States get aid, despite poor show on reforms front

MUMBAI: When it comes to reforms, it is more said than done. Even the Centre, which insisted that states would get help in urban renewal projects only if they carried out certain reforms, is relenting now. And states, including Maharashtra, get away with tardy progress on the reforms front by managing to get funds. The Centre has been threatening to withhold a substantial chunk of funds due to Maharashtra unless it carried out some mandatory reforms under the guidelines of the Jawaharlal Nehru National Urban Renewal Mission (JNURM).

“While this may be true in theory, what the Centre has been doing is exact the opposite. Since January 2006, when JNURM was launched, the Centre has only paid lip service to almost all mandatory reforms that the state needed to carry out. There has not been a serious follow-up nor has the Centre actually held back funds,” a senior bureaucrat told ET.

The JNURM guidelines make four major policy and legislative reforms mandatory for cities to receive the funding: Implement a public disclosure law for all financial as well as other major decisions; get rid of the Urban Land Ceiling and Regulation Act; repeal the Rent Control Act or drastically reform it; and put in place a sustainable self-financing system for the local body implementing the projects, or a revolving infrastructure development fund to maintain the projects.

Now, consider Maharashtra’s performance on these counts. “We have not carried out a single reform so far. Worse, we have shown a tendency to defer reforms. The deadlines that the Centre has been setting for the reforms are constantly being violated by the state, but curiously, the Centre does not seem alarmed,” an official said.

BJP legislator Devendra Fadnavis, who spoke in favour of repealing the ULCRA in the legislative assembly last week, points out that the Centre had asked the state in early 2006 to carry out the reforms. “As per JNURM guidelines, the state ought to have repealed ULCRA in 2006. But the Centre relented to the state’s demand for extending the deadline to April 2007. Even that agreement has been violated. Now, the deadline to repeal ULCRA is March 2008,” Mr Fadnavis noted.

In the meantime, the Centre has sanctioned 44 projects under JNURM for five cities in Maharashtra, including three for Mumbai-Thane. The Centre has released Rs 80 crore for the Mumbai sewage disposal project and the Middle Vaitarana water supply project. A government spokesperson said the state has so far received Rs 874 crore under JNURM for these projects. The allocation to Maharashtra is highest among states and constitutes 22.4% of the total JNURM corpus budgeted for 2006 and 2007.

“In total, we have submitted 97 projects, of which 40 are still under consideration,” the spokesperson said. “This is a classic case of contradiction between theory and practice. Maharashtra has got the highest allocation among all states under JNURM, followed by Andhra Pradesh, Tamil Nadu and West Bengal. But on the reforms side, these states hardly have anything spectacular to show,” an official said. In fact, West Bengal, where the ULCRA is in force, has received Rs 332 crore under JNURM.

“This means that the Centre is not serious when it insists that funds would follow reforms,” sources said. So far, the Centre has distributed Rs 3,906 crore for 198 projects across the country.