Building Smart Cities in India - National Institute of … Smart Cities in India January 30, 2014...
Transcript of Building Smart Cities in India - National Institute of … Smart Cities in India January 30, 2014...
Building Smart Cities in India
January 30, 2014 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 1
Agenda
What great cities do?
Imperatives for Indian cities
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 2
Every city can be a good city…
Public safety Healthcare
Education
Transportation
Jobs and businesses
Greens and recreational spaces
Air quality
Entertainment Housing
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 3
…but what makes a city great?
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 4
From our studies of great cities, we learned that…
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 5
Achieve smart growth
Lead, inspire, perform Do more with less
Great cities…
Let’s explore how…
While there are many paths to greatness, great cities do three things well
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 6
Our findings show that great cities excel in three ways which sets them apart from good cities
Grow smart Lead, inspire, perform Do more with less
Great cities …
SOURCE: McKinsey
▪ Develop an economic strategy: Focus efforts on strategic industries
▪ Promote opportunity and livability: Connect residents to jobs and create a safe and enjoyable city to live in
▪ Renew the environment: Reduce GHG emissions and improve air and water quality
▪ Build a personal vision: Design a legacy built on personal passion and priority issues impacting the city
▪ Build a winning team: Attract and retain the best talent
▪ Create an accountability culture: Execute pragmatically with an eye towards driving impact
▪ Forge stakeholder interest and trust: Stakeholder engagement through data transparency, and multi-sector partnerships
▪ Leverage all financing options: Maximize revenue collection and explore new financing models
▪ Introduce investment accountability: Prioritize, manage and govern capital investments
▪ Use technology to improve city services
▪ Actively assess and manage expenses: Improve cost transparency
▪ Stop wastages and leakages in all government services
1 2 3
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 7
Bogota – Attracting foreign direct investment
SOURCE: World Bank; Invest in Bogota
Government-level intervention (2006) Impact Situation (2001)
▪ Bogota was recovering from two decades of civil war
▪ The private sector had lost confidence and stopped investing – FDI totalled only
$ 2.5 billion ▪ Unemployment rate
was 18.2 %
▪ Invest in Bogota was created as a public-private partnership between the Bogota Chamber of Commerce, the Bogota City Government and the Government of Cundinamarca, with support from the World Bank
National government intervention helped to reduce the unemploy-ment rate to 9.7%
▪ Invest in Bogota successfully increased economic activity and foreign investment in the city – FDI increased, reaching
$6.8 billion in 2010 – MNCs almost doubled – 3,600 new technical
jobs in the city created – Investment projects in
the city tripled
GROW SMART – DEVELOP AND ACTIVATE ECONOMIC STRATEGY
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 8
Luxembourg City – Treating businesses as clients and adopting client service approach to attract businesses
SOURCE: Interview with Former Mayor Helminger; Doing Business Report; PWC report 2006; web-search; team analysis
Mayor – Intervention Impact Situation
▪ Mayor Helminger initiated a review of citizen and business services and introduced new customer interfaces in 2001:
▪ Impact on business environment – Number of days to
open a business has fallen from 26 days to 19 days, because now all forms can be completed in a one-stop-shop
– Cost to open a business has fallen by 90%
▪ When Mayor Helminger (1999-2011) took office in Luxembourg city, there were 50 key service processes for citizens, which were complex to access; little integration across city government agencies
– “Espaces Enterprises”, a one-stop-shop for startup businesses
– Bierger-Center where all services are centralized to simplify dealings with city
– eBerger-Center, which provides birth, death, marriage and residence certificates
GROW SMART – DEVELOP AND ACTIVATE ECONOMIC STRATEGY
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 9
Singapore’s urban livability strategy has been recognized as one of the best among sister Asian cities
▪ Growing population with changing demographics: – Population is
expected to reach 6.5 million over the next 50 years
– By 2050, Singapore’s median age will be 54, making it one of the demographically oldest countries in the world
▪ Resource constraints:
– Singapore’s land area expected to increase by 25% vs population increase by 250%
Impact Situation Intervention ▪ Ranked the 3rd
most livable city worldwide, in the Global Livable Cities Index by the Centre for Livable Cities
▪ Education: – ~20% total budget spent on education – Literacy rate: 95%; average years of
schooling: 9 ▪ Safety:
– Strict laws regulating behavior – Strong surveillance, i.e., Neighborhood Police
Posts operate 24/7 in densely populated housing estates
▪ Affordable housing: – State owns 90% of land, government
provides cheaper financing and subsidies for lower income residents
– Diversity of home designs, mixed-use developments
▪ Green spaces: – 10% of city land set aside for green space – Developing 843-acre park, costing > $795 M
