On January 17, 2020, the Ministry of Health and Family Welfare acknowledged the emergence of COVID-19 pandemic that was spreading across China. Tamil Nadu reported its first confirmed case of COVID-19 on March 7, 2020. As of April 28, the state has 1,937 confirmed cases of COVID-19 (seventh highest in the country). Of these, 1,101 have recovered (third highest rate of recovery in the country among states with 100 or more cases) and 24 have died. The state government has taken several actions to contain the spread and impact of COVID-19. In this blog, we look at the key measures taken by the Tamil Nadu government between January 19 and April 28, 2020.
Initial phase
The Tamil Nadu government came out with a series of responses between January 19 and February 1. These included: (i) readying Rapid Response Teams (RRTs) at state and district levels, (ii) setting up of a 24/7 control room, (iii) thermal scanning of air travellers from China, (iv) creating isolation wards in the General Hospitals of four major cities, and (v) running appropriate awareness campaigns.
Some of the other early measures are summarised below:
Health measures
On March 13, the Governor declared COVID-19 to be a notified disease in the state of Tamil Nadu, under the Tamil Nadu Public Health Act, 1939. Notifying a disease allows for incidences of the disease to be mandatorily reported to the government and in turn, helps authorities to respond with appropriate measures to prevent the spread of the disease.
On March 15, the government prescribed the Tamil Nadu COVID-19 Regulations, 2020. These regulations detail the responsibilities of hospitals and individuals, and the powers of officials in relation to the diagnosis, treatment, and containment of COVID-19. These include (i) creation of isolation wards in hospitals, (ii) containment measures in an area once positive cases are detected, and (iii) mandatory 14-day home isolation for asymptomatic air travellers from COVID-19 affected countries.
On March 15, the government also mandated a 14-day institutional isolation for all air travellers to prevent import of infections from other states. The state also initiated setting up of testing camps and conducting disinfectation drives in the border districts.
Travel and Movement
On March 15, the government notified a series of instructions that restricted the movement of people in the state. These include (i) shutting down of establishments, such as, educational institutions (up to Class 5), theatres, malls etc, and (ii) banning of inter-state travel for 15 days.
On March 16, the government announced additional restrictions till Mar 31, such as, closure of: (i) anganwadis and making alternate provision of dry ration for children at their homes, (ii) swimming pools, amusement parks, gyms, zoos, museums, bars, clubs etc, and (iii) all educational institutions, except the conduct of practical exams for class 10 and 12, and various entrance exams.
State borders were sealed off for road traffic, except for movement of essential commodities, from March 20 to March 31. Public transportation services, such as metro rail and inter-state private buses, were also suspended till March 31.
The Prime Minister asked the country to observe a Janta Curfew from 7 am to 9 pm on March 22,. The state government further extended this curfew to 5 am on March 23. Following this, the government immediately announced a state-wide lockdown from March 24 up to April 1.
On April 5, the government issued an advisory for the quarantine of migrant workers and the conduct of health camps for them.
Welfare Measures
On March 15, the government announced financial assistance of a total of Rs 60 crore to various departments, such as, health, transport etc, to take precautionary measures to combat COVID-19.
On March 24, the government announced the distribution of cash support of Rs 1,000 to all entitled family cardholders. Further, they were also eligible for free supply of essential commodities such as rice, dal, sugar, etc, during the month of April, through the Public Distribution System (PDS).
During the lockdown
A state-wide lockdown was announced from March 24 to April 1, followed by a nation-wide lockdown between March 25 and April 14. On April 13, the state-wide lockdown was extended up to April 30. This was followed by the extension of the nation-wide lockdown from April 15 to May 3. Under this, certain activities could be resumed after April 20.
Some of the key measures undertaken during the lockdown period are:
Travel and movement
Amidst the lockdown, on March 25, the government notified that establishments providing essential goods and services, which were allowed to operate. These included establishments such as (i) police forces, (ii) treasury, (iii) public utilities, (iv) banks, (v) media, (vi) telecommunications, and (vii) shops dealing with food, groceries etc. Further, on March 28, the government permitted a few agriculture-related establishments to operate, such as, Mandis, fertiliser shops, and agencies involved in procurement of agriculture products.
An Expert Committee formed by the state government to formulate guidelines for phased exit from lockdown after April 20, recommended the extension of the lockdown till May 3. Certain select activities were, however, permitted to resume operations from April 20 onwards. These include (i) MNREGA works related to irrigation and water conservation, (ii) rural construction projects on irrigation, dam safety, hospital buildings, roads and bridges, and (iii) state and central government offices at one-third capacity.
