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As of April 27, 2020, there are 27,892 confirmed cases of COVID-19 in India. Since April 20, 10,627 new cases have been registered. Out of the confirmed cases so far, 6,185 patients have been cured/discharged and 872 have died. As the spread of COVID-19 has increased across India, the central government has continued to announce several policy decisions to contain the spread, and support citizens and businesses who are being affected by the pandemic. In this blog post, we summarise some of the key measures taken by the central government in this regard between April 20 and April 27, 2020.
Source: Ministry of Health and Family Welfare; PRS.
Lockdown
Relaxation of lockdown for shops in specific areas
On April 25, the Ministry of Home Affairs passed an order allowing the opening of: (i) all shops in rural areas, except those in shopping malls, and (ii) all standalone shops, neighbourhood shops, and shops in residential complexes in urban areas. Shops in markets, market complexes, or shopping malls in urban areas are not allowed to function. Only shops registered under the Shops and Establishments Act of the respective state or union territory will be allowed to open. Further, no shops can open in rural or urban areas that have been declared as containment zones. The order also specifies that the sale of liquor continues to be prohibited.
Functioning of Central Administrative Tribunals to remain suspended
The functioning of Central Administrative Tribunals will remain suspended until May 3, 2020. Once functioning begins, certain days already declared as holidays may be reassigned as working days. This decision was made keeping in mind that most of the Central Administrative Tribunals are located in COVID-19 hotspots.
Financial measures
RBI announces Rs 50,000 crore special liquidity facility for Mutual Funds
The Reserve Bank of India (RBI) has decided to open a special liquidity facility for mutual funds (SLF-MF) worth Rs 50,000 crore. This will ease liquidity pressures on mutual funds. Under the SLF-MF, RBI will conduct repo operations of 90 days tenor at the fixed repo rate. The SLF-MF will be available for immediate use, and banks can submit their bids to avail funding. The scheme is available from April 27 to May 11, 2020, or until the allocated amount is utilised, whichever is earlier. RBI will review the timeline and amount of the scheme, depending upon market conditions. Funds availed under the SLF-MF can be used by banks exclusively for meeting the liquidity requirements of mutual funds. This can be done through: (i) extending loans, and (ii) undertaking outright purchase of and/or repos against collateral of investment grade corporate bonds, commercial papers, debentures, and certificates of deposits held by mutual funds.
RBI extends benefits of Interest Subvention and Prompt Repayment Incentive schemes for short term crop loans
The Reserve Bank of India has advised banks to extend the benefits of Interest Subvention of 2% and Prompt Repayment Incentive of 3% for short term crop loans up to three lakh rupees. Farmers whose accounts have become due or will become due between March 1, 2020 and May 1, 2020 will be eligible.
Protection of healthcare workers
The Epidemic Diseases (Amendment) Ordinance, 2020 was promulgated
The Epidemic Diseases (Amendment) Ordinance, 2020 was promulgated on April 22, 2020. The Ordinance amends the Epidemic Diseases Act, 1897. The Act provides for the prevention of the spread of dangerous epidemic diseases. The Ordinance amends the Act to include protections for healthcare personnel combatting epidemic diseases and expands the powers of the central government to prevent the spread of such diseases. Key features of the Ordinance include:
Definitions: The Ordinance defines healthcare service personnel as a person who is at risk of contracting the epidemic disease while carrying out duties related to the epidemic. They include: (i) public and clinical healthcare providers such as doctors and nurses, (ii) any person empowered under the Act to take measures to prevent the outbreak of the disease, and (iii) other persons designated as such by the state government.
An ‘act of violence’ includes any of the following acts committed against a healthcare service personnel: (i) harassment impacting living or working conditions, (ii) harm, injury, hurt, or danger to life, (iii) obstruction in discharge of his duties, and (iv) loss or damage to the property or documents of the healthcare service personnel. Property is defined to include a: (i) clinical establishment, (ii) quarantine facility, (iii) mobile medical unit, and (iv) other property in which a healthcare service personnel has direct interest, in relation to the epidemic.
Protection for healthcare personnel and damage to property: The Ordinance specifies that no person can: (i) commit or abet the commission of an act of violence against a healthcare service personnel, or (ii) abet or cause damage or loss to any property during an epidemic. Contravention of this provision is punishable with imprisonment between three months and five years, and a fine between Rs 50,000 and two lakh rupees. This offence may be compounded by the victim with the permission of the Court. If an act of violence against a healthcare service personnel causes grievous harm, the person committing the offence will be punishable with imprisonment between six months and seven years, and a fine between one lakh rupees and five lakh rupees. These offences are cognizable and non-bailable.
For more details on the Ordinance, please see here.
Financial aid
Progress under the Pradhan Mantri Garib Kalyan Package
According to the Ministry of Finance, between March 26 and April 22, 2020, approximately 33 crore poor people have been given financial assistance worth Rs 31,235 crore through bank transfers to assist them during the lockdown. Beneficiaries of the bank transfers include widows, women account holders under Pradhan Mantri Jan Dhan Yojana, senior citizens, and farmers. In addition to direct bank transfers, other forms of assistance have also been initiated. These include:
40 lakh metric tonnes of food grains have been provided to 36 states and union territories.
2.7 crore free gas cylinders have been delivered to beneficiaries.
Rs 3,497 crore has been disbursed to 2.2 crore building and construction workers from the Building and Construction Workers’ Funds managed by state governments.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
In the last decade, the government has implemented several schemes to address issues related to urbanisation and aid the process of urban development. One of the schemes is the Smart Cities Mission, which intends to take advantage of the developments in information technology in developing the urban development strategy, across 100 cities. Last week the government announced the list of 9 new Smart Cities, taking the total to 99. In light of this, we look at the Smart Cities Mission and a few issues with it.