▪ Aging and wellness: – Public-private partnerships to expand
healthcare offerings
SOURCE: Centre for Liveable Cities (CLC) and the Urban Redevelopment Authority (URA)
GROW SMART – PROMOTE LIVABILITY AND OPPORTUNITY FOR ALL
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 10
Barcelona’s SmartCity Centre of Excellence
SOURCE: barcelonacatalonia.cat; 22@barcelona innovation district and the internationlisation of business; Case study: 22@Barcelona Innovation District – Sustainable Cities Collective
Project overview
▪ 22@Barcelona launched in 2000 ▪ Located in historic (dilapidated) cotton
district of Sant Marti
Partnership involvement
▪ During the Smart City Expo in 2011, the Mayor announced the launch of a SmartCity campus to be the headquarters of all companies related to smart cities in Barcelona
▪ Partnerships: – 5 companies signed an
agreement with the Ajutament de Barcelona
– Partners to roll out services and infrastructure and to implement sustainable urban management projects
– Schneider Electric to create a SmartCity Centre of Excellence in the Campus
Financing
▪ Investment in infrastructure of the entire 22@Barcelona District: – A total of 200 million Euros
(2000 – 2010) – Mainly from private investors
(60%), with another 10% from municipality, and 30% from future public users
▪ New companies installed in the district between 2000 and 2009 – 1,502 (41.8% newly created)
▪ New jobs installed in the district between 2000 and 2009 – 44,600 (61.7 newly created)
▪ A 23% increase in residents since project inception
▪ Employment target of 100,000 new jobs with 20-25% of workforce coming from the international community
▪ 22@Barcelona is home to 5 knowledge/technology intensive clusters; ICT, media, bio-medical, energy, and urban design
▪ The project had 5 primary aims – Improve mobility (focus on EV) – Increase overall energy efficiency – Create comfortable, safe buildings – Obtain maximum efficiency in water
management – Improve connection between citizens
and local authorities
What is Smart City Campus-22@Barcelona? Smart city segments addressed
22@Barcelona actual results
22@Barcelona anticipated results
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 11 SOURCE: City Council of Seattle: http://www.seattle.gov/council/issues/zerowaste.htm; press search
Mayor Intervention Impact Situation ▪ In the 1980s, Seattle
committed to recycle a minimum of 60% of its solid waste – By 2004, waste
diversion rates did not exceed 43%
▪ City council adopted a long-term zero-waste strategy – 60% waste diversion
rate by 2012 – 70% waste diversion
rate by 2025
▪ Key components of the strategy are: – Incentivizes for producers who
use reusable / recyclable materials
– Mandatory food waste collection
– Ban the use of Styrofoam and plastic bags
– Solid waste facility re-designs to emphasize better waste prevention, recycling and disposal systems in the future
▪ 10.9% of waste sent to landfills in 2009 (352,000 tons)
“Seattle is an environmental leader in the United States, and our commitment to waste reduction is unparalleled” Council member O’Brien, Jan. 2010
Seattle – Moving towards zero-waste through a variety of policy levers
GROW SMART – RENEW THE ENVIRONMENT
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 12
New York – Engaging citizens through technology
SOURCE: Press search; web search; team analysis
Mayor-level intervention Impact Situation
▪ New York City is a mega-city – $60 billion budget – 350,000 city employees – > 40 city departments – 8 million people
▪ Hard to measure city performance – Limited data available to
citizens – Limited data-sharing and
integration across departments
▪ Mayor Bloomberg came into office with a mission to create a more effective, more efficient and technologically-enabled government that is – Accessible – Transparent – Accountable
▪ Launched NYC 311, a non-emergency central number now receiving >1.2 million calls per month where citizens go to report street repairs and illegally parked vehicles, request tax information, and much more
▪ Launched Citywide Performance Reporting Online (leveraging 311 and other agency data)
▪ Created robust reporting mechanism to help make informed decisions
– Tracks 4,000 KPIs across 40 departments
– City government culture transformed to ensure greater accountability for performance
▪ Provides customers and advocacy groups with a fast, flexible tool to monitor city performance and service level – > 500 "critical"
outcome measures
– Digestible formats
▪ NYC BigApps competition inspires innovation of useful apps for all aspects of city life
▪ Complex interface between citizens and city – Over 40 help-lines:
▫ 14 for public safety ▫ 8 for infrastructure,
regulatory and community services
▫ 7 for business affairs and waste management
▫ 11 for health and human services
DO MORE WITH LESS
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 13
Bogota – Antanas Mockus
SOURCE: Press search; web search
LEAD WELL – DEVELOP A PERSONAL VISION
Impact
▪ Famous initiatives included hiring 420 mimes to make fun of traffic violators, because he believed Colombians were more afraid of being ridiculed than fined. – Traffic fatalities dropped by over 50%,
▪ When he asked residents to pay a voluntary extra 10% in taxes, 63,000 people did so
▪ Bogotá saw improvements such as: water usage dropped 40%, 7000 community security groups were formed and the homicide rate fell 70%, drinking water was provided to all homes (up from 79% in 1993), and sewerage was provided to 95% of homes (up from 71%).
