Professional Work / Report Writing Sample: AMishra UNHabitat India Smart Cities 2017 Chp 1,5,6,8

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Report Outline
for
The City Study on Financing for Resilient and Green Urban
Solutions
Name of the City: Bhubaneswar

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i. Executive Summary 6
ii. Objective of FRUGS Bhubaneswar City Study 7
iii. Introduction 9
1 Status of the City Urbanisation, Economic and Financial Systems
11
1.1 Brief History of the City 11
1.2 Geographic Characteristics of the City 12
1.2.1 Climate Vulnerability of the City 13
1.3 The Population Growth and Urbanisation Patterns 13
1.3.1 Current Status of Urbanisation and Household Structure13
1.4 Future Projection of Urbanisation by 2030 15
1.5 Jurisdictional Design/Environment, e.g. decentralization, local governance
system 19
1.5.1 New Urban Governance System 19
1.5.2 Urban Institutional Arrangements 20
1.5.3 Role of Private Sector Actors 20
1.6 The Municipal Financial System 20
1.6.1 Municipal Revenue and Expenditure by Categories/Types 23
1.7 Financing Sources and Flows for Housing, Infrastructure and Urban Services
25
2 Financing Needs and Status for Housing, Infrastructure and
Urban Services 29
2.1 Financing Needs for Low and Medium Income Housing 29
2.1.1 Financing Needs for Low Income Housing 29
2.1.2 Financing Needs for Lower and Lower-Middle Income Housing 30
2.2 Financing Needs for Infrastructure and Urban Services 32
2.2.1 Financing Needs for Transport 33
2.2.2 Financing Needs for Energy and Power 34
2.2.3 Financing Needs for Water and Waste Management 34
2.3 Sources and Status for Housing, Infrastructure and Urban Services 47
2.3.1 Sources and Status of Finance for Lower and Lower-Middle Income Housing 47
2.3.2 Sources and Status of Finance for Transport 49
2.3.3 Sources and Status of Finance for Energy and Power 50
2.3.4 Sources and Status of Finance for Water and Waste Management 50

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3 Finance Needs and Status for Resilient and Green Urban
Solutions 51
3.1 Financing Needs for Resilient and Green Urban Solutions 51
3.1.1 Climate Vulnerability of the City 52
3.2 Financing Needs for Resilient and Green Infrastructure Development 53
3.2.1 Financing Needs for Resilient and Green Housing Development 53
3.2.2 Financing Needs for Resilient and Green Infrastructure Development 53
3.3 Financing Needs for Resilient and Green Urban Services 55
3.4 Sources and Status of Finance for Resilient and Green Urban Solutions 56
3.4.1 Current Financing Sources and Flows in Resilient and Green Urban Solutions 57
4 Financing Instruments for Housing, Infra. & Urban Services 59
4.1 Key Challenges and Constraints in Financing the Housing Sector 59
4.2 Financing Sources and Flows for Lower and Lower-Middle Income Housing
60
4.3 Financial Instruments for Housing 60
4.3.1 Assessment of Financing Instruments for Formal Housing 60
4.3.2 Financing Sources and Flows for Lower Middle and Middle Income Population
62
4.3.3 Financing Instruments for Infrastructure and Urban Services 63
4.3.4 Assessment of Financing Instruments for Transport 64
4.3.5 Assessment of Financing Instruments for Water and Waste Water 64
4.3.6 Assessment of Financing Instruments for Green Solutions 66
4.4 Assessing the Scale and Volume of Financing involved in Each Financial
Instrument in the city 67
4.4.1 Estimates of Required Investment for Urban Infrastructure 67
4.4.2 Patterns of Financing Instruments to City Characteristics 69
4.5 International Finance 71
4.5.1 Assessing the financial flows and trends of international finance and
international aid in and to the city 71
4.6 Assessing City Financing Challenges in Each Category 74
4.6.1 Macro level challenges (e.g. national regulatory, policy constraints) 74
5 Impacts of Financing Instruments at Financial System Level 76
5.1 Financial Support from Government 76
5.1.1 Impacts on the Financial System 77
5.2 Assessing the impacts of financial instruments at the financial system level -
particularly on the sustainability and resilience of the national financial
system 78
5.3 Assessing the impacts of financial instruments at the financial system level,
particularly on the sustainability and resilience of the national financial

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system 79
5.4 Impacts on Sectors 81
5.5 Identifying issues faced by different actors and stakeholders in financing
housing, infrastructure and urban services 83
5.6 Challenges faced by different actors 84
6 Alternative Financial Instruments 85
6.1 New Challenges, Approaches, Instruments 86
6.2 The Role of Different Agencies towards Affordable Housing 86
6.3 Present recommendations on how to improve efficiency and effectiveness of
financial and technical support in the city 87
6.4 Opportunities for International Financial Institutions and Agencies 88
6.5 Partnership opportunities as well as knowledge development and sharing in
Financing FRUGS 90
6.6 Opportunities for launching and developing new instruments (e.g. assessment
tools for green and climate resilient cities, green building and housing index)
91
6.7 Assessing opportunities for launching and developing new instruments
which support low carbon and climate resilient development 93
6.7.1 Improving Financial and Technical Support at the City Level 95
7 Project Identification 97
7.1 National Priorities for Housing, Infrastructure and Urban Services 97
7.2 City Priorities for Housing, Infrastructure and Urban Services 99
7.2.1 Financing opportunities in the city.99
7.2.2 Bhubaneswar Smart Cities Mission Program Finance Plan 100
7.3 Financing Opportunities for Project Pipelines 101
7.4 Project Identification and Pipelines for Low Income, lower and Lower-
Middle Income Housing 104
7.4.1 Developments in Low Income, lower and Lower-Middle Income Housing for
Bhubaneswar104
7.4.2 Donor Supported Affordable Housing Programme Opportunities 106
7.4.3 Proposed Bhubaneswar Smart City Programme Housing For All Sub-Plan
Projects 106
7.4.4 Proposed Bhubaneswar Comprehensive Development Plan (CDP): 2030 Housing
Requirement Identified 107
7.4.4.1 Housing Requirements Identified 108
7.5 Project Identification and Pipelines for Infrastructure and Urban Services
111

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7.5.1 Proposed Smart City Bhubaneswar 111
7.5.2 Developments in Bhubaneswar Urban Infrastructure Projects viz Smart Cities
Mission 118
7.5.3 Proposed Bhubaneswar Smart City Programme Financial Plan 118
7.5.4 Proposed Bhubaneswar Smart City Programme Basic Services Sub-Plan Projects
121
7.6 Identification and Pipelines for Resilient and Green Urban Development
Projects 126
7.6.1 Emerging Issues in Resilient and Green Urban Development Projects for
Bhubaneswar126
7.6.1.1 Affordable Green Housing Sector 126
7.6.1.2 International cases examples include: 127
7.6.1.3 Emerging India cases 127
7.6.1.4 Potential Strategies to scale up affordable green housing127
7.6.2 Opportunities in Donor Supported Resilient and Green Urban Development
Projects 129
7.6.3 Proposed Bhubaneswar SCM Future Proofing Sub Plan 132
7.6.4 Project Opportunities in Proposed Bhubaneswar Smart City Mission (SCM) Sub-
Plan Projects 133
7.6.5 OUIDF Pipelines for Resilient and Green Urban Development Projects 135
8 Conclusion 137
8.1 Issues for Green Affordable Housing 137
8.2 Instruments for Green Affordable Housing 139
8.3 Enabling Factors for Green Affordable Housing 139
8.4 Next Steps for Green Affordable Housing: Pilot projects 140
References141
Annex 1: Emerging Policy instruments for Economic Efficiency in
Low cost Affordable Housing Sector in India 149
Annex 2: KfW and National Housing Bank (India) Energy
Efficiency Mortgage Refinancing 152
Annex 3: Bhubaneswar Fly Ash Brick Market Analysis 156

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(i) Executive Summary
World class urban infrastructure leverages the backward and forward linkages of urban
mobility, power and communication to enable regional resilience, productivity and growth.
Resilient cities depend on access, quality and cost of urban housing, water, waste, energy
and transport systems, and capacity for integrating such physical, environmental and socio-
economic infrastructure networks on city-region basis. Inventive-based urban housing and
services financing, such as GoI resilient and Smart Cities grant programme, support sub-
national development objectives through equalising regional resilience and growth (in lagging
city-regions) and contributing to SDG outcomes for at-risk urban populations.
Bhubaneswar is a case study of contrast: significant regional threats – due to climate, conflict,
livelihoods, slum proliferation – drive significant regional opportunities for India’s lagging east
coastal states. The World Bank reports that natural disasters like cyclone, earthquake and
flood would paralyse the growing twin urban centers of Bhubaneswar and Cuttack, and
potentially generate the economic losses could be about one third of the State’s Budget. The
FRUGS study examines Bhubaneswar’s innovative response to such challenges vis-a-vis its
Comprehensive Development Plan (CDP) proposal competition for resilience-focused and
performance-based urban transfers through the Governments of India (GoI) Smart Cities
Mission and climate finance programmes. In 2015 Bhubaneswar City was awarded first place
for its medium-term CDP and related SDG outcomes, including “future proofing”, proposed
under the GoI Smart Cities Mission.
The FRUGS City study assesses this emerging case of Bhubaneswar, as an emerging one
million emerging Tier II city-region, awarded first for Government of India (GoI) Smart Cities
Mission programme, and potential opportunities this presents for innovative resilience
financing mechanisms, such as low cost housing and green infra programme investment, to
promote cross-sector resilient cities objectives within 2030 Agenda for Sustainable
Development Goals (SDGs). The study analyses regional threats and opportunities to
demonstrate learning not only for Odisha east coastal region, but also for the national and
global regionalisation processes occurring. It captures ‘snapshot’ for regional resilience and
green incentive based financing -- such as GoI Smart Cities Mission (SCM) programme, to
equalise resilience for vulnerable low/middle income groups in Bhubaneswar City region --
vis-à-vis donor intergovernmental and local investment.
The FRUGS Bhubaneswar City study finds that adequate provision of critical urban
infrastructure like low cost housing, drinking water, sanitation, sewerage, solid waste, public
transport , etc., have indeed become the prime concern for sub-national government, and
Odisha is no exception to this. Global and regional learning on financing and other
mechanisms for affordable housing demonstrate that a balanced mix of fiscal measures,
municipal level regulation, market interventions:
Regulations/Enforcement – mandatory “green” component in construction financing;
Investment - green mortgages, direct financing, guarantees;
Incentives – tax rebates, lower housing loan interest rates for green housing;
Voluntary initiatives — implementation of green technologies, standardisation of green
technologies.
The study recommends scaling up Govt of India and international (ADB, KfW, World Bank)
financing and fiscal incentives in BDA, through innovative Resilient / Smart Cities and Green
infra financing solutions, such as GoI Smart Cities Mission programme investments. In sum
the FRUGS Bhubaneswar City study argues that increasing incentivised green housing
investment (Climate Facilities, National Housing Bank and ADB/WB/KfW pooled funding,
Energy Efficiency Refinancing, urban lending mechanisms) — better responds to vulnerable
low/middle income group (LIG/MIG) needs in emerging tier II Indian cities.

