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Big city, big share

By Sama Khan

The well-planned development of small cities can help disperse rural migration and prevent overcrowding of the metropolitan centres. JNNURM funds can make much more of a difference in these smaller towns. But the bulk of the allocation under JNNURM goes to the three mega cities of Mumbai, Delhi and Kolkata


The Government of India launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in December 2005 for integrated development of urban infrastructure and services. JNNURM was launched with the goal of achieving 'reforms-driven', fast-track and planned development of identified mission cities with the aim of making them self-governing. It was launched as a city-based programme with an estimated investment of Rs 120,536 crore in the Mission period of seven years beginning 2005-06 (1). Under JNNURM, additional central assistance would be provided as a grant to the implementing agencies (2).

Basic features

JNNURM was launched with four components:

  • Urban Infrastructure and Governance (UIG)
  • Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT)
  • Basic Services to Urban Poor (BSUP)
  • Integrated Housing and Slum Development Programme (IHSDP)

UIG and UIDSSMT are administered by the Ministry of Urban Development, while BSUP and IHSDP are administered by the Ministry of Housing and Urban Poverty-Alleviation.

UIG is a scheme for large cities such as Mumbai, Bangalore, Chennai, Hyderabad, Kolkata, Delhi and Ahmedabad, 28 other cities with a population of more than 1 million, 17 state capitals, and 13 cities of religious and tourist importance -- a total of 65 cities. It focuses on infrastructure projects relating to water supply and sanitation, sewerage, solid waste management, road network, urban transport and redevelopment of old city areas with a view to upgrading infrastructure therein, shifting industrial and commercial establishments to conforming areas, etc (3).

UIDSSMT is the corresponding scheme applicable to all other cities and towns, according to the 2001 census, except cities/towns covered under UIG.

BSUP focuses on integrated development of slums through projects providing shelter, basic services and other related civic amenities with a view to providing utilities to the urban poor (4). Its objective is, inter alia, provision of security of tenure at affordable prices, improved housing, water supply and sanitation, and ensuring delivery through convergence of other already existing universal services of the government for education, health and social security. The sub-mission covers the same 65 cities as UIG (5).

IHSDP is the corresponding scheme applicable to all cities and towns according to the 2001 census, except cities/towns covered under BSUP.

The funding for all these schemes comes from the Union, state and local governments but their respective shares depend on the size of the city and its location. The details are given in Table 1.


It was expected that access to Mission funds would be performance-oriented and competitive in nature. But eventually, the practice of pleasing everyone prevailed as in all government programmes. Additionally, two other criteria were applied for allocating the funds. One was the urban population of the states and its proportion to the urban population in the country. The second was the so-called ceiling for states within which JNNURM assistance had to be accommodated (Sivaramakrishnan 2011). These two postulates resulted in larger states and larger cities getting more of the allocation. As a result, the central share allocation and release is higher for larger states and cities. Table 2 presents allocations for the four schemes and some mega cities.

Table 1: Funding pattern under UIG and BSUP
Scheme Category of cities/Towns/UAs Centre State Local (6)
UIG Cities/UAs with 4 million-plus population, according to 2001 census 35% 15% 50%
Cities/UAs with 1 million-plus but less than 4 million population,
according to 2001 census
50% 20% 30%
Cities/Towns/UAs in northeastern states and Jammu and Kashmir 90% 10% -
Cities/UAs other than those mentioned above 80% 10% 10%
BSUP Cities with 4 million-plus population, according to 2001 census 50% 50%
Cities with 1 million-plus but less than 4 million population,
according to 2001 census
50% 50%
Cities/Towns in northeastern states and Jammu and Kashmir 90% 10%
Other cities 80% 20%
UIDSSMT Cities/Towns 80% 10% 10%
Cities/Towns in northeastern states and Jammu and Kashmir 90% 10% -
IHSDP Cities/Towns 80% 20% -
Special category states 90% 10% -
Source: Ministry of Urban Development, Government of India, Modified Guidelines For Projects of Jawaharlal Nehru National Urban Renewal Mission on Urban Infrastructure and Governance (September, 2006) Pg 13; Ministry of Housing and Urban Poverty-Alleviation, Government of India, Modified Guidelines for BSUP, February 2009, Pg 10
Note: Under UIG, for setting up desalination plants within 20 km from the sea shore and other urban areas predominantly facing water scarcity due to brackish water and non-availability of surface source, the funding pattern is divided between 80% central share and 10% each for state and ULB

So, even though the absence of basic services is more prominent in the smaller urban centres than the big cities, under JNNURM the focus on UIDSSMT and IHSDP is limited compared to UIG and BSUP. The bigger cities continue to attract funding from outside as their problems are more visible, while the smaller urban centres are neglected. One of the reasons for this is the low investment in these smaller urban centres and the inability of local bodies to raise independent revenues. Small towns lack financial autonomy as a result of inadequate transfer of funds from the state or central government and the inability to attract investors (Sharma 2012) (7).