In view of rising number of cases, on April 24, stringent curfew orders were passed in the districts of (i) Chengalpattu, (ii) Kancheepuram, and (iii) Thiruvallur. The curfew will be imposed between April 26 and April 29, from 6 am to 9 pm, and with more stringent restrictions than under the ongoing nation-wide lockdown, such as, (i) petrol bunks to operate only between 8 am and 12 noon, and (ii) supermarkets and shops to remain shut.
Curfew orders were passed in 5 more districts. In Chennai, Coimbatore and Madurai, curfew is imposed between 6 am and 9 pm from April 26 to April 29. In Salem and Tiruppur, curfew was imposed from April 26 to April 28.
Welfare Measures
On March 30, the government announced a cash assistance of Rs 1,500 per month to be credited into the bank accounts of differently-abled persons. It also announced that transgenders without ration cards, were eligible to receive 12kg of rice, 1kg of dal, and 1 litre of cooking oil, from fair price shops (FPS).
Further, a cash assistance of Rs 1,000 was announced for (i) all ration card holders through FPS, (ii) registered auto drivers and construction workers, (iii) members of TN Cine Welfare Board, and (iv) match factory workers.
On April 2, the government announced a concession package to manufacturers of COVID-19 related medical equipment, who will commence production before July 31, 2020. The package applied to both MSMEs and large manufacturers of equipment, such as, ventilators, Personal Protection Equipment (PPE) kits and medicines. Some of the concessions include: (i) 30% capital subsidy, upto Rs 20 crore, (ii) 100% stamp duty waiver, (iii) 6% interest subvention for capital loans for two quarters, (iv) commencement of manufacturing without prior approval, and (v) provision of necessary land on priority basis for short-term/long-term leases, etc.
Rs 50 lakh grant was announced to the families of frontline workers in the event of their unfortunate demise. If infected by COVID-19, they are eligible for Rs 2 lakh assistance towards treatment costs. In certain cases, if eligible, their kin would also receive a government job offer.
On April 7, the government announced that MLALAD funds could be utilised for COVID-19 prevention and containment activities. A total of Rs 1.25 crore can be utilised towards prevention, containment, treatment, and purchase of medical equipment, PPEs etc.
Health Measures
On April 2, the government released a list of designated COVID-19 hospitals in the state. Instructions were issued to refer all COVID-19 positive cases exclusively to these designated hospitals. However, willing citizens were also permitted to approach private hospitals, at their own cost. Private hospitals were further instructed to establish dedicated fever clinics to cope with the increasing load of flu and fever cases.
Amidst a rise in the number of cases, on April 4, the government issued instructions to: (i) avoid all kinds of religious gatherings, (ii) hospitals to not show religious bias in treating patients, and (iii) doctors to coordinate with the government and check in on the mental health of quarantined patients via video conferencing facilities such as Skype.
On April 5, the government issued cluster containment measures to stop the transmission, morbidity, and mortality associated with the further spread of COVID-19. This was in response to the large number of imported infections from the attendees of the Nizamuddin conference in Delhi.
Various guidelines were issued towards (i) treatment protocol of COVID-19 positive patients, (ii) appropriate management of suspect cases of COVID-19, (iii) dead body management, (iv) criteria for classification of hotspots, and (v) protocol for use of Rapid Antibody Tests in hotspot areas.
Resource Management: On March 27, the Chief Minister announced an additional COVID-19 related recruitment of doctors and lab technicians. The recruited members were to join within three days of the notification. On April 25, an additional 1,323 nurses were also recruited.
A two-month extension was announced to the tenures of medical professionals retiring on March 31 and April 30.
The government also instructed District Authorities to ensure the protection of doctors and other hospital staff who are being forcefully evicted from their houses by landlords. As a measure to develop immunity against COVID-19, the government, on April 25, also recommended providing Zinc and Vitamin tablets, and herbal powder to all personnel on frontline duty in containment areas.
Other Measures
Administrative: Eleven committees have been formed to coordinate implementation of various welfare programmes. In all districts, Crisis Management Committees have been formed under the district collector.
Education: The conduct of semester examinations in universities and colleges is postponed to the beginning of the next academic year, as and when the institutions reopen. Private colleges and schools were also instructed to not compel students/parents to pay pending dues for 2019-20 or advance fees for 2020-21.
Industry: On April 22, the government released a list of industries classified as continuous process industries. These are companies where the production lines are functioning 24/7. The list includes (i) refineries, (ii) large steel plants, (iii) large cement plants, (iv) sugar mills, (v) large paper mills, (vi) tyre manufacturers etc.