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(ii) Objective of FRUGS Bhubaneswar City Study
Natural disasters like cyclone earthquake and flood frequently paralyse the growing Indian
urban city-regions, and highlight the need to mitigate this impact through implementation of
affordable sustainable and green housing and trunk infra strategy. Case-in-point is the Indian
city-region of Bhubaneswar and Cuttack twin cities. The World Bank reports that such climate
risks could generates economic losses around one third of the State’s Budget. UNDP/TARU
report states that total estimated value for main exposure elements for Bhubaneswar City is
more than INR 151,452 billion, out of which Residential, Commercial, and Industrial exposure
is about INR 910,850 million, INR 437,070 million, INR 43,530 million, respectively. The
exposure value of essential facilities (health care centers, educational institutions, etc.), and
transportation systems are estimated at about INR 49,850 million, and INR 71,860 million,
respectively. (UNDP/TARU, 2014).
The objective of the FRUGS Bhubaneswar City study is to investigate potential green
financing vehicles for Bhubaneswar Development Authority (BDA)’s infra medium-term
affordable housing stock and resilient urban infrastructure financing needs, opportunities and
investment windows. The FRUGS study examines the emerging case of Bhubaneswar, one
million emerging Tier II city-region awarded first for Government of India (GoI) Smart Cities
Mission programme (refer Figure ii), and potential opportunities this presents for innovative
green financing mechanisms, such as Smart Cities sector convergence and Energy
Efficiencies programme investment, to promote cross-sector urban development objectives
within 2030 Agenda for Sustainable Development Goals (SDGs).
Recent international attention has been directed at BDA’s well-articulated Smart Cities vision
(see Figure ii above) as ‘test case’ for demonstrating “equalisation’ through housing and
resilience investments in Tier II (under one million population) cities driving regional growth --
such as Bhubaneswar City for India’s lagging east coast states region.
Figure ii: Integrated Framework for Smart Cities Programme

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Global and regional learning on financing and other mechanisms for affordable housing
demonstrate that a balanced mix of fiscal measures, municipal level regulation, market
intervention, including:
Resilience / Green Regulations/Enforcement – mandatory “green” component in
construction financing;
Resilience / Green Investment – green mortgages, direct financing, guarantees;
Fiscal Incentives – tax rebates, lower housing loan interest rates for green housing;
Voluntary initiatives — implementation of green technologies, standardisation of
green technologies.
Source: Bhubaneswar Municipal Corporation, Bhubaneswar Smart City Proposal Annexure 3,
December 2015
.
The study outcome is provide rational and recommendations for Got of India and international
(ADB, KfW, World Bank) financing and fiscal incentives to support Bhubaneswar’s Smart
Cities Mission (SCM) ambitious and timely Vision (above) through pooled financing, cross-
sector convergence, low cost affordable housing, green urban financing and bankable, market
driven solutions.

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(iii) Introduction
Based on a study of residential housing demand in India, it is estimated that the additional
demand for urban housing forecasted in India for 2012-13 is about 6.79 million.3 By 2015 the
additional demand for housing is projected at 31 million, and that a large proportion of this will
be required in the affordable sector. It is estimated that over 70 million new urban housing
units will be needed over the next 20 years (see Figure iii below). Massive scale of
environmental impact that can be expected from the housing sector if current trends continue
unabated – including need to mitigate this impact through implementation of sustainable and
green housing strategy.
These new housing units will require over 15 billion litres of water per year – and thereby
massive scale of environmental impact that can be expected from the housing sector if current
trends continue unabated – including need to mitigate this impact through implementation of
sustainable and green housing strategy.
Successful affordable housing programmes demonstrate that a balanced mix of fiscal
measures, municipal level regulation, market interventions and community effort is required
to enable affordable green housing. The entry of commercial lending and performance based
mechanisms is required to bridge the gap between demand and supply of critical finance and
technical assistance.
The FRUGS Bhubaneswar City study addresses these emerging issues through exploring the
what extent public and private urban stakeholders are rising to global challenges in India’s
resilient and green housing and trunk infrastructure growth through innovative green financing
mechanisms such as GoI Smart Cities Mission programme (see Figure iv).
Integrated urban planning linked with industrialisation and the provision of affordable housing
and green urban services could provide channels for social mobility, skills acquisition and
consumer demand to help broaden India’s cities dynamism and resilience (UN Habitat, 2014).
Figure iii. Residential Housing demand in India to 2030

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Market based incentives to develop competitive low to mid income housing stock and climate
financing mechanisms in Bhubaneswar city region, include green technology for efficient
recharge, cooling, lighting, heating, equipment.
Savings of more than 30% in the embodied energy of a typical apartment by using affordable
green building materials. 30% material energy savings translates to offsetting:
700,000GWhofenergyuse
560 million tons of CO2 emissions
8newpower plants
Operational energy savings of 10-40% can be achieved by incorporating green–building
materials, passive design strategies and energy efficient appliances. 10%-40% operational
energy savings translates to offsetting:
70,000 to 950,000 GWh of energy use
60 to 750 Million tons of CO2 emissions
Upto11NewPowerPlants
This means typical household with 150 liters of water use per person, over 32 litres
can be saved by using dual flush toilets — and translates to over 46,000 litres of
water saved per household per year (Tanmat, 2011: pp. 1–23).
The study aims to capture ‘snapshot’ of potential for regional resilience and green incentive
based financing -- such as Affordable housing credit, Smart Cities Mission (SCM) sector
convergence and Residential Energy Efficiency incentives, to equalise resilience for
vulnerable low/middle income groups in Bhubaneswar city region -- vis-à-vis donor
intergovernmental and local investment.
Figure iv. Financing Indian Smart Cities
(Gadia, J.P. Financing of Smart Cities. Resurgent India, 2015)

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1. Status of the City Urbanisation, Economic and Financial Systems
1.1. Brief History of the City
Bhubaneswar, the capital of the East coast Indian State of Odisha, is popularly known
as the "Temple City of India". It is located on the Eastern Ghats, about 40 km west of
North Bay of Bengal (with an average elevation of 45 meters above mean sea level)
in Khordad district. It lies on the West bank of River Kakai, which is a tributary of River
Mahanadi that flows about 30 km southeast of Cuttack. The River Dayi branches of
Kathjodi and flows along the south-eastern part of the city. The city has a spatial
spread 135 sq. km with 67 Census wards and population of more than 800,000. It has
a population density of 6,228 persons per sq. km.
Since the early 1950s, the Bhubaneswar City master plan has undergone three
revisions — all inspired by the Ford Foundation Report on Bhubaneswar in the late
1950s. Specifically, the Ford Foundation Report recommended:
Bhubaneswar should expand northward in accordance with Koenigsberger's
linear plan;
Physical separation should be maintained between commercial Cuttack and
administrative Bhubaneswar, and between the old and new Bhubaneswar;
Bhubaneswar should be allowed to develop a more diversified economic base
along the lines suggested by Koenigsberger;
Bhubaneswar should have higher density, perhaps even higher than suggested
by Koenigsberger;
Multi-story developments on the periphery of the capital should be discouraged
(Kalia, 1994).
The Comprehensive Development Plan for Bhubaneswar (1988-2001) prepared by the
Bhubaneswar Development Authority (BDA) repeats many of the findings of the Ford
Foundation by admitting that economy was not adopted in allotting Iand for different activities,
and that the earlier planning of Bhubaneswar followed "horizontal growth." The BDA
report admits that both these factors have "contributed" to the spread of urban sprawl
in the capital and to the lack of controls, and calls for higher density, vertical
development, and diversification of the economic base. Similarly, the Interim
Development Plan for Bhubaneswar (Final), 1985, prepared by the Directorate of
Town Planning, Orissa, places emphasis on regional planning for the improvement of
the urban environment in Bhubaneswar. The report laments that amenities of
Bhubaneswar have served to encourage unauthorised urban developments in the
region, just as Koenigsberger had predicted might happen if he whole region were not
brought into the planning process. More Important, the report recognises that planning
should aim at coordinating the agricultural (rural) and industrial (urban) developments
in the region, (Kalia, 1994)
Specifically, the report calls for:
All State Government Offices to move from Cuttack to Bhubaneswar, which will
complete the administrative character of Bhubaneswar and free space in Cuttack
for commercial developments;

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All State and Regional institutions in Orissa to locate in Bhubaneswar;
Development of Bhubaneswar as a tourist centre;
Dispersion of Industries to cities other than Cuttack, such as Chowdwar,
Jagatpura, and Pradeep, which form regional urban unit;
Development of Jami and Khurdas, near Bhubaneswar, as centres of
transportation and trade, respectively (Kalia, 1994: pp 31-49).
Although well intentioned, most of these reports neglect to address the basic problem
plaguing Indian cities: weak local government. The basic problem of local bodies is
the lack of provision of adequate funds to meet the increasing cost of services and
amenities and their use in the best interest of improving civic amenities and
undertaking development schemes, which should not only be self-financing, but leave
sufficient margin of profit for ploughing back into other essential welfare activities. The
tendency on the part of local bodies to depend mainly on [Central] Government grants
and loans has acted as an opiate and a disincentive to self-help (Kalia, 1994: pp 44-
49).
That explains the growing trends towards shirking responsibilities in raising [local
funds] through prescribed taxation and levies. To make local bodies consciously
alive to their developmental responsibilities, it is necessary that they should be fully
associated with the planning process and programmes not only of the local bodies,
but of the country to become aware of the necessity of economic self-reliant and self-
sufficient the context of all-India resources and plans of development.
There has been a wide gap between the needs and resources of urban local bodies,
estimated at Rs. 910 million. The governor diagnosed the problem of "unwillingness"
and "corruption" widespread among urban local bodies, and for remedy he prescribed
"selfless" dedication to work and eschewing "groupism" or the craze for personal
gain."' Strengthening of urban local bodies was deemed necessary for encouraging
public participation, which in turn depended on education. Thus the story of
Bhubaneswar is one in which a people attempted a break with the past, in hope of a
new future accompanied by urban transformation.
1.2. Geographic Characteristics of the City
The city has a total road network of about 1,642 km of which about 51 km is national highway
passing through the city. The total length of rail network in Bhubaneswar city is about 34 km
and the only international airport is located at 3 km from the city centre. The city has 1,171
educational institutions and 667 health centers. The city, being a temple city, has more than
117 religious places sites (USAID-TCGI 2007). Increasing Urbanization and Industrialisation
is resulting in accelerating the growth of existing urban centers and causing faster rate of
spatial Sprawl. Because of Sprawl of Urban centers, the increase of Population in hazardous
areas and large-scale land conversion are matters growing concern. In particular urbanization
in developing countries has produced large concentration of urban squatters and irregular
developments which are settled in marginal locations and hazardous areas, exposed to
periodic and seasonal flooding, prone to health hazards and other related problems.
Bhubaneswar city is also experiencing similar problems, because the sites with their physical
shortcomings (narrow valleys, low-lying areas and stream banks etc.) have been urbanize
Climate Vulnerability of the City