Table 2: JNNURM allocations
Mega cities Allocation (Rs crore) Share
UIG 59,918.3 54.8%
Delhi 7,197.1 6.6%
Mumbai 5,276 4.8%
Kolkata 4,355.2 4.0%
BSUP 26,844.2 24.6%
Mumbai 2,870.0 2.6%
Kolkata 2,675.6 2.4%
Delhi 1,814.5 1.7%
UIDSSMT 12920.5 11.8%
IHSDP 9,637.98 8.8%
Total 109,320.98 100%
Source: JNNURM database (as on September 2010)

Small towns are better performers

If JNNURM had remained performance-oriented, small towns may have got a better deal since they seem to be better at implementing projects. The ratio of central share released to the total central share commitment is one measure of effectiveness, since it measures how quickly the money is being utilised. For UIDSSMT and IHSDP it is 77.3% and 65.1% respectively, whereas for UIG and BSUP it is 58.9% and 53.2% respectively (8). This means that UIDSSMT and IHSDP are performing better than UIG and BSUP as far as accessing JNNURM funds is concerned (Figure 1).

The prominent cities of the large states have also had access to a variety of sources, multilateral, bilateral and private sector, for their needs over the years. Other states like Odisha, Bihar, Jammu and Kashmir, Assam, Uttarakhand, Himachal Pradesh or the northeastern states have not been that fortunate. Though cities in these states such as Patna, Bhubaneswar, Raipur, Guwahati, Shillong, Shimla, Agartala, etc, are not as populous, the need for strengthening their infrastructure and reinforcing and improving their governance is critical. Even under UIG and BSUP, as seen in Table 2, the focus is on the mega cities compared to the smaller cities. If the focus was instead on the small among the big cities, it may have helped them become self-governing. However, JNNURM is not based on any assessment of whether central assistance would be more effective in some cities than in others.

Figure 1: Central share commitment and release under JNNURM

JNNURM: Project or policy response?

JNNURM is both a project response as well as a policy response. However, it has not served to make our larger cities more self-governing. If it is a project response then the big cities will have large projects with higher costs compared to the smaller cities. If, on the other hand, a self-governing system for cities is the goal then the whole course of project sanction, implementation and monitoring will assume a different character and reforms towards governance will have to determine the course of the programme (Sivaramakrishnan 2011).

JNNURM for small towns: UIDSSMT and IHSDP

JNNURM also includes small towns under its sub-missions on UIDSSMT and IHSDP that have covered 640 (as of August 2010) and 864 towns (as of September 2011) so far respectively, out of 3,799 statutory towns in India according to the 2001 census (9). Table 3 shows the distribution of JNNURM allocations by size of towns. Census towns, of which there were 1,362 in 2001, are settlements that are recognised by the census to fulfil all the requirements of being urban but are not recognised as such by the administrative system and are therefore not eligible for JNNURM funding.

Table 3: UIDSSMT and IHSDP class-wise distribution of towns and allocation (Rs crore)
Scheme Allocation/ Towns Class I Class II Class III Class IV Class V Class VI Total
UIDSSMT Allocation 6,011 3,406 2,378 815 226 82 12,918
Towns 136 157 192 113 30 11 639
IHSDP Allocation 4,132 2,551 2,735 1,044 388 110 10,961
Towns 171 197 257 153 60 21 859
Total statutory towns 369 466 1,159 1,115 502 123 3,734
Census towns 10 29 226 448 540 109 1,362
Source: UIDSSMT database, as on August 31, 2010; IHSDP database, as on September 1, 2011; Census 2001
Note: Total statutory towns exclude the 65 cities under UIG and BSUP. Siddharthnagar in Uttar Pradesh could not be located with an approved project cost of Rs 2 crore under UIDSSMT and five towns in Uttar Pradesh -- Arthala, Bichhari, Saona, Ghasiganj and Salarganj could not be located under IHSDP

As in the case of UIG and BSUP, under IHSDP and UIDSSMT as well, the larger and more prominent Class I cities have received a larger share of allocations. Under UIDSSMT and IHSDP, 46.5% and 37.7% of the total allocations have gone to Class I towns respectively, leaving 53.5% and 62.3% of the total allocations for the remaining Class II to VI towns respectively, but of these, the smaller Class V and VI towns seem to be most neglected with only 2.4% and 4.5% of the total allocations under UIDSSMT and IHSDP. Furthermore, while over 40% of Class I and Class II towns have been covered, a much smaller proportion of Class III, IV, V and VI towns have benefited from these two schemes.


