Himachal's members of the civil society Make Strong Case for Financial Support to Mountain Towns Before 16th Finance Commission here in Shimla today.
Shimla, June 24, 2024 – In a strong representation to the chairperson of 16th Finance Commission, Arvind Panagariya, a consortium of former mayors, commissioners, and the former deputy mayor of Shimla pushed forward the pressing financial and infrastructural needs of Himachal Pradesh’s urban local bodies.
As the Commission convened in Shimla here today, consortium including former mayors Adarsh Kumar and Madhu Sud, ex-commissioners Shakti Singh Chandel and Dr. M. P. Sud, and former deputy mayor Tikender Singh Panwar, urged the Commission to tailor financial policies to the distinct challenges of hill urbanization and recommend devolution of funds to towns in Himachal Pradesh, which has been getting stepmotherly treatment from the Centre.
Welcoming the Commission to this historic town, They met with Panagariya in the Cecil hotel here today and submitted a detailed memorandum to him pointing out the disparity between the contributions of cities and the financial support they receive.
“Our towns and cities, which contribute nearly 70% to the nation’s GDP, get a minuscule share of the financial resources. This needs to change if we are to sustain and improve urban living,” they said.
The group pointed to the recommendations from the Chief Secretaries' National Conference in Dharamshala in 2022, which called for greater decentralization of finances to local bodies.
They underscored the need to increase the share of intergovernmental transfers (IGTs) to urban local bodies (ULBs), currently just 0.5% of GDP in India compared to 2-5% in other developing countries.
They advocated for at least doubling this allocation, highlighting that other developing nations like Brazil allocate up to 5.10% of their GDP to ULBs.
Unique Challenges of Hill Towns
They detailed the unique challenges of urbanization in Himachal Pradesh. The high cost of basic services, such as the production of water in Shimla, which is lifted from 2,000 meters below, is just one example.
They noted that the steep terrain and rapid growth of mountain towns make sustainability a complex issue.
Tourism and climate-induced disasters exacerbate these challenges. Despite a relatively small population of under seven million, Himachal draws about 40 million tourists annually, putting severe pressure on local infrastructure.
Additionally, the towns are highly vulnerable to natural disasters, with urban development often overlooking the geological sensitivities of the Himalayan region.
Demand for Specific Grants
The delegation presented a comprehensive list of demands to the Commission, emphasizing the need for:
1. Enhanced IGTs: Increase the share of IGTs to align with GDP contributions and address the unique costs of hill towns.
2. Waste Management Solutions Grants for removing legacy waste, setting up recycling plants for plastic and compost facilities.
3. Environmental and Community Services: Establishment of environment monitoring centers, and community counseling centers, particularly for disaster-affected individuals.
4. Sustainable Mobility: Financial support for developing alternative, sustainable transport solutions focusing on non-motorized and vertical mobility.
5. Heritage and Forest Conservation: Specific funds for maintaining heritage buildings and preserving the extensive forest cover that acts as the lungs of these towns.
Urban Governance and Infrastructure Needs
They highlighted severe governance issues, such as Shimla's mere five sanitary inspectors for 30 wards.
They also pointed out the high costs associated with managing and maintaining infrastructure like roads and bridges in the face of frequent natural disasters and the lack of potential for private-public partnerships due to small population sizes.
The representatives argued against the 15th Finance Commission's property tax-linked grant recommendations, which they said disproportionately affect mountain towns.
They proposed a 50:50 mix of tied and non-tied funds for non-million-plus towns to allow flexibility in addressing local needs.
"We need a financial structure that recognizes and supports the unique needs of our mountain towns,” said Panwar, hoping that the Commission’s visit will lead to concrete measures to bolster Himachal’s urban infrastructure and governance.
They submitted the detailed presentation and laid out a roadmap for addressing the fiscal and environmental challenges unique to Himalayan urbanization, urging the Finance Commission to take decisive action.