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A recent World Bank report finds that If natural disasters like cyclone, earthquake and flood
strike the twin cities of Bhubaneswar and Cuttack anytime now, it would not just paralyse the
two growing urban centres, the economic losses could be about one-third of the State’s
Budget.(http://indianexpress.com/article/india/india-news-india/natural-disasters-in-
bhubaneswar-cuttack-could-cost-odisha-one-third-of-its-budget-world-bank-study).
The total estimated value for main exposure elements for Bhubaneswar City is more than INR
1,514,520 million, out of which Residential, Commercial, and Industrial exposure is about INR
910,850 million, INR 437,070 million, INR 43,530 million, respectively. The exposure value of
essential facilities (health care centers, educational institutions, etc.), and transportation
systems are estimated at about INR 49,850 million, and INR 71,860 million, respectively
(UNDP 2014).
1.3. The Population Growth and Urbanisation Patterns
Source: http://smartcities.gov.in/writereaddata/CitiesProfile/Orissa_Bhubaneswar.pdf and Census of India
Urbanization and Industrialisation is resulting in accelerating the growth of existing urban
centers and causing faster rate of spatial Sprawl. Because of sprawl of urban centers, the
increase of population in hazardous areas and large-scale land conversion are matters
growing concern. In particular urbanization in developing countries has produced large
concentration of urban squatters and irregular developments which are settled in marginal
locations and hazardous areas, exposed to periodic and seasonal flooding, prone to health
hazards and other related problems. Bhubaneswar City is also experiencing similar problems,
because the sites with their physical shortcomings (narrow valleys, low-lying areas and stream
banks etc.) have been urbanised.
Table X: Current Status of Urbanisation and Household Structure
Table X Bhubaneswar City Region Demographic (2007)
Indicator (2007) City
(Bhubaneswar
Municipal Corp)
State
(Urban)
India
(Urban)
Total Population 840,834 700,3656 377,106,125
Total Population of BDPA 885,363
Share of ULB population in
District Urban population (%)
77.55
Population Growth Rate (AEGR)
2001-11
2.6 2.39 2.76
Area (sq. km)* 135
Share of ULB area in district (%) 4.68
Population Density (person per
sq. km)
6228.4
Literacy Rate (%) 91.89 85.75 84.11
Schedule Caste (%) 8.27 13.85 12.60
Schedule Tribes (%) 5.04 8.51 2.77

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Youth, 15 - 24 years (%) 20.07 19.85 19.68
Slum Population (%) 19.5 7.34 17.36
Source: (TCGI/USAID, 2007)
TABLE X: BHUBANESWAR POPULATION GROWTH
(Source: Modeling Urban Growth in Indian Situation - A Case Study of Bhubaneswar City”, Ashis Chandra Pathy,,
1.4. Future Projection of Urbanisation by 2030
The projection of urban population growth in Bhubaneswar, Future Urbanisation by 2030, is
below (2010 CDP: pp. 108-140):
Year Census
Population
Projected Population
Numerical Method Graphical Method
Arithmetic Geometric Incremental Polynomial 2nd
Order
1951 16,512
1961 38,211
1971 105,491
1981 219,211
1991 411,542
2001 648,032
2006 711,184 927,141 731,321 787,234
2009 749,075 1,149,411 787,738 878,001
2011 774,336 1,326,463 828,034 941,324
2021 900,640 2,715,148 1,061,733 1,291,670
2024 938,531 3,366,069 1,142,314 1,407,737
2031 1,026,944 5,557,661 1,349,131 1,698,236
2031-2039 1,127,987 9,857,593 1,617,711 2,063,967
2039-41 1,153,248 11,376,026 1,690,226 2,161,022
2041-51 1,279,552 23,285,690 2,085,018 2,680,028
2061-56 1,342,704 33,314,889 2,302,551 2,960,614
2061 1,405,856 47,663,688 2,533,509 3,255,254

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Area and Pop of BDPA (2008 and 2030)
Administrative
Area
Area in
Km. Sq.
Population
(2001)
Population
(2008)
Population
(2030)
Population
Density Per
Km. Sq.
(2001)
Population
Density Per
Km. Sq.
(2030)
BMC 146.8 658,220 1,080,000 2,000,000 4,484 13,624
Khurda 29.19 42,695 59,000 150,000 1,463 5,139
Jatani 25.74 57,957 70,000 130,000 2,252 5,051
BDA Rural 217.37 98,534 163,200 720,000 453 3,312
Total BDPA 419.1 857,406 1,372,200 3,000,000 2,046 7,158
Source: (Ashis Chandra Pathy, Dr.G.K.Panda, International Journal of Scientific & Engineering Research Volume 3, Issue 6, June -2012 ISSN 2229-5518)
Zone wise distribution of Area, Pop and Density 2008 and 2030
Fourteen planning zones with their areas, populations in 2001, as well as, the projected
population of 2030. It is noteworthy that the projected population of BDPA in 2030 is 3,00,000
while the projected population of the entire BCUC for 2030 is 4,170,000, which implies that
about 72% of the population of BCUC will be residing in the BDPA.
Current Housing Backlog for Slums / EWS
The current housing backlog has been calculated by extrapolating the backlog trends of 1981-
1991 with suitable adjustments, for each of the planning units as shown in Table-7.4 below.
BPDA Future Dwelling Unit Requirements for 2030
The future housing requirement for the BDPA has been done considering both, the quantitative
housing shortage and the qualitative housing shortage. The future household formation,
including natural growth and in-migration have been considered, the current housing backlog
as well the obsolescence component, have also been considered whole as well as the constituent
planning units individually.
Total Housing Requirements DUs
The total housing requirement for BDPA is thus the summation of the following: Future
housing requirement + existing housing backlog + obsolescence (dilapidated) + non standard
housing units = 431,915 dwelling units

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Distribution of Income Group Categories
Table X: Bhubaneswar (BDPA) Distribution of Household (HH) Income
Classification (2006 & 2030) for Total Housing Requirement
HH Income Classification HH Monthly Income (INR) Distribution
BCUC
(2006)
Distribution
BDA (2030)
2030 DU
Requirement
Lower Range Upper Range
High Income Group (HIG) ₹12,500.00 0.17 0.25 110,000
Middle Income Group (MIG)
₹5,000.00 ₹12,499.00 0.45 0.40 175,000
Low Income Group (LIG) ₹2,500.00 ₹4,999.00 0.23 0.20 90,000
Economically Weaker
Section (EWS) ₹0.00 ₹2,499.00 0.15 0.15 65,000
BPDA Total 440,000
Source: (BDPA CDP, 2010: 109)
Cost of Development (INR 74.92 billion)
Planning Unit
Area
Type 2030 Total
Housing
Requirement
2030 Housing
Area
Requirement
2030 Housing and
Trunk Infra.
Development Cost
DU’s % of
Total
Acres % of
Tota
INR
Billion
USD
Billion
*Based on Ex.
Rt. USD 1 =
INR 67
% of
Tota
Chandrasekharpur Extensive 66,108 15% 1,322 14% ₹9.25 $0.14 12%
East Kuakhai Extensive 45,414 11% 757 8% ₹5.30 $0.08 7%
Aigania Extensive 54,598 13% 1,365 15% ₹9.56 $0.14 13%
Tamando Extensive 105,017 24% 2,100 23% ₹14.70 $0.22 20%
Gangapada Extensive 21,769 5% 435 5% ₹3.05 $0.05 4%
Bhubaneswar-New
Town
Intensive 33,445 8% 669 7% ₹6.69 $0.10 9%
Khurda Intensive 24,857 6% 621 7% ₹6.21 $0.09 8%
Jatani Intensive 19,372 4% 484 5% ₹4.84 $0.07 6%
Restricted Zone 61,335 14% 1,533 17% ₹15.33 $0.23 20%
Grand Total 431,915 9,286 ₹74.92 $1.12

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Planning Unit
Area
Type 2030 Total
Housing
Requirement
2030 Housing
Area
Requirement
2030 Housing and Trunk
Infra. Development Cost
DU’s Percent
of Total
Acres Percent
of Total
INR
Billion
USD
Billion
*Current Ex.
Rt. USD 1 =
INR 67
Percent of
Total
Chandrasekharpur Extensive 66,108 15% 1,322 14% ₹9.25 $0.14 12%
East Kuakhai Extensive 45,414 11% 757 8% ₹5.30 $0.08 7%
Aigania Extensive 54,598 13% 1,365 15% ₹9.56 $0.14 13%
Tamando Extensive 105,017 24% 2,100 23% ₹14.70 $0.22 20%
Gangapada Extensive 21,769 5% 435 5% ₹3.05 $0.05 4%
Bhubaneswar-New
Town
Intensive 33,445 8% 669 7% ₹6.69 $0.10 9%
Khurda Intensive 24,857 6% 621 7% ₹6.21 $0.09 8%
Jatani Intensive 19,372 4% 484 5% ₹4.84 $0.07 6%
Sensitive and
Restricted Zone
61,335 14% 1,533 17% ₹15.33 $0.23 20%
Grand Total 431,915 9,286 ₹74.92 $1.12
Source: BDA CDP, 2011: pp. 108-140)
The total cost of developing the proposed mixed housing stock by 2030 is INR 74.92
billion for 431,915 Dwelling Units
1.5. The Economic System, Structure and Development
Table X Bhubaneswar City Region Demographic (2007)
Indicator (2007) City
(Bhubaneswar
Municipal Corp)
State
(Urban)
India
(Urban)
Total Population 840,834 700,3656 377,106,125
Total Population of BDPA 885,363
Share of ULB population in District
Urban population (%)
77.55

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Population Growth Rate (AEGR)
2001-11
2.6 2.39 2.76
Area (sq. km)* 135
Share of ULB area in district (%) 4.68
Population Density (person per sq.
km)
6228.4
Literacy Rate (%) 91.89 85.75 84.11
Schedule Caste (%) 8.27 13.85 12.60
Schedule Tribes (%) 5.04 8.51 2.77
Youth, 15 - 24 years (%) 20.07 19.85 19.68
Slum Population (%) 19.5 7.34 17.36
Source: (TCGI/USAID, 2007)
The city's significance in the State, in the Capital-Sub-Region and in the Golden Triangle of
Tourism in Orissa has made this city an important hub of commercial, political, administrative
and socio-cultural activities in the region. As stated earlier, the Bhubaneswar City has been
functioning as an administrative city with sustained growth in tertiary economic activities.
Directorate of Economics and Statistics of respective State, Governments and for all India-Central
Statistics Office)
Major economic activities of the city are trade & commerce, tourism related activities and to
some extent, industrial activities. Bhubaneswar’s regional setting can be best illustrated in
respect of the three characteristics, viz. Orissa State; Capital Sub-Region; and Golden
Triangle of Tourism. Bhubaneswar City being the Capital City of the State has been functioning
as an administrative city and hub for tertiary economic activities like services, trade and
commerce.
In addition, recent development indicates that the city is fast emerging as a preferred
destination of health and education for the State. The future city economy is likely to be driven
by the core sub-sectors like tourism related activities, knowledge based industries, small-scale
and household service industries and services, trade & commerce. The capital sub-region can
be said to extend from Khorda, Jhatni in the South and up to Choudwar in the North, while the
Chandaka Forest is situated in the West and Daya Canal in the East. The city region however
extends as far as Bhadrak & Talcher in the North, Berhampur in the South and Puri in the
East. As stated earlier, the city is located at a distance of about 64 km from Puri, and forms
the apex of the 'Golden Triangle' with Konark and Puri as the other two points; about 14% and
2.5% of the total buildings are under commercial and industrial use, respective.
1.6. Jurisdictional Design / Environment, e.g. decentralisation, local
governance system
1.6.1. New Urban Governance System
Bhubaneswar is seeking refers to follow the Smart Cities New Urban Governance system
Its features include:

