NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Indian cities require an estimated capital investment of $840 billion in urban infrastructure and municipal services in the next 15 years till 2036, according to a recent report by the World Bank. This means that India will need an average of $55 billion per annum for its urban infrastructure in a bid to effectively meet the needs of its fast-growing urban population.

Titled “Financing India’s Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action,” the report says that till 2036, the investment in the urban cities must be equivalent to 1.18% of the estimated gross domestic product (GDP) over this period. This is equivalent to $108 per capita per year. Over half of these investments needs almost $450 billion in municipal services such as water supply, sewerage, municipal solid waste management (SWM), stormwater drainage, urban roads and street lighting, whereas the remaining $300 billion investment is required for mass transit.

The report says that currently, the finances provided by the central and state government account for only 75% of the city infrastructure, whereas urban local bodies (ULB) finances only 15% of the city infrastructure. Of this private sources play a minor role by providing only 5% in financing the urban infrastructure. The government’s annual urban infrastructure investments currently stand at $16 billion.

Photo courtesy of Manuel Darío Fuentes Hernández.