Personal vision
▪ Turn the city of Bogota safer and cleaner and inculcate a greater sense of civility and community
▪ He believed in the power of social incentives and norms and communicated his vision through creative and playful campaigns aimed to spark residents’ interest and increase the visibility and social costs of undesirable behavior.
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 14
Agenda
What great cities do?
Imperatives for Indian cities
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 15
Cities are likely to house 40 percent of India’s population by 2030
290220
377
+223
2030
600+
2011 2001 1991
SOURCE: India Urbanisation Econometric Model; McKinsey Global Institute analysis
1 Defined as the ratio of urban to total population based on the census definition of urban areas; population >5,000; density >400 persons per square kilometre; 75 percent of male workers in non-agricultural sectors; and statutory urban areas.
31 41 26 Urbanisation rate1
Percent
1210 1,470 856 Total population Million 1,040
28
Urban population Million
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 16
10 states will be more than 50% urbanised by 2030
33
35
37
39
43
45
48
48
53
52
54
55
63
60
69
62
Andhra Pradesh
Haryana
Punjab
Karnataka
Gujarat
Maharashtra
Kerala
Tamil Nadu
Urbanisation rate Percent, total population
Urban population Million 2030
2011
34.9 52.7
15.9 25.3 50.8 79.9
25.7 45.4 23.6 39.2 10.4 19.0
8.8 16.5 28.4 51.2
Goa and Mizoram
are already 50%
urbanised
SOURCE: McKinsey Global Institute India Econometric Model; Census 2011
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 17
Opportunity in the top Indian cities of tomorrow will be much bigger than countries today
Pune
66
74
83 Ahmedabad
Chennai 83
134 Bangalore
36 (GDP, Mumbai, 2010)
4x
66 2x
Surat
Hyderabad
Vadodara 42
36 (GDP, Mumbai, 2010)
Chandigarh 32
Vishakha- patnam 34
Kochi 35
Nagpur 36
1
2
3
4
5
6
7
8
11
12
13
14
Mumbai (MMR) 260
220 (Malaysia GDP, 2010)
Kolkata 200
Delhi 250
9
10
SOURCE: McKinsey’s “Granularity of Growth” work
Top 3 cities will be the size of countries today ... GDP 2030, US$ Billion, 2008 prices
... next 6 cities will become 2-4X the size of Mumbai today GDP 2030, US$ Billion, 2008 prices
... next 5 cities will be equal to Mumbai GDP 2030, US$ Billion, 2008 prices
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 18 SOURCE: McKinsey Global Institute analysis
Only 105 lpcd supplied, need 140-150
Only 30% of sewage is treated
24% of urban population lives in slums
Public transport share has declined to ~30%
Water supply Sewage Affordable housing Public transportation
Private transportation Solid waste
Only 70% of solid waste is collected today
Peak morning travel time of 1.5-2 hours in large cities
Open space
Only 2.7 m2 open space per capita compared to 14 m2 in Beijing
Storm water drains
Storm water drain coverage of only 20%
The situation on the ground in our cities is grim
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 19
Current trajectory will result in urban decay and gridlock
SOURCE: United Nations; Handbook of benchmarks, Ministry of Urban Development; W. Smith, Transportation Policies and Strategies in Urban India; National Council for Applied Economic Research; McKinsey Global Institute analysis
220150
105 65
85112170
610
00
25
Best-in-Class
Basic Current
38
2030 Business as usual
Current Future
Vehicular congestion Peak vehicles per lane kilometer
Water supply quantity Liters per capita per day
Slum population Million households
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 20
India’s urban operating model should focus on three key elements
Elements of operating model
Funding Where will resources come from?