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Transit oriented city with a compact urban form that promotes active, connected and
sustainable mobility choices;
Livable City providing diverse range of housing, educational and recreational opportunities;
while enhancing its heritage, arts and traditional communities;
Child-friendly city providing accessible, safe, inclusive and vibrant public places;
Eco-city co-existing in harmony with nature for nurturing a resilient, clean, green, and
healthy environment;
Regional economic centre attracting knowledge based enterprises and sustainable tourism
activities by leveraging and empowering its institutions, local businesses and informal
workforce. (Smart City Proposal, 2015)
1.6.2. Urban Institutional Arrangements

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1.6.3. Role of Private Sector Actors
1.7. The Municipal Financial System
http://rmc.nic.in/Reform Appraisal Report, JNNURM, Ministry of Urban Development, Government of India
Bhubaneswar Municipal Financial System Overview (2015)

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1.7.1. Municipal Revenue and Expenditure by Categories/Types
Detailed review of revenue and capital accounts, primarily aimed at assessing the
municipal fiscal status and provide a base for determining the ability of the BMC to
sustain the planned investments.
REVENUE ACCOUNT
The revenue account comprises two components, revenue income and revenue expenditure.
Revenue income comprises internal resources in the form of tax and non-tax items. External
resources are in the form of assigned revenues and revenue grants from the GoO. Revenue
expenditure comprises expenditure incurred on salaries, operation & maintenance,
administrative expenses and debt servicing.
REVENUE INCOME
The revenue sources of the BMC can be broadly categorised as own sources (includes both
tax and non-tax revenues), assigned revenues and grants. Own sources of income of the BMC
include income from resource mobilisation activities in the form of taxes, fees, user charges,
rent received from municipal properties, etc. Own revenue sources are further classified as
tax revenue and non-tax sources that are generated by various sections of the BMC.
Property tax is based on the Annual Rental Value (ARV) of property and is the single largest
and most elastic source of revenue. The ARV of the property varies with the nature of use,
viz. a) residential use — owner occupied, b) residential use — rental and c) commercial use.
The ARV is calculated based on the plinth area, building and land cost.
The present tax rate is 17.50 percent of the ARV, which comprises 10 percent of ARV on
holding tax, 2.5 percent on latrine/drainage tax and remaining 5 percent on lighting tax. The
BMC is empowered to revise the property tax at least once in five years (quinquennial
revision).
Other Taxes
Other tax revenues are in the form of taxes levied on carriage & carts, animals, advertisement
and others. The most important category in own sources of income is the property tax.
Advertisement tax is the other most important tax and it contributes about 7 percent of the
total tax revenue. The other taxes contributed about 5 percent of the total own sources on
average during the assessment period.
Property tax is the major source of tax revenue while other taxes include tax on carriages &
carts, advertisement tax and tax on animals. Non-tax sources included all non-tax revenues
such as fees and charges levied as per the Municipal Corporation Act. Such revenue sources
include rent from municipal properties, fees & user charges, sale & hire charges and others.
Major source of revenue income is in the form of assigned revenue, which contributes to about
three-fourth of the revenue income on average. This source mainly includes compensation in
lieu of Octroi.
Property Tax: The most important category in the own sources of income is the property tax8
(erstwhile holding tax). This tax is imposed on land and buildings depending on their nature of
use. Property tax component comprises holding tax, latrine / drainage tax and lighting tax. The

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present property tax assessment is being done as per the provisions of the Orissa Municipality
Act9, 1950.
Non-Tax Revenue / Remunerative Enterprise: Income from remunerative enterprises is
categorised as non-tax income received in the form of rentals from assets like shopping
complexes, market fees, parking fees and income from other real assets owned by the BMC.
ASSIGNED REVENUES
Assigned revenues include revenues transferred to the BMC by the GoO under specific acts.
This source of revenue income comprises duty on transfer of properties, entertainment tax /
public resort, compensation in lieu of Octroi and other assigned revenues. Income through
assigned revenue contributes to about three-fourth (76.31 percent) of revenue income, the
growth of which however has been inconsistent. Apart from the drastic reduction in
compensation in lieu of Octroi during the FY 2004-05, there has been an inconsistency in
terms of the amount transferred to the BMC. Other sources of assigned revenue include duty
on transfer of properties, entertainment tax/public resort, and others and these sources have
not contributed during the last three financial years of the assessment period as indicated in
the table above. As a whole, the assigned revenue has shown negative growth rate of 0.86
percent on average during the assessment period.
REVENUE GRANTS, CONTRIBUTIONS & SUBSIDIES
The BMC receives revenue grants and compensations from the GoI/GoO under the various
heads.
RECEIPTS
2014-15 2015-16 % Annual
Change
Tax Revenue ₹414,211,421 9.60% ₹535,154,875 11.42% 29.20%
Assigned Revenue &
Compensations
₹750,326,730 17.39% ₹780,707,549 16.66% 4.05%
Rental Income from Municipal
Properties
₹17,690,279 0.41% ₹67,948,736 1.45% 284.10%
Fees & User Charges
₹125,126,367 2.90% ₹93,722,395 2.00% -25.10%
Sale & Hire Charges ₹8,197,934 0.19% ₹8,435,016 0.18% 2.89%
Income From Investment
₹30,202,916 0.70% ₹125,119,397 2.67% 314.26%
Other Income ₹862,940 0.02% ₹11,246,687 0.24% 1203.30%
Loans ₹100,101,093 2.32% ₹20,150,315 0.43% -79.87%
Deposits Received ₹11,218,226 0.26% ₹20,150,315 0.43% 79.62%
Grants ₹1,879,484,323 43.56% ₹3,023,953,070 64.53% 60.89%
Funds from Sale of Property ₹909,970,716 21.09% ₹0 0.00% -100.00%
Arrear Incomes ₹67,309,356 1.56% ₹0 0.00% -100.00%
Total Budgeted Receipts ₹4,314,702,303 4314702303 ₹4,686,588,354 4686119742 8.62%

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Grants received from the GoO are for the following purposes:
Salary/DA grant;
Salary of teaching staff;
Actuals of the
Previous Year
(2014-15)
Budget Estimates
of Current Year
(2015-16)
Revised
Estimates of
Current Year
(2015-16)
Budget Estimates For 2016-17
General Urban Poor Total
Revenue Grant
Reimbursement of
CENSUS related
expenditure
50,00,000 50,00,000
IGNOAP - Central
Grant
114,26,400 100,00,000 100,00,000 200,00,000 200,00,000
IGNWP - Central Grant 62,10,327 200,00,000 200,00,000 150,00,000 150,00,000
IGNDP - Central Grant 5,83,200 100,00,000 100,00,000
National Family
Benefit Scheme
(NFBS)
14,242 20,00,000 20,00,000 30,00,000 30,00,000
Election Fund - 1,00,000 1,00,000 - -
Old Age Pension 111,24,525 200,00,000 200,00,000 200,00,000 200,00,000
MBPY 652,87,200 254,59,600 254,59,600 250,00,000 250,00,000
Harichandra Sahayata - 6,00,000 6,00,000 5,00,000 5,00,000
Grant for Solid Waste
Managenent
70,41,120 100,00,000 100,00,000 72,87,500 - 72,87,500
Animal Birth Control 40,70,000 50,00,000 50,00,000 40,00,000 40,00,000
Chief Minister's Relief
Fund
10,11,178 10,00,000 10,00,000 10,00,000 10,00,000
Odisha State Disaster
Management Fund
10,20,757 10,00,000 10,00,000 6,00,000 6,00,000
NULM - SM & ID 42,14,000 1136,95,000 1136,95,000 50,00,000 50,00,000
NULM - SEP(I) & (G) 35,85,000 - - 50,00,000 50,00,000
NULM - EST & P 387,64,000 - - 200,00,000 200,00,000
NULM - CB & T 38,00,000 - - 50,00,000 50,00,000
NULM - SUH 64,00,000 - - 50,00,000 50,00,000
JnNURM-Challenge
Fund
119,11,200 - - 50,00,000 50,00,000
Grant from Sewerage
board (OWSSB fund)
352,39,034 - - 100,00,000 100,00,000
14th FC Grant 3323,91,000 3323,91,000
Devolution of Funds 780,31,000 900,00,000 900,00,000 2322,81,000 2322,81,000
Grant Towards
AHAAR
100,00,000 100,00,000
TOTAL 289,733,183 298,854,600 298,854,600 591,959,500 149,100,000 741,059,500
% Total Receipts 11.86% 6.40% 6.40% 23.01% 59.86% 26.27%

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Road maintenance;
Pension from DMA; and
Others.
The allocation on the above regular grants is ad-hoc in nature and inconsistent. These items
have contributed 6.63 percent of revenue income and have registered an average negative
growth rate of 26.49 percent per annum. Fluctuations in these grants are also due to receipt
of some special grants during certain years.
REVENUE EXPENDITURE
Revenue expenditure of the BMC has been analysed based on expenditure heads broadly
classified under the following departments:
General Administration;
Finance and Audit;
Tax and License;
Light Establishment;
Market Establishment;
Conservancy Establishment;
Medical Establishment;
Public Works Establishment; and
Education Establishment.
The administrative expenses and expenses on repairs & maintenance are not clearly
separated across the above departments and hence these expenses are analysed together
for the BMC.
Revenue expenditure is further classified under the following heads:
Establishment;
Administrative expenses;
Repairs & maintenance;
Interest & finance charges;
Revenue grants, contributions and subsidies; an
Miscellaneous / other expenses.
Expenditure
2014-15 2015-16 % Annual
Change
General Administration ₹557,037,674 13.42% ₹582,547,273 12.94% 4.58%
Administrative Expenses ₹70,978,720 1.71% ₹225,095,546 5.00% 217.13%
Solid Waste Management ₹449,946,973 10.84% ₹450,191,092 10.00% 0.05%
Repair & Maintenance ₹232,860,011 5.61% ₹286,771,726 6.37% 23.15%
Interest & Finance Charges ₹830,160 0.02% ₹4,051,720 0.09% 388.06%
Programme Expenses ₹351,988,038 8.48% ₹1,085,860,914 24.12% 208.49%
Revenue Grants, Contribution &
Subsidies
₹801,935,012 19.32% ₹1,025,085,116 22.77% 27.83%
Misc / Contigency ₹4,980,963 0.12% ₹9,904,204 0.22% 98.84%
Refund Of Deposit ₹21,169,092 0.51% ₹66,178,091 1.47% 212.62%
Loan & Advances ₹16,188,129 0.39% ₹25,660,892 0.57% 58.52%