Technology: The government launched a Whatsapp Chat Bot for providing latest information and guidance related to COVID-19 in both Tamil & English.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
India’s urban population has grown by 32% from 2001 to 2011 as compared to 18% growth in total population of the country.[1] As per Census 2011, 31% of the country’s population (377 million people) live in cities, and contribute to 63% of the country’s GDP.[2] The urban population is projected to grow up to 600 million by 2031.2 With increasing urban population, the need for providing better infrastructure and services in cities is increasing.[3] The government has introduced several schemes to address different urban issues. These include the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission, Heritage City Development and Augmentation Yojana (HRIDAY), Pradhan Mantri Awas Yojana – Housing for All (Urban) (PMAY-U), and Swachh Bharat Mission (Urban).
Last week the Ministry of Urban Development released the next batch of winners under the Smart Cities Mission.[4] This takes the number of smart cities to 90. The government has also announced a few policies and released data indicators to help with the implementation of the urban schemes. In light of all this, we discuss how the new schemes are changing the mandate of urban development, the fiscal challenge of implementing such schemes, and the policies that are trying to address some of these challenges.
Urbanisation in India
The Jawaharlal Nehru National Urban Renewal Mission (JnNURM), launched in 2005, was one of the first urban development schemes implemented by the central government. Under JnNURM, the central government specified certain mandatory and optional reforms for cities, and provided assistance to the state governments and cities that were linked to the implementation of these reforms. JnNURM focused on improving urban infrastructure and service delivery, community participation, and accountability of city governments towards citizens.
In comparison, the new urban schemes move beyond the mandate that was set by JnNURM. While AMRUT captures most of the objectives under JnNURM, the other schemes seek to address issues around sanitation (through Swachh Bharat), affordable housing (through PMAY-U), and technology innovation (through Smart Cities). Further, the new schemes seek to decentralize the planning process to the city and state level, by giving them more decision making powers.2 So, while earlier, majority of the funding came from the central and state governments, now, a significant share of the funding needs to be raised by the cities themselves.
For example, under the Smart Cities Mission, the total cost of projects proposed by the 60 smart cities (winners from the earlier rounds) is Rs 1.3 lakh crore.[5] About 42% of this amount will come from central and state funding towards the Mission, and the rest will be raised by the cities.[6]
The new schemes suggest that cities may raise these funds through: (i) their own resources such as collection of user fees, land monetization, property taxes, etc., (ii) finance mechanisms such as municipal bonds, (iii) leveraging borrowings from financial institutions, and (iv) the private sector through Public Private Partnerships (PPPs).[7]
In 2011, an Expert Committee on Indian Urban Infrastructure and Services (HPEC) had projected that creation of the required urban infrastructure would translate into an investment of Rs 97,500 crore to Rs 1,95,000 crore annually.[8] The current urban schemes are investing around Rs 32,500 crore annually.
Financial capacity of cities
Currently, the different sources of revenue that municipal corporations have access to include: (i) tax revenue (property tax, tax on electricity, toll tax, entertainment tax), (ii) non-tax revenue (user charges, building permission fees, sale and hire charges), (iii) grants-in-aid (from state and central governments), and (iv) debt (loans borrowed from financial institutions and banks, and municipal bonds).
While cities are now required to raise more financing for urban projects, they do not have the required fiscal and technical capacity.8,[9] The HPEC had observed that cities in India are among the weakest in the world, both in terms of capacity to raise resources and financial autonomy. Even though cities have been getting higher allocations from the centre and states, their own tax bases are narrow.8 Further, several taxes that cities can levy are still mandated by the state government. Because of their poor governance and financial situation, cities also find it difficult to access external financing.8,7
In order to help cities improve their finances, the government has introduced a few policies, and released a few indicators. Some of these are discussed below:
Policy proposals and data indicators
Value Capture Financing (VCF): The VCF policy framework was introduced by the Ministry of Urban Development in February 2017.[10] VCF is a principle that states that people benefiting from public investments in infrastructure should pay for it. Currently when governments invest in roads, airports and industries in an area, private property owners in that area benefit from it. However, governments recover only a limited value from such investments, constraining their ability to make further public investments elsewhere. VCF helps in capturing a part of the increment in the value of land due to such investments, and use it to fund new infrastructure projects.
The different instruments of VCF include: land value tax, fee for changing land use, betterment levy, development charges, transfer of development rights, and land pooling systems.10 For example, Karnataka uses certain value capture methods to fund its mass transit projects. The Mumbai Metropolitan Region Development Authority (MMRDA), and City and Industrial Development Corporation Limited (CIDCO) have used betterment levy (tax levied on land that has gained in value because of public infrastructure investments) to finance infrastructure projects.