Reforms & Governance What needs to change to empower our cities and make them accountable?
City Development Planning and Policies How do cities plan and incentivize/enforce their planning choices? 1 2
3
SOURCE: McKinsey Global Institute analysis
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 21
India’s urban operating model should focus on three key elements
Elements of operating model
City Development Planning and Policies How do cities plan and incentivize/enforce their planning choices? 1 2
3
SOURCE: McKinsey Global Institute analysis
Funding Where will resources come from?
Reforms & Governance What needs to change to empower our cities and make them accountable?
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 22
In every international best practice city we studied, there were uniform “nuts and bolts” lessons
▪ All countries spent more than $300 in capita in capital expenditure on their large cities annually
▪ Cities in developing countries used land monetization to fund urban infrastructure
▪ All cities have systematic, formula based funding from central and state governments, and leverage debt well
Funding
Reforms & Governance
▪ All cities have strong, empowered, elected political leaders
▪ All large cities had metropolitan structures (and not just municipal) for governance
▪ Most cities have moved towards agency structure for service delivery, with chief executives and MOUs with cities
City Development Planning and Policies
▪ All have evolved urban planning systems with systematic attention to job creation, affordable housing and public transportation
▪ Best practice cities followed the principle “Economic master-planning before physical master-planning”
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 23
Key principle of planning
SOURCE: Source
Economic master-planning before physical master-planning
Job creation engines with anchor tenants
Infrastructure tailored towards the job creation engines
Land monetisation and financing strategies
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
1 Footnote
McKinsey & Company | 24 Source: MMR Regional Plan 1996-2011; The London Plan
Granular FAR planning norms in New York instead of one-value-for-all
Ward-wise specification of maximum FAR and minimum open space ratios
PLANNING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 25
London master plan includes detailed peak transport planning
SOURCE: The London Plan, Transport for London (TfL)
Population and employment forecasts by region
Peak AM traffic demand by region
Sequencing of key transportation projects
Financing strategies
PLANNING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 26
India should consider a cascaded urban planning system with integrated content
SOURCE: McKinsey Global Institute analysis
▪ 40-year forecasts, Economic development strategy, High-level land use, Major transit projects
Plan content
▪ 20-year forecasts, Economic development strategy, Broad ward-level land-use plan and FSI including, Key projects and policies in Metropolitan transportation and affordable housing
▪ 20-year detailed plot-level land-use plan, Key projects and policies in local transportation, water, sewage, solid waste, stormwater drains, urban design norms
Metropolitan Planning Committee
Metropolitan Authority
Technical Planning Board
Planning Department
Municipality Technical Planning Board
Planning Department
Concept plan
Master plan
Development plan
▪ Target population and employment for wards ▪ Ward-level broad land use and FAR, including
areas for intensification, regeneration, and greenfield development
▪ Major transportation projects and their effects on ward-level land use and densities
▪ Goals for specific sectors such as affordable housing, including zoning norms
Parameters that cascade down to municipalities
PLANNING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 27
Smart Components that can be integrated in city planning
1 Solutions included are described in greater detail in the following; solutions must exist in at least one city to have been included
Smart city solutions
City pain points addressed
Reliability Health Environ- ment Safety Time
E-governance and citizen services
Better transportation services
Better water management Smart meters & demand management
5
Leak identification and preventive maintenance
6
Water quality monitoring 7
Stormwater response 8
Better energy management Smart meters & demand management
1
Distribution & substation automation
2
Building energy management 3 Streetlight, building and structural health monitoring
4
Better air management Air-quality monitoring 9
Better waste management Smart solid waste management 10
Congestion zone & lanes 11
Smart parking meters & pricing 12
Adaptive traffic control (real time signal optimization)
13
Fleet monitoring, maintenance, and location services
14
Integrated intermodal fare payment
15
Citizen information and complaint management 16
Video crime monitoring 17
Citizen sourcing (empowering citizens to be the city’s eyes and ears)
18
PLANNING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 28
India’s urban operating model should focus on three key elements
Elements of operating model
Funding Where will resources come from?
City Development Planning and Policies How do cities plan and incentivize/enforce their planning choices? 1 2
3
SOURCE: McKinsey Global Institute analysis
Reforms & Governance What needs to change to empower our cities and make them accountable?