What is a Smart City?
The primary objective of the Mission is to develop cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and apply ‘smart’ solutions.
However, the Mission document does not provide one definition of a Smart City. Instead it allows cities to come up with their own solutions of what they identify as a Smart City. The guidelines suggest that the core infrastructure elements in a Smart City will include: (i) adequate water supply, (ii) assured electricity supply, (iii) sanitation, including solid waste management, (iv) efficient urban mobility and public transport, (v) affordable housing, (vi) robust IT connectivity, and (vii) good governance. ‘Smart’ solutions may include (i) energy efficient buildings, (ii) electronic service delivery, (iii) intelligent traffic management, (iv) smart metering, (v) citizen engagement, etc.
How were the Smart Cities selected?
The Mission was introduced in the form of a competition, called the Smart City challenge. The first stage was in July 2015 when states nominated their cities for the competition. In August 2015, the Ministry of Urban Development selected 100 of those cities to participate in the competition. These cities were required to develop their smart city plans (SCPs) and compete against each other. The SCPs were evaluated on the basis of the solutions, the processes followed, the feasibility and cost effectiveness of the plans, and citizen engagement. Over the last 2 years, the Ministry has announced winner cities in batches. So far, 99 cities have been selected under the Mission.
What information do these SCPs contain?
The cities had to prepare their SCPs with two primary strategic components: (i) area-based development, and (ii) pan-city development. The area-based development would cover a particular area of the city, and could have either a redevelopment model, or be a completely new development. Pan-city development would envisage application of certain smart solutions across the city to the existing infrastructure.
Each city had to formulate its own concept, vision, mission and plan for a Smart City that was appropriate to its local context and resources. The Ministry of Urban Development provided technical assistance, through consultancy firms, to cities for helping them prepare these strategic documents.
How will the Mission be implemented?
The Mission will be implemented at the city level by a Special Purpose Vehicle (SPV). The SPV will plan, approve, release funds, implement, manage, monitor, and evaluate the Smart City development projects.
The SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level. It will be chaired by the Collector/ Municipal Commissioner of the Urban Development Authority. The respective state and the Urban Local Body (ULB or municipality) will be the promoters in this company having 50:50 equity shareholding.
How are the Plans getting financed?
The Mission will be operated as a Centrally Sponsored Scheme. The central government will provide financial support of up to Rs 48,000 crore over five years, that is, an average of Rs 500 crore per city. The states and ULBs will have to contribute an equal amount. The central government allocated Rs 4,000 crore towards the Mission in the 2017-18 budget.
Since funding from the government will meet only a part of the funding required, the rest will have to be raised from other sources including: (i) states/ ULBs own resources from collection of user fees, land monetization, etc., (ii) innovative finance mechanisms such as municipal bonds, (iii) leverage borrowings from financial institutions (such as banks), and (iv) the private sector through Public Private Partnerships (PPPs).
The total cost of projects proposed under the various SCPs of the 90 winner cities is Rs 1.9 lakh crore. About 42% of this amount will come from central and state funding, 23% through private investments and PPPs, and 19% through convergence with other schemes (such as HRIDAY, AMRUT, Swachh Bharat-Urban). The remaining will be generated by the cities through the levy of local taxes, and user fees.
What are some of the issues to consider?
Financial capacity of cities: Under the Mission, cities have to generate additional revenue through various sources including market borrowings, PPPs, and land monetization. The High Powered Expert Committee on Indian Urban Infrastructure and Services (HPEC) had observed that ULBs in India are among the weakest in the world, both in terms of capacity to raise resources and financial autonomy. Even though ULBs have been getting higher allocations from the centre and states, and tax devolution to them has increased, their own tax bases are narrow. Further, owing to their poor governance and financial situation, ULBs find it difficult to access external financing.
Such a situation may pose problems when implementing the Mission, where the ULBs have to raise a significant share of the revenue through external sources (PPPs, market borrowings). For example, the Bhubaneswar Smart City Plan has a total project cost of Rs 4,537 crore (over five years), while the city’s annual budget for 2014-15 was Rs 469 crore.
In order to improve the finances of the ULBs, committees have made various recommendations, which include:
The government has recently introduced a few policies and mechanisms to address municipal financing. Examples include value capture financing through public investments in infrastructure projects, and a credit rating system for cities. In June 2017, the Pune Municipal Corporation raised Rs 200 crore by issuing municipal bonds.
Technical capacity of the ULBs: The Smart Cities Mission seeks to empower ULBs to raise their own revenue, and also lays emphasis on the capacity building of ULBs. The HPEC had observed that municipal administration has suffered due to: (i) presence of untrained and unskilled manpower, and (ii) shortage of qualified technical staff and managerial supervisors. It had recommended improving the technical capacity of ULBs by providing technical assistance to state governments, and ULBs in planning, financing, monitoring, and operation of urban programmes. The central government had allocated Rs 10.5 crore towards the capacity building component of the Mission in 2017-18.
The Ministry of Urban Development has been running several programmes to improve capacity of ULBs. This includes MoUs with 18 states to conduct training programmes for their ULB staff.
Coverage of the Mission: The Mission covers 100 cities, of which 99 have been announced as winners so far. The urban population that will be impacted through the Mission is around 96 million (data for 90 cities excluding the recently announced 9 cities).
As per Census 2011, India’s urban population was 377 million. The Mission impacts about 25% of this population. Further, most of the SCPs approved so far focus on area-based development, thus affecting a particular area of the cities. About 80% of the total project cost proposed is towards this model of development. In each city, this area-based development will cover up to 50 acres of area. The remaining 20% of the project cost is towards pan-city development proposals, which provide smart planning solutions for the entire city. It may be argued that even within the selected cities, the Mission will only impact few selected areas, and not necessarily help with development of the entire city.