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Medical Expenses ₹2,905,562 0.07% ₹2,250,955 0.05% -22.53%
Purchase of Store Materials ₹24,074,654 0.58% ₹14,856,306 0.33% -38.29%
Acquisition & Purchase Of Fixed
Asset
₹881,215,336 21.23% ₹723,907,276 16.08% -17.85%
Arrear Liabilities ₹734,692,014 17.70% ₹0 0.00% -100.00%
Total Budgeted Expenditures ₹4,150,802,338 ₹4,501,910,920 8.46%
1.8. Financing Sources and Flows for Housing, Infrastructure and Urban
Services
Bhubaneswar Municipal Corporation (BMC) has utilised the following sources of
funding for its Housing, Infrastructure and Urban Services programmes.
TABLE 1.8: BMC REVENUE GRANTS, CAPITAL RECEIPTS AND
CAPITAL GRANTS 2014-16

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The BMC’s current fiscal strength is outlined below
Table 1.8 Bhubaneswar Municipal Corporation (BMC) Budget 2014-2016
Budget
Head
Tax
Revenue
Assigned
Revenue
and
Compens
ation
Rental
Income
Fees and
User
Charges
Sale
and
Hiring
Charges
Income
from
Investme
nts
(Fixed
Deposit)
Other
Income
Revenue
Grant
Loan
from
OUIDF
Capital
Grants
TOTAL
(INR)
% Total
Budget
ed
Income
18.20
24.63 0.58 9.76 0.44 3.90
0.75
26.27 4.25 11.22 100
Amoun
t (INR) 513570
971
6950150
00
16283
759
275334
103
12424
669
110000
000
21108
623
741059
500
120000
000
316500
000
2821296
626
Bhubaneswar Municipal Corporation (BMC) is currently engaged with the Government of India
Smart Cities Mission (SCM) programme to generate funding for its 2030 Strategic Plan. BMC
is striving to meet its fiscal needs through the leveraging SCM instruments in Figure 1.8.
LOANS Actuals of the
Previous Year
(2014-15)
Budget Estimates
of Current Year
(2015-16)
Revised Estimates
of Current Year
(2015-16)
Budget Estimates For 2016-17
Loan from Central Govt - - - -
Loan From state Govt - - - -
Loan For creation BMC Infrastructure
(Odisha Urban
Infrastructure Development Fund)
54,00,000 200,00,000 200,00,000 1200,00,000 1200,00,000
Loans From Govt Bodies &
associations
- - - -
Loans From Financial Institutions for
self Financing project
- - - -
Loans From Bank - - - -
Loans From International agencies - - - -
TOTAL 5,400,000 20,000,000 20,000,000 120,000,000 - 120,000,000
% Total Receipts 0.22% 0.43% 0.43% 4.67% 0.00% 4.25%
Flgure 1.8 Govt of India Smart Cities Mission (SCM) Programme

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Based on its current fiscal strength, BMC proposes to attract more than four times of
investment available under SCM Mission, including improved financial management for
ensuring credit worthiness.
(i) PROPERTY TAX – Recently enacted Property Tax Act will help in moving towards unit
area method of assessment. The law will come into force from January 2016. Secondly, it
is proposed to move to GIS based property management system. The vendor for software
has been finalised and contract for GIS mapping has been awarded to Odisha Remote
Sensing and Application Centre (ORSAC). The work is likely to be completed in 6 months.
(ii) It is expected that these measures will help BMC to increase its property tax revenue by
300% in next two years. Currently tax assessments for residential properties are linked to
valuations of 1978 and there are wide spread leakages in the present system.
(iii) USER FEE RECOVERY – BMC has notified its User Fee Regulation in 2015. This has
been developed on basis of “User’s Pay” and “Polluter’s Pay” principle. It is expected that
cost recovery of Solid Waste Management will improve from 1% to 50% in next two years.
(iv) PARKING – Rates of parking have been revised by 200% and differential pricing has been
introduced. This has led to increase in revenue by 100% in 2015-16 (month on month
basis). Further, deployment of ICOMC will help in plugging the leakages. This will increase
in identified spaces for on-street parking, and lead to more than 100% increase on year to
year basis for next 5 years.
(v) RENTAL REVENUES - Vacant commercial properties of BMC, for want of correct
valuation, have not been put on lease. Action plan has been initiated for revaluation of
these properties for leasing them out on rent. It is expected that 100,000 square feet of
space available will provide additional income of at least Rs.3 Crore per year.
(vi)RoW and LICENSING – New regulation on licensing of telecom infrastructure and
giving RoW rights has resulted in increase of revenue. This source has extreme
potential, once ducting is completed.

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5. Impacts of Financing Instruments at the Financial System
Level
India's economic growth can only be sustained with corresponding to growth in infrastructure.
Presently the growing demand is being met by crumbling infrastructure, such as road
networks, city transport, water and sanitation, etc. A solution to the contradiction requires a
massive enlargement of urban infrastructure, which will further require newer green and
sustainable techniques for building this infrastructure. These newer techniques encapsulate
the foundation of green buildings. Energy consumption and associated greenhouse gas
emissions will continue to rise unless actions to direct the construction industry towards
sustainable consumption and production are urgently taken. The objective of sustainable
development is to reduce the baseline energy consumption through adoption and
implementation of efficiency measures in buildings, by the use of energy efficient passive and
active techniques.
Compact Energy efficiency is a growing policy priority for many countries around the world. It is
widely recognised as the most cost-effective and readily available means to address
numerous energy-related issues, including energy security, the social and economic impacts
of high energy prices and concerns about climate change. At the same time, energy efficiency
increases competitiveness and promotes consumer welfare.
All the stakeholders viz. the Central and State Governments by way of setting standards for the
bottom of the buildings market and supporting the topof themarket toaccelerate energyefficient
construction. The real estate developers and the Financial institutions need to work together to
make the concept of Energy efficiency more affordable and sustainable. The recent launch of
three landmark initiatives for Energy Efficiency by the Government of India viz., "Design
Guidelines for Energy Efficient Multi-storey Residential Buildings and Star Ratings for Diesel
Gensets and for Hospital Buildings are supposed to encourage all stakeholders to take part in
the implementation energy efficiency initiatives.
5.1. Financial Support from Government
The Government of India new has launched a mission on Smart Cities. Its main purpose is to
provide core infrastructure (including adequate water supply); assured electricity supply;
sanitation (including solid waste management); health, education , etc., to these cities (box 2).
The Mission will cover 100 cities (distributed among the states and UTs) and is a centrally
sponsored scheme. The central government proposes to give it financial support to the extent
of INR. 48,000 Cr. over five years, i.e., an average of INR. 100 Cr. per city per year. An equal
amount, on a matching basis, will have to be contributed by the state/ULB; therefore, nearly
INR. one lakh Cr. of government/ULB funds will be available for the development of smart
cities.
Strategy: The strategic components of area-based development in the Smart Cities Mission
are city improvement (retrofitting), city renewal (redevelopment) and city extension (greenfield
development) plus a pan-city initiative. Greenfield development will introduce most of the
smart solutions in a previously vacant area (more than 250 acres) using innovative planning,
plan financing and plan implementation tools (e.g., land pooling / land reconstitution) with
provision for affordable housing, especially for the poor. Greenfield development is required
around cities in order to address the needs of the expanding population.
Finance: The Mission will cover 100 cities which have been distributed among the states and
UTs on the basis of equitable criteria. The Smart City Mission will be operated as a Centrally
Sponsored Scheme and the central government proposes to give it financial support to the
extent of INR 48,000 Cr over five years, i.e., on an average Rs100 Cr per city per year. An

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equal amount, on a matching basis, will have to be contributed by the state/ULB; therefore,
nearly INR one lakh crore of government/ULB funds will be available for smart cities
development.
Solid Waste Management: Another Mission launched by the new government is known as
Swachh Bharat Mission (SBM). It aims at making India free from open defecation and
achieving 100 percent scientific management of municipal solid waste in 4041 statutory
towns/cities in the country. The targets set for the mission that have to be achieved by 2
October 2019 are: construction of 1.04 Cr. individual household latrines (IHHL), 2.52 lakh
community toilet (CT) seats and 2.56 lakh public toilet (PT) seats; and the achieving of 100
percent door-to-door collection and scientific management of municipal solid waste (MSW).
National Heritage City Development and Augmentation Yojana (HRIDAY): The HRIDAY
scheme aims at preserving and revitalising the soul and unique character of heritage cities in
India. In the first phase, with a total outlay of R500 Cr. fully funded by the central government,
twelve cities have been identified for development.
Atal Mission for Rejuvenation and Urban Transformation (AMRUT): AMRUT was
launched on June 25, 2015, with the objective of improving basic urban infrastructure in 500
cities/towns. The total outlay for AMRUT, a Centrally Sponsored Scheme (CSS), is INR.
50,000 Cr. for five years from the financial year 2015-16 to 2019-20. Cities with a population
of 10 lakh or above are entitled to central assistance of one-third of the project cost and all the
other cities get assistance for one half of the project cost. Balance funding is to be arranged
by state governments / urban local bodies (ULB) and will be inclusive of private investment.
5.1.1. Impacts on the Financial System
Flexible PPP models
– Funding from the private sector is necessary to meet the overall funding requirements;
– PPP models where in the private sector companies are leveraged for technical support,
capital funding and oversight of operations.
Infra. Debt funds
– IDFs channel investment in municipal bonds viz. defining eligible investments
– IDFs re-finance debt during construction phase and additional funds for financing
operations
Land Monetisation
– Greenfield and Brownfield Project funds through the sale of sale of land and/or commercial
and residential real estate
– Funds raised by increasing the floor area ratio (FAR) -- total floor area of a building to the
size of the land built on.
User Charges
– User fees for cities to cover the cost associated with funding supporting infrastructure.
– Costs of service/infrastructure investment from private users to repayment.
–
Tap Fees
– Tap fees cover the cost of tying water meters for new connections to existing line.
Other taxes to explored further to understand their potential benefit /impact
– Green tax on fuel purchase.
– Urban tax on purchase of new vehicles.
– Betterment charges payable on sale / registration of property.