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 29
India has massively underinvested in its cities in comparison with other urban centres around the world
391
127116
17
China Total Urban India
United Kingdom
South Africa
SOURCE: Press search; McKinsey Global Institute analysis
1 Urban services include water, sewage, city roads, storm-water drains, mass transit (including rail-based mass-transit), solid waste, and low-income housing
11458
Tier-3/4 Tier-2 Tier-1
India’s current USD per capita urban spending1 across tiers
Comparison of India’s USD per capita urban spending with other countries
FUNDING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 30
Indian cities need capital funding of USD 1.2 trillion over 20 years USD per capita per annum
Capital expenditure
17
Required
134
Current
231
392
395
96
Total capex
1,182
Afford-able housing1
Mass transit
City roads
Sewage and sanitation
68
Water
FUNDING
SOURCE: India urbanisation funding model; detailed project reports from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM); McKinsey Global Institute analysis
1 Net of beneficiary contribution
Funding requirement for urban sectors, 2010-2030 USD billion, 2008 prices
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 31 31
Cities across the world have used four key funding sources
1 DRK – Directional Route Kilometres
SOURCE: India Urbanization Transportation Model; McKinsey Global Institute analysis
Land Monetization
350139
Hong Kong Shanghai
$ per capita per annum
Property tax and user charges
Debt and PPP
541811
Shanghai London
120
659
Shanghai London
New York Shanghai
30% 32%
London
70%
$ per capita per annum
$ per capita per annum
Support from government
Per cent of local budget
FUNDING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 32
CapEx OpEx
India too needs to leverage these four to satisfy funding urban funding requirements $ per capita per annum, 2008 prices
26
43
134127
58
CapEx required
Total CapEx
Formula based government grant
Debt and PPP
Mon- etizing land
SOURCE: India Urbanization Funding Model; McKinsey Global Institute analysis
76
116112
36
Total OpEx
User chargrs
Property tax
OpEx required
Note: Numbers may not sum due to rounding
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 33
Successful examples of such funding already exist in India
11
5
22
7
Debt and PPP
Land Monetization
Total Spend 2010-2015
Total Govt. Support
SOURCE: MMRDA; Press search; McKinsey Global Institute analysis
MMRDA capital spend program USD billion, 2010-2015
FUNDING
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 34
Municipal Corporation of Greater Mumbai (MCGM) has only recently introduced policies to generate funds through land monetization
FUNDING
Background and highlights ▪ FAR of 1 is free of charge for every non-agricultural land parcel. Largely,
additional FSI is allotted on a discretionary basis rather than on the carrying capacity of the region determined by city’s master plan
▪ As per fungible FSI policy introduced by MCGM, developers have to pay a premium for additional FAR in areas under the jurisdiction of the corporation
– Residential construction: for an additional 35% of FAR, developers need to pay a premium of 60% of the per square foot ready reckoner price
– Commercial and industrial development: for an additional 20% of FAR, developers need to pay a premium of 80% to 100% of the per square foot ready reckoner price
Generate US$ 250 to 300 million annually, leveraged to create US$ 1billion of funds annually
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 35
India’s urban operating model should focus on three key elements
Elements of operating model
Funding Where will resources come from?
Reforms & Governance What needs to change to empower our cities and make them accountable?
