ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Financing the Development of Small and Medium Cities

Urbanisation in India is currently marked by two fundamental trends: lopsided migration to the larger cities and unbalanced regional economic development. In this context, this paper makes a case for the concerted development of small and medium cities as the key focus in the strategy to ensure sustainable urbanisation in India. As cities plan for the long term, among the most critical components they need are the availability of land and the provision of infrastructure and services for a growing population. This paper suggests the need for land banks and land readjustment mechanisms, and assesses the efficacy of current mechanisms for infrastructure provision in small and medium cities. There is also a rationale and need for the creation of new cities, either on the peripheries of large cities or around industrial clusters, with private participation and financing.

Panchayat Finances and the Need for Devolutions from the State Government

One of the key tests to real empowerment of panchayats lies in the ability of local self-governing institutions to finance their own expenditures through internal generation of resources. Based on an analysis of three villages in Tamil Nadu, this paper argues that many gram panchayats are today in a position to substantially finance themselves and build a culture of self-sufficiency, independence and accountability to their citizens, reducing their dependence on devolutions from state governments. It concludes that by incentivising competition among panchayats and instituting a rural development fund to enable them to access debt capital, the perverse incentives they now face can be mitigated to a large extent, leading to several significant positive outcomes.
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