City of contrast: Spread over 1.75 sq. km, Mumbai's Dharavi is Asia's largest slum, where thousands of people live

Scene 1: Bangalore, Silk Board Junction, morning rush hour. Cars and motorbikes snake endlessly along the narrow road that leads to the heart of India's Silicon Valley, the Electronic City. From the junction, it is less than 10 kilometres to the campuses of India's best-known it companies, Infosys and Wipro, but the motorists this morning-most of them employed in the booming it industry-will take anywhere between one and two hours to reach their workplace. The irony: The junction did get a new flyover recently, but nobody bothered to widen the road down the stretch. It is worse on the way back home, because there's no flyover on this side. Elsewhere in the city, getting stuck on the Airport road could mean a missed flight.

Scene 2: Mumbai, early July: It has been raining for four days and life in the city has come to a halt. Places such as Andheri, Khar, Malad and Bandra-Kurla Complex are waterlogged, suburban trains are stranded at several places, and there are reports of rain-related deaths. It's not the first time rains have brought Mumbai to a standstill. They did too last year and claimed more than a thousand lives. Weary Mumbaikars are outraged.

Scene 3: Delhi, Seelampur slums: Crumbling brick-and-mud houses line the sides of a narrow lane, with open drains running alongside. There are small heaps of garbage all along, smell of which mixes with that of excreta in the open drains to produce an overwhelming odour. But unmindful of the surroundings, children chase each other around and men sit around on charpoys, smoking beedis and hookahs. Living in these slums means cooking, eating, sleeping and washing in barely 10x6 rooms. But guess what? That's how half of Delhi lives.

This is not how best cities are supposed to be. Best cities aren't supposed to erupt in violence if an ageing movie star dies at the grand age of 77, like Bangalore did when Rajkumar died on April 12. Neither are best cities supposed to let walk-in bombers massacre home-bound rail commuters like Mumbai allowed on July 11, when more than 200 people died. Best cities are supposed to be places where all their inhabitants can find material and spiritual fulfilment. The fact that none of India's cities is so, drives home a grim fact about our fifth Best Cities for Business survey: These are best of the worst cities. Power cuts, water scarcity, congested roads, pollution, dirt and roadside squalor are par for the course at almost all Indian cities.

Yet, it is these overcrowded and crumbling cities that drive India and make it the second-fastest growing economy in the world. Cities and towns are where 30 per cent of our people live, with 38 per cent of the urban population confined to just the top 35 cities. Fifty-five per cent of the country's GDP emanates from urban India; 50 per cent of the foreign direct investment goes to the seven largest cities. Globally, cities are the engines of their economies. They are too in India.

But the stress on our cities has begun to tell. As India's population and economy grew, more and more people migrated to the cities in search of a livelihood. But the cities themselves never planned to keep pace with their growth. There was no urban planning to talk of, resulting in haphazard development. Poor zoning compliance turned residential localities into commercial centres, and slums came up wherever they could. Today, 22 per cent of the city dwellers live in slums, and half of them work in the informal economy as hawkers, mechanics or roadside vendors. "A city is not just a place of employment, but a place of hope," notes Kavas Kapadia, Professor & Head of Urban Planning at Delhi's School of Planning and Architecture (SPA).

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Why have we neglected our cities, then? Because our early political leaders always thought of India as an agrarian country. Therefore, urban development, a state subject, was never accorded priority and all the five-year plans allocated token sums to cities for development. The Mega City Scheme of 1993-94, for instance, allocated Rs 75 crore to five mega cities for a five-year period, meaning Rs 15 crore a year. "You can't build half a flyover with that sort of money," quips Vijay Dhar, hudco Chair Professor at the National Institute of Urban Affairs. Property tax is supposed to be the single-biggest source of revenue for city municipalities, fetching three-fourths of all revenue collections in cities that don't have octroi. But thanks to poor compliance, outdated property valuation systems and leakages, India's cities and towns (more than 5,000 of them) collect just Rs 12,000 crore a year. Obviously, bigger cities such as Delhi and Mumbai account for the lion's share of this money. "If you don't remove regulatory constraints and rebalance the power equation between the Central government and the states on the one hand and between the states and their cities on the other, infrastructure in cities can't be developed," says Om Prakash Mathur, Professor, National Institute of Public Finance and Policy (NIPFP).

A large part (70 per cent) of India still lives in villages, but not quite the way it used to. Agriculture's contribution to the GDP is shrinking. Between 1990 and 1995, it accounted for a third of GDP. Today, its share is a little more than a fifth. More importantly, it has finally sunk into our policy makers that neglecting our cities is a lose-lose game. When choked drains bring Mumbai to a halt, there's real business and productivity loss in India's financial capital. When Bangalore riots and tech workers aren't able to reach their workplace, companies lose real export dollars. In other words, when our cities lose, India loses. "Compared to some other cities in the world, we are 180 years behind in city management and, therefore, have to fight 180 times harder to come up," says SPA's Kapadia.

