Cities may soon come in three colours: red, black and blue chip.

The Union urban development ministry is putting in place a grading system for Indian cities to guide investors wanting to pump money into urban infrastructure. The concept is inspired from European countries where cities are branded and graded annually to make them compete with each other. The ministry will constitute a panel comprising senior bureaucrats, credit rating companies and people of public forums to grade cities.

Cities would also be judged on how they have worked towards improving urban amenities for their inhabitants.

Special points would be given to cities that have rationalized the property tax structure, implemented a uniform stamp duty bringing it close to 5%, and repealed the Urban Land Ceiling Act and implemented the Model Rent Control Act.

Cities that have carried out projects on the public-private partnership (PPP) model will also get bonus points. Infrastructure experts feel the new initiative will help lift the crumbling infrastructure of Indian cities. Besides serving as an input for private sector to invest in the cities, the move would facilitate healthy competition and transparency in approach. Urban infrastructure is the prime need of the hour. While Delhi, West Bengal and Orissa have reduced stamp duty to 8%, Andhra Pradesh has introduced GIS in property tax assessment along with computerisation of land records. Major cities in these states thus stand to gain. Cities such as Jaipur, Mumbai and Hyderabad aiming to run mass transit systems like metro rail on PPP model would stand to benefit while being accorded grades.

The government also hopes to monitor effective utilisation of special funds such as Jawaharlal Nehru National Urban Renewal Mission (JNNURM) through the exercise. Cities have been asked to submit data on utilising city development funds by May 24, which would be one of the factors in assessing them. The data would be scrutinised by the expert panel. Under the JNNURM, the Centre allocated Rs 2,460 crore to select cities for their development plans in 2006-07. Now, it is time to check, how best they have utilised the funds. The grading system would not only monitor development of a city on a sustainable manner, it will also help potential investors select particular cities as investment destinations based on development factors.
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