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5.2. Assessing the impacts of financial instruments at the financial system
level — particularly on the sustainability and resilience of the national
financial system
Till a few years back, the supply of low income housing in India was largely through housing
constructed by state housing boards and corporations (HUDCO, MHADA) The
Government’s role in proving affordable housing today is still significant through various
government programs such as JNNURM and Rajiv Awas Yojana. While mainstream housing
finance providers (banks, housing finance institutions) have traditionally served the middle to
high income formal sector, in recent years, the demand for affordable housing has seen the
entry of financial institutions and micro-finance companies in the affordable housing space.
Infrastructure Financing: The Government of India announced some special schemes for
encouraging finance for infrastructure. These included the following:
(i) The Cabinet Committee on Investment (CCI) was set up in 2013 to expedite clearances
and decisions on large infrastructure projects.
(ii) Long Term Finance Company:
The India Infrastructure Finance Company Limited (IIFCL)
Set up in 2006 for providing long-term financing for infrastructure projects. The IIFCL funds
viable infrastructure projects through long-term debt as well as refinance to banks and
financial institutions for loans approved by them. This will enable the spreading of debt
repayments over a longer period and will benefit PPP infrastructure projects with improved
liquidity, better viability, and reduced restructuring risk.
Central Government Allocation
– GoI allocation of INR 4800 billion (480,000 crore) for the smart city project
– Each City INR 10 billion (1000 crore) per year for the five years
– Initial allocation of INR 500 billion (50,000 crore) for selected cities’ City Development
plan
– Central allocation: 60% in infrastructure, 10% for e-governance initiatives
– Equity contribution: 30% for building townships along with Pvt. Developers
– Special Purpose Vehicle for Smart City financing
xxiii. Viability Gap Funding
– VGF up to 90% reduction in project cost for cities in hilly areas and 40% reduction in
project cost for cities on the plains
National Investment and Infrastructure fund
– INR 200 billion (20,000 crore) for smart cities funding
– Secured from PSU dividends and Central govt
Infrastructure Debt Fund
The government has conceptualised infrastructure debt funds (IDF) for sourcing long-term
debt for infrastructure projects. An IDF can be set up either as a trust or as a non-banking
financial company (NBFC). The income of IDFs has been exempted from income tax.

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Tax-free Bonds
The government has attempted to broaden the corporate bond market by according tax-free
status to infrastructure bonds for addressing the specific needs of infrastructure deficit,
especially in sectors such as roads, ports, airports, and power which are essential for
economic growth in any country.
5.3. Assessing the impacts of financial instruments at the financial system
level, particularly on the sustainability and resilience of the national
financial system
Debt and PPP: Borrowings from multi-lateral and bi-lateral agencies
– Borrowing secured from intl agencies such as Kiwi and ADB for financing smart city
projects.
Assistance from the World Bank/ADB:
– Potential $500 million from WB and $1 b from ADB over 5 years (2015-20) to funds to
Smart City SPVs – exact modalities are being worked out.
– Loan should be available in 2016 for use by Round One Smart Cities.
– GoI request for ADB annual funding of at least $20 billion in smart city projects
Municipal bonds
– 10% of the funding requirement raised through municipal Bonds
– Recent SEBI guidelines for allowing municipal bodies to raise funds through issue of
municipal bonds
GoI Pooled Municipal Debt Obligation (PMDO) facility
– PMDO facility partnership of 15 Banks/FIs with INR 27.5 billion (2750 crore) corpus
– Finance urban local bodies and Special Purpose Vehicles (SPVs) promoted under PPP
arrangements
– Implement urban infrastructure projects (Water Supply and Sewerage, Solid Waste
Management, Roads and Urban Transport, Environmental Projects, Healthcare and
Education etc)
– Smart City project funding potential: corpus increased from INR 500 billion to 5000 billion
(INR 50K to 500K crore)
PPP and market based affordable housing financing in India, such as Smart City Mission
Programme to leverage private sector financing, and Urban sector reform incentives such as
Performance based financing.
Pooled Municipal Debt Obligation (PMDO) facility set up in 2006 with the participation of
several Banks to promote and finance infrastructure projects in urban area on shared risk
basis. Current corpus of the facility is GBP 500 mn. It is proposed to enlarge it to GBP 5 bn
by 2019.

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Table 4 - Policy Instruments for Energy Conservation in low income green housing-1
Policy
instrument
Existingor
proposed
policy
instruments/m
echanismsin
India
Effectiveness
Cost-
effectiveness
Direct
Applicability
toaffordable
greenhousing
Special
conditionsfor
success,
majorstrengths
andlimitations,
co-benefits
Energy
efficiency
certificate
schemes
Under the Ministry of Power, a
Renewable
Energy Certificate mechanisms
launched in November 2010, with
trading commencing in March
2011 through Perform Achieve
and Trade (PAT) under the
NMEEE.
Medium High/
Medium
Low No long-term experience yet.
Transaction costs can be high.
Adv. institutional structures
needed.
Profound interactions with
existing policies.Benefitsfor
employment. Applicability
and benefits to the residential
developmentsectorto be
explored
Kyoto Protocol
flexible
mechanisms
Under the NMEEE, Bachat Lamp
Yojana
Program of Action (PoA) being
implemented in collaboration with
Electricity Distribution Companies
(DISCOMs).BachatLampYojana
(BLY) promotesenergyefficientand
highquality CFLsasareplacement
forincandescent bulbs in
households at the rate of an
incandescentbulb,i.e.,INR15.This
project aims to leverage Clean
Development Mechanism (CDM)
under the UNFCCC Kyoto protocol
Low Low Medium So far limited number of CDM
&JI
Projects in buildings.
Success factors: Project
bund-ling, Information &
awareness campaigns, link
to GIS
Fiscal instruments and incentives
Taxation (on CO2 or
household fuels)
None Low/
Medium
Low Low Effect depends on price
elasticity.
Revenues can be
earmarked for further
energy efficiency
improvements. More
effective when combined
with other tools.
Tax exemptions/
reductions
Under the NMEEE the following tax
exemptions have been proposed-
• Graded excise duty for
STAR labeled equipments
in favour of higher
efficiencies
• IncomeandCorporatetax
incentives for ESCOs/Venture
Capital funds, etc. in energy
efficiency
• Providing
infrastructurestatusto
ESCO business
Some Municipal bodies suchasin
Pune haveextendedrebatesin
propertytaxfor Eco-housing
certified buildings.
High High High If properly structured,
stimulate
Introduction of
highly efficient
equipment and
new buildings.
Public benefit
charges
None Medium High in
reported
cases
Success factors:
Independent
administration of funds,
involvementofall
stakeholders,regular
evaluation/monitoring&
feedback, simple and
clear program. design,
multi-year progress

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Real Estate Infrastructure Trusts (REITS): Govt of India to provide incentives for REITS,
which will have pass through for the purpose of taxation. These are expected to make
available fresh equity and attract long term finance from foreign and domestic sources
including the NRIs.
Infrastructure debt funds (IDFs): They could be directed to invest in highly rated municipal
bonds/green bonds. They could be used as a means to re-finance debt taken during the
construction phase as well as additional cash for financing operations. Tax-free municipal
bonds: Creditworthy local govt. issuing tax-free municipal bonds to bring down the cost of
borrowing.
5.4. Impacts on Sectors
It is estimated that the total constructed built-up area would increase from 8 billion square
meters in 2005 to 41 billion square meters in 2030 (about 5-fold increase)23. Out of this total
estimated built-up area by 2030, only 30% has been constructed. This situation is significantly
different from the developed countries, where bulk of the buildings is already constructed. This
provides both challenges and opportunities to building sector stakeholders to develop this
building stock appropriately. Energy management practices should be encouraged in the
planning of buildings and the city form. Buildings and city forms that are energy efficient and
use sustainable energies like solar and wind energies should be considered. There are
fragments of evidences in India of settlements using solar power, water recycling techniques
and waste management practices. But in general, the environment friendly techniques are yet
to be practiced in urban areas, especially in large cities where the differences would be felt.
The environmental sustainability of housing is concerned with the impacts of housing on the
environment and climate change, as well as the impacts of the environment on housing itself.
As per the report of the Central Electricity Authority (CEA), the residential sector consumes
approximately 22% of the total electricity generated in India, which is about three times more
than that of the commercial buildings. One of the reasons for this is that the built-up area of
residential buildings is about seven times more than that of commercial buildings. The energy
use intensity of the residential buildings is expected to grow because of the increase in air-
conditioned area, more access to electricity, and the increase in ownership and usage of
appliances by the tenants
A strong and stable technical and fiscal environment is necessary to drive private investment
into affordable green Housing. To promote the interest of the commercial investor, the benefits
of green affordable housing need to be more measurable with technical risks reduced. High
quality technical standards in affordable housing space-design and renewable installations
where performance and benefits can be measured and benchmarked will promote investor
interest.
Showcasing the identified alternate green technologies in pilot projects will not only provide
empirical evidence of the benefits of these low-cost green technologies in mainstream
affordable housing projects but will also facilitate better understanding of the supply chain
Capital subsidies,
grants,
subsidised
loans
Under the NMEEE, Partial Risk
Guarantee
Fund (PRGF) and Venture Capital
Fund for EE(VCFEE)arebeingset
uptostimulate commercial lending
to ESCO projects.
SBIhassubsidisedinterestratesfor
green building certified commercial
and residential buildings.
High /
Medium
Low High Positive for low-income
households,
riskoffree-riders,
mayinduce
pioneering
investments

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barriers. Measurable performance/benefits will also lead to effective finance mechanisms,
policy interventions and commercial investments
Policy instruments (Energy efficiency certificate schemes and Kyoto Protocol flexible
mechanisms) and Fiscal instruments and incentives for Energy Efficiency in the low-
cost green housing sector in India, such as Taxation on CO2 o household fuels, Tax
exemptions/reduction, Public benefit charges, Capital subsidies, grants and subsidised loans.
(see Annex 1).
Municipal Borrowing
With a view to deepening the bond markets for infrastructure finance, draft
guidelines/framework has been prepared for issuance of municipal bonds in India. It is
important to mention that bonds require creditworthiness, a reputational history that signals
the likelihood of repayment by the local government. In turn, that may be expensive and
complex — and even if obtained, it is still a debt that must be repaid in the future.
Public-Private-Partnership Initiatives
The Government of India is promoting public-private-partnerships (PPP) as an effective tool
for bringing in private sector efficiencies for creation of economic and social infrastructure
assets and for delivery of quality public services.
Viability Gap Funding [VGF] Scheme
For VGF financial support to PPPs in infrastructure a Viability Gap Funding [VGF] Scheme
The India Infrastructure Project Development Fund (IIPDF)
Launched in December 2007 to facilitate quality project development for PPP projects and
ensure transparency in procurement of consultants and projects. The National PPP
Capacity Building Programme was launched in December 2010, and has been rolled out in
16 states and two central training institutes33. The rate of growth of bank credit diminished
from an average of 44.8 percent in 2011-12 to 17.7 percent in 2013-14. Power had more
than 50 percent share in total credit flow to infrastructure. However, the rate of growth of
credit to this sector also decreased from an average of 48.6 in 2010-11 to 25.0 percent
2013-14.
Tax and Non-Tax Incentives
In order to meet the demands of better urban living, government has offered tax and non-
tax incentives to promote investments in urban infrastructure and housing sectors besides
increasing Plan outlay in the Budget 2014-15. In order to encourage development of Smart
Cities, requirement of the built-up area for Foreign Direct Investment (FDI) has been
reduced from 50,000 sq. mt. to 20,000 sq mt and capital requirement from USD 10 million
to USD 5 million. To further encourage this activity, projects committing at least 30 percent
of the total project cost for low cost affordable housing will be exempted from minimum built
up area and capitalisation requirements, with the condition of a three-year lock-in period.
The Government has taken recent initiatives to ensure accelerated growth in the
infrastructure sector:
(a)Harmonised Master List of Infrastructure Sub-sectors:
(b)Smart City Mission
(c) Atal Mission for Rejuvenation and Urban Transformation (AMRUT)
(d)National Heritage City Development and Augmentation Yojana (HRIDAY)
(e) Infrastructure Financing
(i) The Cabinet Committee on Investment (CCI);