City Development Planning and Policies How do cities plan and incentivize/enforce their planning choices? 1 2
3
SOURCE: McKinsey Global Institute analysis
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 36
India
London
Johannes-burg
Examples of success, including in India
▪ BEST in Mumbai – Well functioning – Fast decision making
▪ Transport for London – Increased share of public
transportation
▪ Johannesburg Water – Revenue collection has
increased from 56% to 105%
Create accountable corporatised agencies (instead of departments) in our largest cities
GOVERNANCE
Allows for fast decision making and
efficient service delivery
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 37
Base reform agenda for small ULBs (population less than 5 lakhs as per census 2011)
REFORMS & GOVERNANCE
Proposed reforms ▪ Adoption of double entry system of accounting 1
▪ Introduction and enhancement of e-governance system with modules on property tax, accounting, water charge payment and birth & death should be implemented
2
▪ Collection of property tax, with overall efficiency of 65% in 5 years. ULBs may outsource the property listing, calculation of property tax and billing of the tax
3
▪ User charge collection – ULBs should collect user charges at least up to 80% of O&M cost in 5 years – ULBs in NE and Hilly states should collect user charges up to 50% of the O&M cost
in 5 years – States should approach the electricity tariff regulator to allow electricity to be charged
at domestic rates (instead of commercial rates) for supplying water
4
▪ Put in place transparent FAR policies and market value based FAR charges 5
▪ Earmarking at least 10-15% land or 20-25% dwelling units for housing projects for EWS/LIG category with a system of cross subsidization
6
▪ Internal earmarking within local body budgets for basic service to the urban poor 7
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 38
Base reform agenda for large ULBs (population more than 5 lakhs as per census 2011)
REFORMS & GOVERNANCE
Proposed reforms ▪ Adoption of accrual based double entry system of accounting 1 ▪ Introduce and enhance e-governance system with modules on property tax, accounting, water charge
payment, birth & death, citizen grievances, building plan approval, e-procurement and hawker’s licenses should be implemented
2
▪ Prepare a 20 year integrated spatial development plan extending ~10-15 km beyond the municipal limits 3 ▪ Collection of property tax, with overall efficiency of 75% in 5 years:
– GIS mapping should be used to increase coverage efficiency – ULBs may outsource the property listing, calculation of property tax & billing of the tax
4
▪ User charge collection – ULBs should collect user charges at least up to 100% of O&M cost in 5 years – ULBs in NE and Hilly states should collect user charges up to 50% of the O&M cost in 5 years – States should approach the electricity tariff regulator to allow electricity to be charged at domestic rates
(instead of commercial rates) for supplying drinking water
5
▪ Create a ring-fenced development fund, financed through sources such as all proceeds from land monetization, betterment charges, FAR charges (in line with the integrated spatial development plan), Land use conversion charges, Development charges etc
6
▪ Put in place transparent FAR policies and market value based FAR charges 7 ▪ Earmarking at least 10-15% land or 20-25% dwelling units for housing projects for EWS/LIG category with a
system of cross subsidization 8
▪ Internal earmarking within local body budgets for basic service to the urban poor 9
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 39
Base reform agenda for metropolitan areas (UAs with population more than 1 million)
REFORMS & GOVERNANCE
Proposed reforms ▪ All metropolitan areas (UAs) with population over 1 million should institute the
Metropolitan Planning Committee (MPC) with the development authority/ any other such agency as the secretariat. The MPC should prepare a 20 year metropolitan level Integrated Spatial Development Plan (ISDP). This plan should be legitimised through a statutory provision in the state town and country planning act and made binding on municipal plans. The plan should include: – Strategic densification – City mobility plan – Economic and commercial activity plan – Infrastructure plan – Disaster management plan – Inclusionary zoning with affordable housing plan, and – Environment conservation plan
1
▪ All metropolitan areas (UAs) with population above 4 million, should set up an UMTA to facilitate integration of multi-modal transport systems and ensure it works with the MPC and has the MDA as the secretariat
2
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 40
Base reforms for all states REFORMS & GOVERNANCE
▪ Strengthen the State Finance Commissions and act on the existing recommendations of previous SFCs
▪ Create and establish the Municipal Cadre
▪ Set up a State Property Tax Board to frame assessment guidelines (based on either a capital value or annual rental system that is indexed every 3-5 years to factor in real estate appreciation) for property tax collection
▪ Prepare a State level urban blueprint to manage the urban population
▪ Revise town planning act, DCRs, municipal laws, and building bye-laws with a view to: – Allow mixed use of land to enable levy of FAR charges – Vest the authority Local Area development authorities to plan for local areas just outside
municipal boundaries (15 km for 5 lakh+ ULBs) – Put in place a time bound process for building plan approvals – To levy rationale basement controls, façade controls and maintenance
▪ Repeal of Urban land Ceiling and Regulation act
▪ Amendment of Rent Control Laws balancing the interest of landlords and tenants
▪ Rationalization of Stamp Duty to bring it down to 5% or lower
▪ Introduction of computerized process of registration of land and property
▪ Provide security of tenure at affordable prices to urban poor
1
2
3
4
6
5
7
8
9
10
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 41
India’s urban operating model should focus on three key elements
Elements of operating model
Funding Where will resources come from?
Reforms & Governance What needs to change to empower our cities and make them accountable?
City Development Planning and Policies How do cities plan and incentivize/enforce their planning choices? 1 2
3
SOURCE: McKinsey Global Institute analysis
Last Modified 30/01/2015 00:27 India Standard Tim
e Printed
McKinsey & Company | 42
END