The 65 cities under UIG and BSUP account for 79% of total allocations, with 42% of the total urban population residing in these cities, whereas only 21% of allocations are attributed to the remaining cities that account for 57% of the total urban population. The allocation for the three mega cities of Mumbai, Delhi and Kolkata together is Rs 24,188 crore under UIG and BSUP, which is much more than the total allocation of Rs 22,558 crore under UIDSSMT and IHSDP for all the smaller towns. The focus seems to be on fulfilling the infrastructure requirements of big cities, ignoring hundreds of smaller towns.

Even within the JNNURM schemes for smaller towns, the bigger among them receive most of the funds. Among the smaller (non-Class I towns), a large component, that of census towns, is ignored and cannot access these funds because they remain under rural panchayat administration. The population of these census towns has more than doubled from the 2001 to 2011 census and their share in the population of non-Class I towns has grown from 18% in 2001 to 32% in 2011. A large and growing share of the small town population is thus being denied access to the JNNURM programme.

What seems to be forgotten is that urban India also lives in small towns. Investments should be directed to these growing cities for a more balanced urban growth. The number of towns in India has increased from 5,161 in 2001 to 7,935 in 2011 (10). However the growth in the number of towns has not been accompanied by the supply of basic services, as a result of which most small towns appear more rural in character than urban, even as their economy is non-agricultural. Declining governmental investment in infrastructure and basic services in smaller towns over the years and their failure to attract private or institutional investment has increased the disparity within the urban economy (Kundu 2006). Small towns facilitate rural non-farm activities and therefore have a role in urban and rural poverty-reduction (Himanshu et al 2011). Well-planned development of small cities can help disperse rural migration and prevent overcrowding of other metropolitan centres (Sahasranaman 2012). JNNURM money can make more of a difference in these smaller towns as compared to big cities. Policymakers need to focus on mitigating the strains of small towns in India and maximising the opportunities offered by these towns, by encouraging investment in industries that generate employment opportunities. This will also provide an opportunity to assess whether in small towns there is greater commitment on the part of elected municipalities and better public participation because of the smaller population size and increased proximity between people and the government.

(Sama Khan is with the Centre for Policy Research)


1 Government of India, Ministry of Urban Development 'JNNURM Overview' document, pg 3
2 Government of India, Ministry of Urban Development 'JNNURM Overview' document, pg 8
3 Government of India, Ministry of Urban Development 'JNNURM Overview' document, pg 5
4 Government of India, Ministry of Housing and Urban Poverty-Alleviation 'Modified Guidelines for Sub-Mission on Basic Services to the Urban Poor', February 2009, pg 3
5 Government of India, Ministry of Housing and Urban Poverty-Alleviation 'Modified Guidelines for Sub-Mission on Basic Services to the Urban Poor', February 2009, pg 2
6 Under UIG, ULB share can include parastatal share/loan from financial institutions. Under BSUP, state/ULB/parastatal share includes beneficiary contribution
7 UIG database (as on March 23, 2012), BSUP database (as on January 2, 2012), UIDSSMT (as on August 31, 2010) and IHSDP database (as on January 2, 2012)
8 UIDSSMT database (as on August 31, 2010), IHSDP database (as on September 1, 2011)
9 Census of India, 2001 and 2011


Himanshu, Peter Lanjouw, Abhiroop Mukhopadhyay and Rinku Murgai. 2011. 'Non-Farm Diversification and Rural Poverty Decline: A Perspective from Indian Sample Survey and Village Study Data', Asia Research Centre Working PaperNo 44, London School of Economics, London
Kundu, Amitabh. 2006. 'Trends and Patterns of Urbanisation and their Economic Implications' in Anupam Rastogi ed. India Infrastructure Report, Oxford University Press, New Delhi
Sahasranaman, Anand. 2012. 'Financing the Development of Small and Medium Cities', Economic and Political Weekly, Vol 47, No 24: 59-66
Sharma, Kalpana. 2012. 'Rejuvenating India's Small Towns', Economic and Political Weekly, Vol XLVII, No 30: 63-68
Sivaramakrishnan, K C. 2011. 'Urban Development and Metro Governance', Economic and Political Weekly, Vol XLVI, No 31: 49-55
Sivaramakrishnan, K C. 2011. Re-visioning Indian Cities: The Urban Renewal Mission. Sage, New Delhi

Infochange News & Features, August 2013