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The estimates for urban infrastructure in the core eight services of water supply, sewerage, solid waste management, storm water drains, urban roads, urban transport, street lighting and traffic support infrastructure amount to 31 lakh crore over a 20-year period, says the Report of the Sub-committee on Financing Urban Infrastructure in the 12th Plan, Ministry of Urban Development.

The expert committee estimated capacity building costs of 1 lakh crore, renewal and redevelopment costs of 4.1 lakh crore, and other sector expenditure of 3.1 lakh crore over the 20-year period. The total expenditure on urban infrastructure is thus estimated to be 39.2 lakh crore over 20 years.

In addition to investment projections on urban infrastructure, the committee estimated 19.9 lakh crore towards operation and maintenance over the 20- year period, of which 18.1 lakh crore is for eight core sectors.

Water supply
As per Census 2011, drinking water within the premises is available to 71.2 per cent of the urban population vis-à-vis 65.4 per cent as per Census 2001. Similarly, 20.7 per cent of the population has access to drinking water near the premises vide Census 2011 vis-àvis 25.2 per cent vide Census 2001. None of the cities have 24x7 water supply. Non-revenue water, which includes leakages of various kinds, is fairly high, being in the range of 40 to 50 per cent.

Sanitation
The challenge of sanitation in Indian cities is acute. In fact, the problem of lack of systematic sanitation facility is much worse in urban areas than in rural areas. A sanitation rating of 423 class-I cities done in 2009-10 by the Ministry of Urban Development revealed that only 39 cities qualified on three basic water quality parameters of turbidity, residual chlorine and thermo tolerant coliform bacteria.

According to Census 2011, 32.7 per cent of the urban population has access to a piped sewer system and 12.6 per cent of the urban population still defecates in the open. Installed sewage treatment capacity is only 30 per cent as per Central Pollution Control Board Report 2009. The capacity utilisation is around 72.2 per cent, which means that only about 20 per cent of sewage generated is treated before disposal in most of the cities and towns.

Solid waste management
The management and disposal of solid waste generated in Indian cities is a major problem. According to the CPCB Report 2005, about 1,15,000 tonnes of municipal waste is generated daily. Collection performance varies from city to city. Staff deployed to manage SWM is also fairly low as per requirements. In most of the cities, waste is transported and dumped to landfill sites. Scientific treatment and disposal of solid waste is practically non-existent.

PER CAPITA INVESTMENT COST ESTIMATING INVESTMENT REQUIREMENT
Urban Sectors	Per Capita Investment Cost by Sector (`)	Per Capita O&M Cost by Sector (`)
Water Supply	5,099	501
Sewerage	4,704	286
Solid Waste	391	155
Urban Roads	22,974	397
Urban Transport	5,380	371
Traffic Management Systems	945	34
Storm Water Drains	3,526	53
Street Lighting	366	8
Total	43,386	1,806
(Average cost at 2009-10 prices)
Source: Ministry of Urban Development

The service backlog in water supply across various cities was arrived at based on the assumption that 100 per cent piped water supply would be provided for all households with 24x7 continuous supply and a per capita norm of 135 litres per capita per day. Further, it was estimated that 80 per cent of the current distribution network in the cities needs to be replaced for delivering continuous water supply. Industrial demand for water for cities above 500,000 population would be 20 per cent and non-revenue water would be 20 per cent.

Underground sewerage network is considered for all city classes and 100 per cent collection and treatment of wastewater. Sewage generation is assumed to be 80 per cent of water consumption and 5 per cent from infiltration of groundwater into sewage.

Financing framework
The requirement of investment in urban infrastructure has been estimated by various sources, including the expert committee, as being of the order of 40,000 crore to 50,000 crore. While the committee has recommended this amount to be made available over a 20-year period, in reality, the period needs to made much shorter, because citizens would not like to, and should not be expected to, wait for as many years to get their basic needs met in respect of core sectors such as urban transport, city roads, water supply and sanitation etc.

Land monetisation: The example of Delhi Airport Redevelopment presents a model for land monetisation for development of urban infrastructure in PPP mode. But there are umpteen variants possible, to prove that urban development can pay for itself, of course, with a proper structure. A water supply project can also include development of appurtenant land, to generate money, to be ploughed into the capex of the water supply project.