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(ii) Infrastructure Debt Fund; and
(iii) Tax-Free Bonds; and Municipal Borrowing
(f) Public-Private Partnership (PPP) in India
(i) Viability Gap Funding for PPP Projects;
(ii) Support for Project Development of PPP Projects;
(iii) National PPP Capacity Building Programme; and
(iv) Online toolkits for PPP Projects.
5.5. Identifying issues faced by different actors and stakeholders in financing
housing, infrastructure and urban services
Building EnergyEfficiency
Everyone benefits from energy efficiency in buildings, from workers and landlords to tenants
and civil society. Identifying the groups responsible for the successes of, and obstacles to,
energy efficiency is critical to building a roadmap with targeted actions for each stakeholder to
capitalise on the opportunity to save energy. But the challenges associated with the
implementation of energy efficient measures residential buildings are many and varied. There
is lack of awareness regarding the technical and financial potential of energy efficient solutions
on the part of end-users. The limited availability and high costs of energy efficient construction
material and appliances have hindered their mass adoption
To add to it, there are concerns on the part of end users that incremental expenditure on in
energy efficiency measures may inflate their purchase consideration. From the technical aspect,
it cannot be ignored that specialists like architects and energy auditors lack sufficient expertise
in this area of work as it is still in a nascent stage. Moreover, technical standards and calculation
tools have not been widely introduced to support implementation and adoption. From the legal
perspective, mucho needs to be done with respect to the development and propagation of
energy efficiency codes for buildings in the country and mandate their legal requirement.
Why Affordable Housing has not Worked in India
Land cost in urban city centers are high, often constituting more than 50% of the project cost
for developers; this makes affordable housing projects unviable.
Building affordable housing entails buying raw material at a cheaper cost so that the benefit
can be passed on to the end-user or home buyer. Land is the most important raw material
for real estate developers. In order to build affordable homes, land can mainly be purchased
in peripheral areas of the city since cost in city centers are high. But peripheral areas of the
city lack infrastructure facilities such as good connectivity to city centers, water supply and
sanitation.
Typically, in India, the process of acquiring necessary construction approvals for each
project takes anywhere between 18-24 months. Such a long holding period leads to
additional cost escalation for developers.
People who belong to LIG and EWS segment have little access to organised finance. These
people often do not have documents such as proof of address, salary slips, etc. The housing
finance industry is hence not geared towards providing finance to those who need it the most.
There is lack of sound government policies that enable and incentivise the affordable
housing segment such that developers are geared to build affordable housing projects
Barriers and challenges
The critical barriers and challenges to the supply chain of green building technologies include:
Capital cost impact

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The incremental cost of green measures is about Rs.100/sq.ft. of built up area, which is
approximately a 10% addition to the average cost of construction today (2011). The additional
costs are largely due to increased labor and transportation costs and incremental cost of
provision of energy efficient lighting, fans and solar water heaters.
Material re, suppliers and vendors
The manufacturing of green technologies is still a niche industry involving small and medium
enterprises with the supplier and vendor network being at a nascent stage of development.
Worker skill and familiarity
Shortage of workers trained in the use of new techniques and technologies is also a barrier to
implementation of green building technologies as it causes delays and additional costs
5.6. Challenges faced by different actors
During 2010–2015, real estate developers have launched projects in the affordable segment
across Indian cities, with units priced between INR 0.5-2.5 million. Several of these projects
have been sold on an application model due to huge demand, with multiple takers for the
same unit.
With high prices of land within the city, low-income housing projects are being developed at
‘leapfrogged locations’, which offer land parcels at suitable price points for such
developments. Leapfrogging is a real estate phenomenon, in which high prices of intermediate
land parcels lead to development of far-flung areas before immediate periphery is developed.
Whilst leapfrogging leads to cost-effective developments, they might lack development of
adequate physical and social infrastructure.
Most of the Indian metropolitan cities have expanded on a multiple nuclei model, in which
satellite towns have been developed, which acts as secondary nodes to the city. Most of these
newer locations being explored by developers of housing for low-income groups are at
reasonable distances from these nodes and are attractive options for people employed in
these suburban commercial nodes. Some of them are in close proximity to industrial nodes as
well, which generates demand for such housing projects. Hence, although their distances from
the city centers initially seem large, these projects are still suitable for several people
employed in industries or offices located near these areas.
Options:
Policy instruments or Energy Efficiency in the low-cost green housing sector in India, such
as Energy efficiency certificate schemes and Kyoto Protocol flexible mechanisms.
Fiscal instruments and incentives for Energy Efficiency in the low-cost green housing
sector in India, such as Taxation on CO2 o household fuels, Tax exemptions/reduction,
Public benefit charges, Capital subsidies, grants and subsidised loans.

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6. Alternative Financial Instruments
Recent budget announcements related to housing sector have been encouraging. An
allocation of ` 8,000 crore to support rural housing and ` 4,000 crore for affordable housing to
the urban poor/EWS/LIG segment through NHB, will increase the flow of cheaper credit for
housing. Further, the Government has mandated to provide 'Housing for All by 2022'. With
this objective the Hon'ble Finance Minister in his Budget Speech announced the setting up of
a Mission Low Cost Affordable Housing, which will be anchored by the National Housing
Bank. The scheme will incentivise the development of low cost affordable housing.
Mission on Low Cost Affordable Housing: NHB allocated 4,000 crore for affordable
housing to the urban poor/EWS/LIG segment through NHB, will increase the flow of cheaper
credit for housing. Further, the Government has mandated to provide 'Housing for All by
2022'. With this objective the Hon'ble Finance Minister in his Budget Speech announced the
setting up of a Mission Low Cost Affordable Housing, which will be anchored by the
National Housing Bank. The scheme will incentivise the development of low cost affordable
housing.
Smart Cities funding through CDP Infrastructure Development Fund (CIDF). NHB
allocated INR 70.6 billion (7,060 crore) for the project of developing "one hundred Smart
Cities,’ may attract long term finance from foreign and domestic sources including the setting
up of CDP Infrastructure Development Fund (CIDF).
Policy instruments or Energy Efficiency in the low-cost green housing sector in India, such
as Energy efficiency certificate schemes and Kyoto Protocol flexible mechanisms.
Fiscal instruments and incentives for Energy Efficiency in the low-cost green housing sector
in India, such as Taxation on CO2 o household fuels, Tax exemptions/reduction, Public benefit
charges, Capital subsidies, grants and subsidised loans.
Pooled Municipal Debt Obligation (PMDO) facility was set up in 2006 with the participation
of several Banks to promote and finance infrastructure projects in urban area on shared risk
basis. Current corpus of the facility is GBP 500mn. It is proposed to enlarge it to GBP5bn by
2019.
Real Estate Infrastructure Trusts (REITS) tax incentives announced in the Union Budget of
2014-15, could result in extracting new growth opportunities through Rental, Affordable and
Senior Citizen Housing projects that can increase the depth of the industry. REITS have been
successfully used as instruments for pooling of investment in several countries and such
instruments will definitely attract long term finance from foreign and domestic sources
including the NRIs. REITs would reduce the pressure on the banking system while also making
available fresh equity.
Infrastructure debt funds (IDFs) to invest in highly rated municipal bonds/green bonds. They
could be used as a means to re-finance debt taken during the construction phase as well as
additional cash for financing operations. Tax-free municipal bonds: Creditworthy local govt.
issuing tax-free municipal bonds to bring down the cost of borrowing.
Tax incentives for the Real Estate Investment Trusts (REITs), as announced in the Union
Budget of 2014-15, could result in extracting new growth opportunities through Rental,
Affordable and Senior Citizen Housing projects that can increase the depth of the industry.

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REITS have been successfully used as instruments for pooling of investment in several
countries and such instruments will definitely attract long term finance from foreign and
domestic sources including the NRIs. REITs would reduce the pressure on the banking system
while also making available fresh equity.
6.1. New Challenges, Approaches, Instruments
Affordable housing refers to housing units that are affordable by that section of society whose
income is below the median household income. Though different countries have different
definitions for affordable housing, but it is largely the same, i.e., affordable housing should
address the housing needs of the lower or middle income households. Affordable housing
becomes a key issue especially in developing nations where a majority of the population is
unable to buy houses at the market price. Disposable income of the people remains the
primary factor in determining the affordability. As a result, it becomes the increased
responsibility of the Government to cater to the rising demand for affordable housing.
The Government of India has taken various measures to meet the increased demand for
affordable housing including stressing on Public-Private Partnerships (PPP) for development
of these units. The need to facilitate supply of affordable housing to the unserved population
and to encourage broad based home ownership through a right mix of policy initiatives cannot
be overemphasised. In this context, the role of the Governments (both Central and State),
financial institutions in terms of deliberate policies and interventions, is to create an enabling
environment for the private sector, so as to facilitate realisation of affordable and decent
housing for all. The Government of India's focus through various housing policies schemes and
funds is to increase housing stock and provide low cost housing finance to the underserved and
unserved. Housing has been an important subject in the Five Year Plans and specific Schemes
such as Indira Awes Yohan, Golden Jubilee Rural Housing Finance Scheme, etc., and funds
such as Rural Housing Fund, Urban Housing Fund, etc., havebeenformulated /createdinorder
to promote affordable housing.
Initiatives by the Government of India like allowing FDI up to 100 per cent in development
projects for townships and settlements, approval of the Real Estate (Regulation and
Development) Bill, 2013, setting up the Urban Housing Fund and impetus to Subsidy
Schemes like the Rajiv Rinn Yojana, strengthen the role of fiscal incentives in India’s
affordable housing crisis.
6.2. The Role of Different Agencies towards Affordable Housing
Investments required for implementation of CDP are of very high order. There is an urgent
requirement for putting in place an effective, efficient, easy and simple mechanism for transfer
of Government lands to the Development Authorities for the purpose of taking up urban
infrastructure and development projects including housing and commercial complexes:
Development projects can be implemented on PPP model or directly by Development
Authorities’
Allotted lands can be auctioned by Development Authorities after specifying end use,
which shall be in conformity with terms and conditions prescribed by government during
transfer of such land to the Authority for generating funds for CIDF;
Land should be transferred by Government on free of cost basis for the purposes of Urban
Infrastructure projects such as roads, parks, drainage and sewerage systems, electricity
installations, drinking water installations, solid waste management, transport terminals,

