People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 52

December 26, 2010


Urban Reforms: An Experience

Of Vijayawada City


C H Babu Rao


MUCH has been said about the funds for the development of cities from the World Bank and the central government. The central government initially chose Hyderabad, Vishakapatnam and Vijayawada cities in Andhra Pradesh under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and said that later it would be expanded to other cities. It said that the face of the cities would change dramatically and gave hopes that there would be no dearth of civic facilities. But the experience of the last five years has proved to the contrary. Luring with the promise that it would provide funds, the central government imposed World Bank conditionalities, which adversely impacted the lives of people. For example, if we take the Vijayawada city itself, this city was brought under JNNURM in 2005-06. They promised there would be a deluge of funds. The central government was asked to provide Rs 7300 crore but it allocated only Rs 1422 crore. Of it, only 70 per cent would be borne by the central and state governments. Of the funds they give, 20-40 per cent would be given as debt. This has to be repaid with interest. But so far only Rs 470 crore has been given. Of it, Rs 205 crore would go for the construction of houses and only Rs 265 crore would be left for providing civic facilities. Of this, Rs 52 crore is the debt and only Rs 213 crore is the grant amount. This means that only Rs 43 crore is given on an average per annum in the last five years.




The state government has stopped giving grants which it was supposed to give under law on the pretext of central funds to the Vijayawada city. It has imposed additional burdens on people. It has stopped giving Rs 60 crore from the past four years which was due under professional tax, per capita grants and such other grants. The World Bank and the central governments have imposed a condition that the stamp duty be reduced from 13 per cent to 5 per cent for facilitating the big, foreign realtors. As a result of this reduction, there is a shortfall of Rs 50 crore to the corporation’s income. Contrary to the decision that the wages of all the municipal workers would be borne by the state government, in the name of JNNURM, Vijayawada has been excluded and this burden is being now borne by the city corporation. Apart from the sanction given for the construction of houses for the poor, an additional expenditure of Rs one lakh has been incurred for each house. This additional expenditure had to be borne by the state government but instead it shifted it onto the city corporation. As a result approximately Rs 100 crore additional burden was placed on the corporation for construction of 15,000 houses. On the whole, because of the reduction in grants, reduction in the share in the income, additional burdens etc the city corporation has lost Rs 250 crore. During this period only Rs 213 crore has been offered as assistance.


For these projects, 30 per cent of the funds (around Rs 420 crore) have to be borne by the city corporation. The central and state governments have not released even the funds that they have comparatively expended for the JNNURM. The state and centre owe Rs 150 crore to the corporation. Above it, the centre has stopped the last instalment of the funds stating that the user charges and other conditionalities have not been implemented in time. As a result, at present there is no money with the corporation even for wages. Money is owed to the contractors. Development works like drinking water supply, underground drainage, laying/repair of roads etc have been stopped midway, subjecting the people to severe hardships.




The poor people have become scapegoats of urban reforms. Burdens have increased, while facilities were curtailed. Slums were neglected. In the name of minimum tax, around Rs 50-153 has been increased in the tax on the huts. As a result of privatisation of lavatories, poor people who do not have independent toilets are shelling out Rs 300-500 as user charges for utilising the public toilets. The fee for issuing birth and death certificates has been increased by Rs 5-50. Taxes were imposed on small vendors who sell their wares sitting on roadside. Fee was levied even on using the premises of municipal schools where the poor had an opportunity to hold their marriage and other functions by Rs 100-1000. In the name of providing underground drainage, huge donations were levied. The corporation has withdrawn from mosquito eradication programmes. Every day poor families are forced to spend Rs 5 for mosquito control. On the whole the reforms are playing havoc on poor people lives.





In the name of reforms, street lighting, maintaining public toilets, etc have all been privatised. Rich people have been given an opportunity to construct and sell apartments, hotels in the valuable lands of the government and city corporation. Priority is being accorded for providing facilities like drinking water, maintaining roads, etc in the colonies of the rich under the pretext that they are ready to share part of the expenditure through contributions. They are introducing a scheme to supply water 24 hours – 24x7 scheme – in these colonies. Parks are well maintained in these colonies. All facilities are provided to the wealthy. This is the reason why rich classes, contractors, corrupt officials, bureaucrats and politicians are very happy about these reforms.




The World Bank and the central government have imposed almost similar conditions in the name of urban reforms. They have issued a diktat that 100 per cent costs have to be collected from the people who avail civic facilities. Local bodies have to mobilise their own additional incomes for their share. As a result, in these five years severe burdens were imposed on the people of Vijayawada. Under the pretext of covering the losses from supplying drinking water, they are trying hard to fix water meters. Prices have been fixed for supplying water to the water distribution sheds run by voluntary organisations. Drainage charges were raised by 100 per cent for each toilet. They have not even spared garbage collection from income mobilisation. The state government has even issued a government order imposing Rs 8 crore ‘garbage tax’. Trade licence fee for the traders has been increased. In these five years, in the name of collecting interest, people have been burdened with Rs 4.65 crore. Rs 45 crores were snatched under the building penalisation scheme. On the whole, in the last five years an additional burden of Rs 190 crore has been imposed on the people in the name of taxes, fee and user charges.




All the promises for strengthening the local bodies and giving more powers to them through the 74th Constitutional Amendment proved to be empty words. Local bodies have been robbed of their power to take decisions under their purview and were degraded to just implementing agencies of the diktats and conditionalities of the central and state governments. Without the knowledge of the elected council, the commissioner has signed on urban development plan that has dangerous conditions. It was later unilaterally adopted by the council without any discussion as a mere formality. Only after the CPI(M) has exposed this fraud, the corporators and the people have been given the copies. The state government has issued orders rejecting the resolutions of the council on doing away with the garbage tax and on giving concessions to the poor for change of name in the property tax receipts. The state government did not pay heed to the unanimous resolution of the council demanding the non-removal of the huts of the poor constructed on the Krishna embankments. Dictatorial policies are being implemented on the pretext of reforms. These are not just confined to Vijayawada but are implemented in various stages in all the cities.




Except for the CPI(M) all other parties welcomed the introduction of JNNURM in the Vijayawada municipal council. The ruling Congress stated that it is a boon for the city. CPI and TDP too supported it. Everybody thought that there would be a deluge of funds. CPI(M) was the only party that consistently opposed this move. It warned against the dangers of conditions. The ruling party had campaigned that CPI(M) is against development and that it is obstructing the flow of funds. Experience has vindicated the party’s stand. CPI and TDP too were now forced to join our party in the demonstrations against the burdens on the poor. Due to the protests organised by the party, brakes were applied on the implementation of the reforms. Fitting of water meters were stalled temporarily. Collection of garbage tax was being postponed for the last five years. It was proved in practice that these reforms can be stopped through struggles. This fight has to be taken further and conducted in all the cities.