Today's Editorial

Today's Editorial - 15 February 2024

Jamshedpur model of urbanisation

Relevance: GS Paper II

Why in news?

Urban utility management in the Jamshedpur highlights the potential for high-quality services through the private sector, but the challenge lies in ensuring accountability to the public

Origin of Jamshedpur:

  • Founded by industrialist Jamsetji Nusserwanji Tata in 1907, the city was designed with wide roads, green spaces, and residential areas close to the workplace, principles that modern urban planners advocate for today.
  • Despite the planning, Jamshedpur has not been immune to the challenges of urbanisation.

Challenges of Urbanisation:

  • Rapid industrial growth has brought pollution, waste management, and water scarcity issues.
  • Managing urban growth was another challenge as the city has witnessed a population surge, which has put pressure on its infrastructure and resources.

Private sector managing local governance: Jharkhand model

  • The Jamshedpur Utilities and Services Company (JUSCO), a Tata enterprise, was established to manage civic amenities.
    • Jamshedpur turned into an industrial township in accordance with the special provisions of the Indian Constitution.
      • Industrial towns are recognized as special economic areas that offer concessions in legislation and other incentives to private entities to establish economic units to facilitate commercial operations.
  • This would involve the creation of a municipal council comprising representatives from Tata Steel, the local government, and residents.
    • This model would significantly differ from earlier industrial townships with negligible local participation or representation, such as in Rourkela and Salem.
  • In Jamshedpur, the Tata Group's management of urban utilities through JUSCO exemplifies the potential for delivering high-quality services, ranging from water supply and waste management to street lighting and road maintenance.
    • Tata Steel and other industries have adopted cutting-edge technologies to reduce emissions and have invested in water harvesting and recycling initiatives.
  • This model suggests that private actors, motivated by managerial efficiency and accountability to their stakeholders, can solve the persistent issues afflicting municipal governance in many Indian cities, such as inefficiencies, project delays, and poor maintenance of urban infrastructure.
  • All this has opened up a debate on entering private actors into urban governance and ensuring democratic accountability.

Arguments in favour:

  • Even though the 74th Amendment Act ensures decentralisation of power to urban local governments, the lack of devolution of power, instances of corruption, and inadequate resources with the local bodies imply that these bodies are often ineffective.
    • In such a scenario, the entry of private players seems like an opportunity for competent management and effective governance.
  • Private sector engagement in urban governance is frequently praised for bringing efficiency, innovation, and investment into the public domain.

Arguments against:

  • Critics contend that this scenario can result in a governance model where decisions affecting community well-being are made behind corporate doors, potentially marginalising the needs and voices of less influential stakeholders.
  • The private sector/company remains mainly focused on areas where its employees reside and ignores other regions, especially in the case of the industrial township.
  • Despite their proficiency and expertise, private entities, like elected bodies, operate in areas critical to public welfare without being directly accountable to the public.

Way forward:

  • Jamshedpur is a testament to India's industrial ingenuity and urban planning. To reconcile the advantages of private sector efficiency with the necessity for democratic governance, it is vital to establish comprehensive frameworks for accountability, transparency, and public participation.
    • This involves defining the roles, responsibilities, and boundaries of private actors in urban governance to ensure they enhance, rather than replace, the functions of urban local bodies (ULBs).
  • Implementing mechanisms for public oversight, such as citizen advisory boards, public audits, and open forums for feedback and grievances, and developing partnership models that include ULBs in the decision-making process, ensures that the expertise and efficiency of private actors are utilised without compromising the authority and accountability of elected bodies.

Beyond Editorial:

ENGAGING THE PRIVATE SECTOR FOR INCLUSIVE URBANISATION: The Role of Municipally Owned Enterprises, a report by UNDP

New Urban Agenda (NUA):

  • The United Nations General Assembly convened Habitat III (United Nations Conference on Housing and Sustainable Urban Development) in Quito, Ecuador 2016. Member states had agreed on the new objectives for the New Urban Agenda.
    • NUA contributes to creating a comprehensive approach alongside the 2030 Agenda Goal 11, which aims to make cities and human settlements inclusive, safe, resilient and sustainable.
  • It states that government bodies or local authorities should recognize that collaborative action with the private sector and other informal actors is crucial to providing inclusive and resilient urbanisation.
    • Integrating the private sector is increasingly required to build inclusive cities for all aspects of the urban value chain, planning and design, operation and maintenance, and financing these services.
  • Local governments and municipalities can benefit from engaging the private sector to develop capacities in procurement, contract management, professional and often unionised labour management and finance and operating budgets to provide better services.
  • The business models to engage the private sector can be Public-Private Partnerships (PPPs), State Owned Enterprises (SOEs) at the national level and Municipal Owned Enterprises (MOEs) at the local level.

Municipally Owned Enterprises (MOEs):

  • MOEs are businesses owned by local governments that provide services and typically generate revenue for local communities.
    • MOEs are typically organisations with independent corporate status, managed by an executive board appointed primarily by local government officials and with majority public ownership.
  • The key point that distinguishes MOEs from local authorities is managerial autonomy.
    • While local authorities are constrained by municipal law safeguarding public money, MOEs are often regulated by public or private commercial law instead.
  • Another key point distinguishing MOEs from other private companies is that they have a significant economic and social impact on local communities and are among the largest employers, contributing to a substantial percentage of the workforce.
  • MOEs play a critical role in urbanisation by creating sustainable, quality jobs for community members, increasing local economic sustainability, generating new local revenues that can be used for countless purposes that benefit the community, and providing more accountability, transparency, and democratic control.
  • MOEs can develop markets while developing the capacities of local actors and enable an ecosystem to attract other private sector companies to the market.
    • The more private sector engagement in the market, the greater the competitiveness, with the outcome of sustainable, efficient and affordable basic services.

Way forward:

  • MOEs can be instrumental in promoting efficiency in pro-poor basic services delivery at different levels of society by providing more affordable services.
    • Although they have this potential, MOEs are not widely covered in the literature, even though the model is not common in emerging markets, and many would benefit from this service delivery model.
  • Municipally Owned Enterprises (MOEs) are one of the methods of engaging the private sector in the promotion of resource management, enhancing dynamism and providing inclusive and efficient service delivery.
    • Creating MOEs is thus a possibility that contains significant untapped potential for development.

 

Mains PYQ:

Q. “The local self-government system in India has not proved to be effective instrument of governance”. Critically examine the statement and give your views to improve the situation. (UPSC 2017)

Q. Adoption of PPP model for infrastructure development of the country has not been free of criticism. Critically discuss the pros and cons of the model. (UPSC 2013)

Q. “Effectiveness of the goverment system at various levels and people’s participation in the governance system are inter-dependent.” Discuss their relationship with each other in context of India. (UPSC 2016)

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