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parking, vendors markets, neighbourhood shopping & public parking for motorised and
non-motorised transport;
For taking up slum redevelopment and affordable housing projects as approved by State
Government under the relevant policies, land required will be transferred on free of cost
basis to development authorities.
Role of Central Government
The National Urban Housing & Habitat Policy 2007 (NUHHP - 2007) seeks to promote various types
of Public-Private Partnerships for realising the goal of "Affordable Housing for All" with
special emphasis on the urban poor. Given the magnitude of the housing shortage and
budgetary constraints of both the Central and State Governments, the NUHHP, 2007
focuses the spotlight on multiple stake-holders. Specific roles have been envisaged under the
policy for various stakeholders, which are as under.
To play a role of enabler and facilitator and ensure that private sector is enthused to take up
affordablehousingprojects;
To advise and guide respective State Governments to adopt and implement the National
Urban Housing&HabitatPolicyinatimeboundmanner;
To promote balanced regional development in the country by suitably decentralising
functions relatingtodevelopmentoftheHousingSectorandpromotionofanecologically
soundhabitat;
To develop suitable financial instruments for promotion of housing for the EWS and LIG
groups servicedbybasicamenities;
To promote action plans for creation of adequate infrastructure facilities relating to water,
drainage,sanitation,sewerage,powersupplyandtransportconnectivity;
To develop economically viable housing promotion models and standards for provision of
physical,socialandeconomicservices;
TodevelopsuitablefiscalconcessionsincollaborationwiththeMinistryofFinancefor
promotion ofhousingandurbaninfrastructurewithspecialfocusonEWS/LIGbeneficiaries.
Roles of State Governments
To prepare the State Urban Housing and Habitat Policy.
To ensure suitable flow of financial resources to potential EWS/LIG beneficiaries as well
as undertake viability gap funding of large housing and habitat development projects.
To prepare medium term and long term strategies for tackling problems relating to
provision of adequate water supply, drainage, sewerage, sanitation, solid waste
management, power supply and transport connectivity.
To promote and incentivise decentralised production and availability of local building
materials.
To prepare and update Master Plans along with Zonal Plans, Metropolitan Plans, District
Plans and the State level Regional Plan by respective agencies with provision of adequate
land for To promote well designed Public-Private Partnerships for undertaking housing and
infrastructure projects.

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To act as a facilitator and enabler in collaboration with ULBs/Parastatals/Private Sector
Cooperative Sector / Non-Government Organizations (NGOs) with regard to Integrated
Slum Development Projects as well as Integrated Township Development Projects.
To encourage Cooperative Group Housing Societies, Employees Organizations, labour
housing promotion organisation, NGOs and Community Based Organizations (CBOs) to
have Partnerships with Urban Local Bodies / Parastatals in relation to housing related
micro-finance and housing development.
Roles of Financial Institutions
To reassess their strategies with a view to make them more inclusive in terms of EWS and
LIG segments;
To promote innovative financial instruments;
To enhance/strengthen the income spread of housing loans portfolio to increasingly cover
BPL and EWS beneficiaries;
To Develop financial products which encourage EWS and LIG beneficiaries to take
insurance To plough part of their resources towards financing slum improvement and up-
gradation programmes;
To devise innovative housing finance schemes for targeting the EWS and LIG segments,
with suitable subsidy support from the Government;
To promote MFIs and SHGs for mobilising savings and play a significant role in housing
finance sector.
Recent Housing Schemes Implemented by the Government of India
6.3. Present recommendations on how to improve efficiency and
effectiveness of financial and technical support in the city
Partnership opportunities as well as knowledge development and sharing of the key issues faced
by affordable housing finance institutions are:
Access to low-cost funds
Government support to lower cost of capita
Credit risk
Profitability
International case studies focused on financing and other mechanisms for affordable housing
demonstrate that a balanced mix of fiscal measures, municipal level regulation, market
interventions and community effort is required to enable affordable green housing. The entry
of commercial lending and performance based mechanisms is required to bridge the gap
between demand and supply of critical finance and technical assistance. The policy and
financing package recommended under this study include:
Regulations/Enforcement – mandatory “green” component in construction financing
Investment - green mortgages, direct financing, guarantee
Incentives – tax rebates, lower housing loan interest rates for green housing
Voluntary initiatives — implementation of green technologies, standardisation of green
technologies.

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CDP Infra Development Fund (CIDF) Management
xxiv. This fund will be ring-fenced from normal Development Authority expenditures to ensure
that funds are utilised only for development of city level infrastructure i.e. Capital
Expenditures. Development Authority will maintain separate book of account for this fund;
xxv. The fund will supplement and fill gaps in funding available for various urban infrastructure
projects. It will not be used to substitute the funds and grants available under various
schemes and projects of State & Central Government;
xxvi. Fund can be used for provision of technical assistance, preparation of development plans,
DPRs, feasibility reports and for hiring of Consultancy for any work relating to
implementation of CDP proposals.The Empowered Committee on CDP will be the Nodal
Authority for sanctioning of projects for expenditure out of this fund;
xxvii. The funds in CIDF account should be invested in suitable fiscal instruments so as to
generate optimum return with assured safety and liquidity. This should be done as per
decision of Empowered Committee.
6.4. Opportunities for International Financial Institutions and Agencies
Analysing incentive based approaches which could reduce the costs of affordable housing
and narrow the affordable housing gap in the city, including market-oriented solutions (e.g.,
lowering the cost of land, construction, operations and maintenance, and financing) such as
Fiscal instruments and incentive for energy efficiency (see Annex 1). Other financing
sources could include: Use PPPs where feasible in smart city projects to leverage private
sector financing. Fostering PPPs in the urban sector provision for incentives could be
explored; however, this needs to be discussed with the relevant ministries of the GoI and
concerned departments in the Central/State Governments.
Mission on Low Cost Affordable Housing: NHB allocated INR 70.6 billion (7,060
crore) in the current fiscal for the project of developing "one hundred Smart Cities,’
Incentives for Real Estate Investment Trusts (REITS), complete pass through for the
purpose of taxation and a modified REITS type structure for infrastructure projects as the
Infrastructure Investment Trusts (Invites), may attract long term finance from foreign and
domestic sources including the setting up of CDP Infrastructure Development Fund (CIDF).
Smart Cities funding through CDP Infrastructure Development Fund (CIDF).
CDs for many Indian cities has been approved and notified. It has envisaged large scale
investment for implementation of various urban housing and Infrastructure Projects such as
low cost housing, slum re-development, storm water drainage, sewerage, water supply,
master plan roads, open space development , etc. The quantum of funds required for the
purpose will be difficult to be met only out of budgetary resources. Therefore, financing of
such infrastructure will require other financial instruments like setting up of dedicated funds.
In this regard, Odisha State Government approved setting up of State Capital Region
Development Fund (SCRDF) for BDA area (Govt .of Odisha HUD Notification No. T.P.Dev-
23/2015/ 14108 /HUD, Bhubaneswar, Dated the 02.06.2015).
This fund works on principles of Development Based Land Value Capture (DBLVC), in
which value of government land is unlocked and is used for financing urban infrastructure.
This mechanism needs to be extended to other Development Authorities also. The
Government of Odisha will constitute CDP Infrastructure Development Fund (CIDF) for
every Development Authority. The objective is to create a dedicated fund for financing of City
Level Infrastructure projects including slum re—development, affordable Housing, master plan
roads, open space development, transit & transport infrastructure , etc., as proposed in CDP
and other development works as approved by appropriate institutional framework prescribed
in this policy. The CIDF will be managed as per following: The end use plan of the corpus of

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CIDF shall be in accordance with the approval of state government on the basis of
recommendations of the Empowered Committee in respect of projects costing below INR 5
billion (500 Crores). The Empowered Committee will approve individual urban infrastructural
projects including Housing projects costing below Rs. 500 Crores
CSS (Central Government allocation)
►Borrowings from multi-lateral and bi-lateral agencies; For instance, ADB has firmly
committed to support India’s Smart Cities Programme
►Bonds subscribed by national and state level land development agencies (e.g., HUDA,
PUDA, DDA, etc.) The pooling of funds from several sources is expected to reduce
borrowing cost and lengthen tenor. Viability Gap Funding (VGF) as well as provide credit
guarantees to municipal bonds and term-loans to leverage debt resources from financial
markets.
National Investment and Infrastructure Fund
Maximise economic impact mainly through infra development in commercially viable projects, both
greenfield and brownfield. Initial authorised corpus of NIIF would be Rs.20,000 Cr. Functions include
investing, which would entail considering and approving candidate companies/institutions/projects
(ink state entities) for investments — both debt and equity. Funds would also be available for equity
support for NBFCs/FIs that are engaged in infra financing.
Other financing sources could include: Use PPPs where feasible in smart city projects to leverage
private sector financing. Fostering PPPs in the urban sector provision for incentives could be explored;
however, this needs to be discussed with the relevant ministries of the GoI and concerned
departments in the Central/State Governments.
Pooled Municipal Debt Obligation (PMDO) facility was set up in 2006 with the participation of several
Banks to promote and finance infrastructure projects in urban area on shared risk basis. Current
corpus of the facility is GBP500mn. It is proposed to enlarge it to GBP5bn by 2019.
Real Estate Infrastructure Trusts (REITS): GoI intends provide incentives for REITS, which will have
pass through for the purpose of taxation. These are expected to make available fresh equity and
attract long term finance from foreign and domestic sources including the NRIs.
Infrastructure debt funds (IDFs): They could be directed to invest in highly rated municipal
bonds/green bonds. They could be used as a means to re-finance debt taken during the construction
phase as well as additional cash for financing operations. Tax-free municipal bonds: Creditworthy local
govts. issuing tax-free municipal bonds to bring down the cost of borrowing.
Convergence with other Government schemes: Strong convergence between AMRUT and Smart City
Mission – Most Smart Cities (area based) would also be AMRUT Cities (project-based). lath the
planning stage itself, cities must seek convergence in the SCP with
AMRUT, SBM, HRIDAY, Digital India, Skill development, Housing for All, etc.
Cross Subsidisation and User Charges: A technique of charging higher prices from one party in order
to subsidies lower prices for another. Services can be designed in phased manner so that cost recovery
can be enabled by this model. User fees allow cities to impose fees to cover the cost associated with
funding supporting infrastructure. Under this system, the public jurisdiction shoulders the costs of
service/infrastructure investment and dedicates the fee stream from private users for repayment.
New Development Bank: NDB floated by the BRICKS Nations has formally started financing
infrastructure investment and sustainable development projects at its headquarters in Shanghai. The

Professional Work / Report Writing Sample: AMishra UNHabitat India Smart Cities 2017 Chp 1,5,6,8

Professional Work / Report Writing Sample: AMishra UNHabitat India Smart Cities 2017 Chp 1,5,6,8

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Professional Work / Report Writing Sample: AMishra UNHabitat India Smart Cities 2017 Chp 1,5,6,8