A project for development of ring road around a city by, say, NHAI, can have partnership of the local development authority, which could acquire lands on either side of the right of way and convert into commercial (and social) projects, which would part-fund the ring road itself. If that is not pursued, sundry real estate developers would encash on the enhancement in the value of the properties around the ring road, leaving the government to pay for the development of the road. The revenue sharing model for such land monetisation would take care of any possibility of windfall gains only to the private party.

PPP projects
Today, quite a few water supply and sewerage projects are being implemented through PPP mode. Water sector PPP projects are increasingly focusing on distribution improvements and the emphasis is as much on service improvement as on capital infusion from the private sector.

In some of the projects which are in Latur, Chandrapur, Nagpur and Navi Mumbai in Maharashtra, Madurai in Tamil Nadu, Mysore, Hubli-Dharwad, Gulbarga and Belgaum in Karnataka, and Sonia Vihar in Delhi, the focus is on upgradation and O&M. The operator does not bear any investment risks. Other projects such as the ones at Haldia in West Bengal and Tirupur in Tamil Nadu are on BOOT/BOT basis.

PROJECTED CAPITAL EXPENDITURE DURING 12TH PLAN (` CRORE)
Sector	2012-13	2013-14	2014-15	2015-16	2016-17	12th Plan Total
Water Supply	5,241	5,881	6,593	7,390	8,285	33,390
Sewerage	3,931	4,411	4,945	5,543	6,213	25,042
Solid Waste	806	905	1,014	1,137	1,275	5,137
Urban Roads	28,120	31,554	35,372	39,652	44,450	179,149
Mass Transit	7,307	8,200	9,192	10,304	11,551	46,553
Traffic Management
Systems	1,613	1,810	2,029	2,274	2,549	10,274
Storm Water
Drains	3,124	3,506	3,930	4,406	4,939	19,905
Street Lighting	302	339	380	426	478	1,926
Other Sectors	8,159	10,737	13,928	17,788	22,439	73,050
Total	58,604	67,342	77,383	88,920	102,178	394,428
Source: Ministry of Urban Development

Several municipal bodies have successfully implemented private sector participation in SWM e.g. Alandur, Haldia, Chennai, Coimbatore, Madurai and Faridabad etc. In urban transport, areas where PPP model has been followed or is intended are metro projects, running of modern city bus service in Indore, Bhopal, Jabalpur, Kota, Jodhpur, Jalandhar, Patiala etc., development of bus terminal and parking lots, foot over-bridges and road signage, modernisation of bus terminals, bus rapid transit system where infrastructure is being provided by the government, and rolling stock operation and maintenance is through PPP participation.

Barriers
There are barriers for private sector investments in urban infrastructure in India, more so in the critical water supply and sewerage sub-sectors. A quick review of the relevant literature indicates a number of reasons for reluctance on the part of the private sector to assume commercial risks in majority of the urban subsectors.

• Most of the urban sector investments involve third tier of governments, which increase the perceived risks for private sector investments.
  
• Historically, water supply and sanitation services have been seen as "public goods" that need to be provided at affordable prices (meaning nominal low costs).
  
• The low water and sewerage tariffs make water supply and sewerage projects non-bankable which require general revenue support even for operations and maintenance. An exception, however, is industry which has a long history of paying rational tariffs.
  
• Except for a minority of municipalities, the general financial status of most municipalities is precarious.
  

In the past, the financing of urban infrastructure projects at these levels has been largely through government budgets, which also supported O&M expenditure of assets that were developed.

With the launch of the reform-driven and partgrant financed JNNURM, both the macro-environment as well as projectlevel micro environment has become more and more congenial for publicprivate partnerships in the urban sector.

A combination of partgrant financing by the JNNURM is likely to create demand for private capital as well as greater interest from private sector in the urban sector. However, to encourage PPPs, it is important to develop 'bankable' or financially-sustainable models at a project level.

The unbundling of services and technological innovations in the urban sector, particularly in the areas of sanitation and water supply and solid waste management, has opened up these areas to the private sector. Also, global trends show that the private sector has been able to mobilise funds necessary to finance infrastructure projects and that it is willing to accept risks provided the institutional environment meets certain minimum standards and the projects are properly structured.

There is scope for expanding PPP in urban sector, especially in water, sanitation and waste to energy. While there are established models and a sizeable number of projects in certain sectors, the number of PPP projects in urban social infrastructure (water supply, sanitation and solid waste management) is limited. PPP projects in water sector for loss reduction, introducing 24x7, 100 per cent metering and billing are to be encouraged in the form of management contracts in the states. A few states have taken the initiative, which needs to be replicated in the country.

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