Municipal bonds: Municipal bonds are bonds issued by urban local bodies (municipal corporations or entities owned by municipal bodies) to raise money for financing specific projects such as infrastructure projects. The Securities and Exchange Board of India regulations (2015) regarding municipal bonds provide that, to issue such bonds, municipalities must: (i) not have negative net worth in any of the three preceding financial years, and (ii) not have defaulted in any loan repayments in the last one year.[11] Therefore, a city’s performance in the bond market depends on its fiscal performance. One of the ways to determine a city’s financial health is through credit ratings.
Credit rating of cities: In September 2016, the Ministry of Urban Development started assigning cities with credit ratings.[12] These credit ratings were assigned based on assets and liabilities of the cities, revenue streams, resources available for capital investments, accounting practices, and other governance practices.
Of the total 20 ratings ranging from AAA to D, BBB– is the ‘Investment Grade’ rating and cities rated below BBB– need to undertake necessary interventions to improve their ratings for obtaining positive response to the Municipal Bonds to be issued. By March 2017, 94 cities were assigned credit ratings, 55 of which got ‘investment grade’ ratings.[13]
Credit ratings indicate what projects might be more lucrative for investments. This, in turn, helps investors decide where to invest and determine the terms of such investments (based on the expected returns).
Earlier this month, the Pune Municipal Corporation raised Rs 200 crore through the sale of municipal bonds, to finance water supply projects under the Smart Cities Mission.[14] The city had received an AA+ credit rating (second highest rating) in the recent credit rankings assigned by the central government.
Other than credit ratings, the Ministry of Urban Development has also come up with other data indicators around cities such as the Swachh Bharat rankings, and the City Liveability Index (measuring mobility, access to healthcare and education, employment opportunities, etc). These rankings seek to foster a sense of competition across cities, and also help them map their performances year on year.
Some financing mechanisms, such as municipal bonds, have been around in India for the last two decades, but cities haven’t been able to make much use of them. It remains to be seen whether the introduction of indicators such as credit ratings helps the municipal bond market take off. While these mechanisms may improve the finances of cities, the question is would more funding solve the cities’ problems. Or would it require municipal government to take a different approach to problem solving.
[1] Census of India, 2011.
[2] Mission Statement and Guidelines, Smart Cities, Ministry of Urban Development, June 2015, http://smartcities.gov.in/writereaddata/SmartCityGuidelines.pdf.
[3] Report on Indian Urban Infrastructure and Services, March, 2011, The High Powered Expert Committee for estimating the investment requirements for urban infrastructure services, http://icrier.org/pdf/FinalReport-hpec.pdf.
[4] “30 more smart cities announced; takes the total to 90 so far”, Press Information Bureau, Ministry of Urban Development, June 23, 2017.
[5] Smart Cities Mission, Ministry of Urban Development, last accessed on June 30, 2017, http://smartcities.gov.in/content/.
[6] Smart City Plans, Last accessed in June 2017.
[7] “Financing of Smart Cities”, Smart Cities Mission, Ministry of Urban Development, http://smartcities.gov.in/upload/uploadfiles/files/Financing%20of%20Smart%20Cities.pdf.
[8] “Report on Indian Urban Infrastructure and Services”, March, 2011, The High Powered Expert Committee for estimating the investment requirements for urban infrastructure services, http://icrier.org/pdf/FinalReport-hpec.pdf.
[9] Fourteenth Finance Commission, Ministry of Finance, February 2015, http://finmin.nic.in/14fincomm/14fcrengVol1.pdf.
[10] Value Capture Finance Policy Framework, Ministry of Urban Development, February 2017, http://smartcities.gov.in/upload/5901982d9e461VCFPolicyFrameworkFINAL.pdf.
[11] Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015, Securities and Exchange Board of India, July 15, 2015, http://www.sebi.gov.in/sebi_data/attachdocs/1436964571729.pdf.
[12] “Credit rating of cities under urban reforms begins”, Press Information Bureau, Ministry of Urban Development, September 6, 2016.
[13] “Credit Rating of Urban Local Bodies gain Momentum”, Press Information Bureau, Ministry of Urban Development, March 26, 2017.
[14] “Pune civic body raises Rs200 crore via municipal bonds”, LiveMint, June 19, 2017, http://www.livemint.com/Money/JOOzaSTKnC6k1EZGeFh8LJ/Pune-civic-body-raises-Rs200-crore-via-municipal-bonds.html.
