Niti Aayog has said that the economic potential of Tier 2 and Tier 3 cities should be harnessed for them to take on the mantle in the future and has suggested that differentiated incentive policies be put in place to attract investments in both small and underdeveloped cities.
The report titled Cities as Engines of Growth by Niti Aayog and the Asian Development Bank also said that alternative models should be explored for land acquisition and assembly and building bye-laws that may be constraining the supply of land should be relaxed.
“As India transitions from being a largely rural to an urban society, the focus needs to be on harnessing the economic potential of all cities, large and small. For this, there is a need to not only nurture megacities and their hinterlands as centres of economic growth, but also facilitate tier 2 and 3 cities to take on the mantle in the future,” it said.
“Create differentiated incentive policies to attract investments in smaller and underdeveloped cities and a city-level single window facility for service sector industries based within natural city limits such as hospitality, healthcare, commercial developments and education,” the report said.
This requires that cities be managed appropriately. Indeed, there are many examples of cities globally that are not contributing significantly to economic dynamism, even as they have gotten larger and/or denser, according to the report that selected 12 cities from seven states as case studies to analyse their growth bottlenecks and identify frameworks for growth-enabling urban governance and planning.
These cities included Vadodara, Navsari, Indore, Dewas, Warangal, Nalgonda, Vijaywada, Machilipatnam, Sonipat, Hisar, Gangtok and Guwahati.
On the issue of cost and valuation of land, the study noted that land is expensive in most of the study cities, and the acquisition and development of large land parcels for key industrial infrastructure projects are challenging.
Even in smaller urban centres where the cost of land might not be a big constraint, there are still challenges in complying with various processes associated with land acquisition in a time-bound manner, it said.
It pointed out that procedural challenges such as acquisition, aggregation, and land conversion persist. As cities expand outwards, land conversion can be a contentious issue, particularly in cities such as Guwahati, Indore, Navsari and Vadodara. Conversion of land from non-urban to urban uses, particularly the tension between agricultural and non-agricultural uses, is specifically an issue on the urban periphery. For instance, cities such as Gangtok have specific restrictions on who can acquire land, it said.
In addition, there are issues around aggregating land to create contiguous parcels needed for industrial layouts. Moreover, in cases where land is available, either through aggregation or a combination of government and acquired land, evidence across cities such as Guwahati and Navsari shows that such land has remained unused.
It also suggested that provisions for affordable and organised housing be made for workers.
It said that land record systems be digitised. “Integrate institutions of revenue, registration, and survey functions at the state level to harmonise land records data and establish integrated digital technology platforms to improve efficiency in land transaction and flexibility to deal with different types of data, and a range of complex on-ground processes,” the study said.
It also recommended participation by private investors or PPP vehicles in the post-acquisition stage by state governments to explore alternatives to develop quality land banks.
“Explore alternative models for land acquisition and assembly—e.g., the Land for Land compensation scheme adopted by CIDCO and explore relaxation of building bye-laws that may be constraining the supply of land,” it added.
On the issue of providing affordable and organised housing for workers, it suggested that existing EWS/ LIG housing stock should be improved through incremental in-situ upgradation and that alternate models for providing rental housing close to work centres should be improved.It also called for developing direct benefit transfer schemes such as rental housing vouchers and leveraging existing funding that is already available in state and central government schemes for vulnerable groups