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A Plan To Save Our Cities

Thankfully, an ambitious urban renewal plan has been put in place. Last year in December, Prime Minister Manmohan Singh announced the setting up of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). It draws a lot from the Urban Reform Incentive Fund announced in the 2002-03 budget by the then Finance Minister, Yashwant Sinha, but it differs in two key aspects: Compared to the Rs 500 crore that Sinha allocated to the fund, JNNURM boasts a staggering Rs 50,000 crore against matching contributions by recipient cities. More importantly, it makes it mandatory for cities to get their governance and accountability in place before laying their hands on the fund. "In the scale of its ambition and the nature of its rigour, JNNURM has no parallel," says Ramesh Ramanathan, National Technical Advisor to the mission.

He isn't exaggerating. It's for the first time that India has started on a concerted effort to renew its urban centres. Unlike in the past, money isn't to be allocated and spent in dribbles and drabs. To start with, the mission has identified 63 cities, based on criteria such as the size of population and tourism potential, for development. An estimated Rs 1,20,536 crore is required to develop these cities, half of which will come from the Central government. The matching rest must be raised by the cities themselves. Since JNNURM has sweeping goals, it is easier to mention what sort of projects don't qualify for assistance. These relate to power, telecom, health, education, wage employment and employment creation. Everything else-widening of city roads, improving water supply and sanitation, and even relocation of slums-is admissible for assistance.

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The mission money won't come free. Since governance and accountability have been the reasons why our cities never kept pace with growth, there is a string of mandatory and optional reforms at the level of urban local bodies (ULBs) and states. For instance, it is mandatory for the beneficiary municipality to adopt modern, accrual-based, double-entry system of accounting so that a city's profits and losses are clearly visible to its citizens. It is also mandatory for it to introduce e-governance, using software such as GIS (geographic information system) and MIS (management information system) for various civic services. The cities must also reform property tax using GIS, so that a more realistic market rate can be determined depending on the zone, and bring in appropriate user charges for services such as water.

The states, on their part, have to hand over urban management to ULBs as per the 74th Constitutional amendment, and repeal the Urban Land Ceiling and Regulation Act and the Rent Control Act to balance the interests of landlords and tenants. In addition, they must bring down stamp duty to 5 per cent to encourage registration of property transactions and enact a public disclosure law to ensure fiscal transparency and discipline among ULBs and parastatal agencies. To get the funds, the cities must first come up with a city development plan (CDP), get it appraised and approved, and then provide a detailed project report for each project or sets of them. "It's a perfect balance of incentives, reforms and design," says Ramanathan, who also runs a Bangalore-based NGO, Janaagraha, focussed on urban reforms.

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Given India's fractured polity, it's a lot to ask of Indian states. But, happily, the response has been spectacular, although the mission is just seven months old. Thirty-two cities have already submitted their CDPs, of which 18 have been approved and the rest are under appraisal. "To be honest, the response is way beyond my expectation. There's now a competitive spirit emerging among our cities," says Anil Baijal, Union Secretary for Urban Development and the man who, everyone says, has been championing the mission. He expects all the other CDPs in by end of August.

A Virtuous Cycle

Not everything is hunky-dory, though. Key cities including Bangalore and Delhi haven't yet finalised their CDPs. Bangalore did submit one, but it was sent back for improvement. Delhi, because of its peculiar position as both the seat of Union government and a state, has yet to get its act together. For instance, the municipal commissioners are appointed not by the state, but the Centre. The biggest threat to the mission lies in the cities and states not agreeing to the mandatory reforms. For, that is really what will trigger a virtuous cycle of improved revenue collections, investment in infrastructure, growth and, hence, more revenues. The mission only has a longevity of seven years, meant to coincide with the 11th Five-year Plan, and the cities in that time must prove that they can be self-sustaining. "This window is available to take the cities up to a point. Thereafter, they have to earn their own bread," says Baijal.

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Where the money from revenue collections and grants is not enough, the cities will need to raise money from markets or multilateral agencies. For that, Baijal, who retires in two months, plans to get all the 63 cities credit rated by international agencies. There's also a pooled finance development fund (of Rs 500 crore) that will allow the weaker of the 63 cities to use it as a cushion to bolster their books.

Finally, as Baijal points out, the success of the mission depends on the ownership of the local community. The people of a city have to become more involved in the running of their cities. Because, more than good roads and green gardens, cities are us.