NEW DELHI: Learning from experiences of how real estate agents build high-quality projects with facilities within their complexes while public infrastructure outside is mostly neglected, the government will allow private developers to act as ‘urban infrastructure managers’ in major redevelopment zones under the ambitious Urban Challenge Fund (UCF) programme.
This means they will develop and maintain infrastructure such as roads, water supply, sanitation and transportation. The plan – with a central outlay of Rs 1 lakh crore – will be rolled out soon to promote sustainable urban development by transforming cities into growth hubs, promoting creative redevelopment and strengthening water and sanitation infrastructure.
The Ministry of Housing and Urban Affairs has also told the Public Investment Board (PIB), an inter-ministerial panel for assessing fully government-funded schemes, that private developers will be allowed to bring in bankable urban infrastructure projects to receive financial support under the UCF scheme. These projects will have to be approved by the state governments or urban local bodies (ULBs) and the central assistance will be routed through escrow accounts at the state level.
The UCF was announced in the budget. Under this scheme, the Center will provide 25% financial support to bankable projects, while 50% will come from bonds, bank loans and public-private partnerships. The remaining 25% will be funded by states and ULBs.
As per PIB’s recommendation, the scheme will be applicable to cities with a population of at least 10 lakh, industrial cities with a minimum population of 1 lakh and all state capitals. A separate sub-scheme will be introduced for all cities and ULBs in hilly states as well as for ULBs with a population of less than one lakh.
To qualify for aid, cities must implement eight broad reforms: operational reforms, governance reforms, tariffs, property taxes, transit, project financing, planning and building code reforms.
On the prospect of private players bringing in bankable projects through the state governments, experts say the key issue will be operations and maintenance. “If states fail to get financing for projects from banks with their guarantees, how will private contractors get it? Repayment of bank loans will also be a challenge. Under this model, even though the loans will not fall under the budget limits of state governments, they will attract higher interest rates. Banks will look for some guarantees,” said an expert.
#Developers #acting #urban #infrastructure #managers #major #urban #overhauls #UCF