMRUT is the new avatar of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
  • The scheme is dependent with public private partnership model (PPP) model.
  • AMRUT adopts a project approach to ensure basic infrastructure services relating to water supply, sewerage, storm-water drains, transportation and development of green spaces and parks with special provision for meeting the needs of children.
  • AMRUT will be implemented in 500 locations with a population of one lakh and above. It would cover some cities situated on stems of main rivers, a few state capitals and important cities located in hilly areas, islands and tourist areas.
  • Under this mission, 10% of the budget allocation will be given to states and union territories as incentive based on the achievement of reforms during the previous year.
  • Central assistance will be to the extent of 50% of project cost for cities and towns with a population of up to 10 lakhs and one-third of the project cost for those with a population of above 10 lakhs.
  • Under this mission, states get the flexibility of designing schemes based on the needs of identified cities and in their execution and monitoring.
  • States will only submit state annual action Plans to the centre for broad concurrence based on which funds will be released. But, in a significant departure from JNNURM, the central government will not appraise individual projects.

 

Modifications in AMRUT:

Recently, MoUD modified the AMRUT reform matrix, creating a template that enables States and cities to go beyond incrementalism and implement transformational changes over three years.

  • The template spells out five major reforms, such as
  1. ‘Trust and verify’ (40% weightage),
  2. ‘Professionalisation of municipal cadre’ (25% weightage),
  3. ‘Land titling law’ (15% weightage),
  4. ‘Credit rating’ (10% weightage)
  5. ‘Value capture finance’ (10% weightage)
  • AMRUT alters the approach in two ways: First, the number of reforms aimed at has been reduced and separated from project assistance. Second, shifted focus from penalisation to incentivisation.
  • AMRUT now sets aside 10 per cent of funds for incentives to be given based on self-assessment by ULBs and corroborated by State-level high-powered steering committees based on the report of independent monitoring agencies.
  • While AMRUT cascades the autonomy to design, monitor and approve projects to states and civic bodies, it also persuades local stakeholders to put more skin in the game by participating in execution.
  • The corpus of the Reforms Incentive Fund, accessible to those adhering to mandates and milestones, has been increased six-fold to Rs. 3,300 per annum for the next three years.
  • The Centre is also increasingly looking at impact-oriented urban programmes where States and ULBs take more responsibility for implementation and sustaining urban infrastructure. So traditional grant-based programmes are being embedded with impact and outcome milestones.
  • JNNURM was considered to have big city bias. AMRUT has cast the net wider, reaching all urban centres with a population of one lakh and more.
  • Under the programme, the number of reforms expected from States and ULBs has decreased, but the number of cities expected to adhere to reforms have increased.
  • Earlier, several committees have elaborated upon various tax and non-tax revenue improvement measures for municipalities.
  • To empower ULBs financially, resorts to market borrowings (pooled finance, municipal bonds and institutional finance) and project execution mechanisms such as public-private partnerships and land-based financing instruments.
  • Under the new AMRUT reforms, in the initial year, States are also expected to formulate value capture financing policy, tools and rules for all cities with a million plus population. In the subsequent years, they will have to operationalise and implement it.
  • Cities with investment grade rating will be encouraged to float municipal bonds and those below the rating will continue working on improving their ratings.

 

Conclusion:

  • Economic Survey last fiscal reiterated ‘cooperative and competitive federalism’ as India’s unavoidable future.
  • It argues for cities to be entrusted with responsibilities, empowered with resources, and encumbered by accountability to transform into vehicles of competitive federalism. In that context, AMRUT rightly puts states and ULBs in the driver’s seat.
  • By prioritising five core areas, AMRUT sharpens focus in the right areas.

 

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