Indo-German MOU on technical cooperation under Sustainable Urban Development programme & Smart Cities in India - Pragny IAS Academy -- news analysis

Indo-German MOU on technical cooperation under Sustainable Urban Development programme & Smart Cities in India

To develop & apply concepts for provision of Urban basic services & housing in Smart Cities Technical cooperation to support approaches in integrated planning, affordable housing & basic services: Hardeep Puri.

An Indo-German MOU has been signed for an “Implementation Agreement in Sustainable Urban Development and Smart Cities in India”, here today. The objective of the programme is to develop and apply concepts for sustainable urban development about the provision of urban basic services and housing in selected cities and Smart Cities in India. The Agreement was signed between Ministry of Housing & Urban Affairs(MoHUA), Government of India and Deutsche Gesellschaft für Internationale Zusammenarbeit(GIZ) GmbH, India on behalf of the Government of Federal Republic of Germany in the presence of Shri. Hardeep Singh Puri, Minister of State (IC) for Housing and Urban Affairs, Government of India and Dr. Martin Ney, the German Ambassador to India. The agreement was signed by Shri. Rajiv Ranjan Mishra, Additional Secretary, Ministry of Housing and Urban Affairs and Ms. Annette Röckel, Deputy Country Director and Ms. Tanja Feldmann, Cluster Coordinator, Sustainable Urban and Industrial Development, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH India.
Speaking after signing of the MOU, Shri Hardeep Puri said that the technical cooperation measure will support approaches for sustainable urban development in the area of integrated planning, provision of affordable housing and basic services with particular focus on water, waste water and solid waste management and mobility. The ‘Sustainable Urban Development Programme - Smart Cities in India’ project is supported by the German Federal Ministry for Economic Cooperation and Development (BMZ) and jointly implemented by the Ministry of Housing and Urban Affairs, Government of India and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). The project support to Government of India will seek to achieve the set target of promoting sustainable urban development under the national urban missions/programmes such as Smart Cities Mission, linking with the Sustainable Development Goal No. 11 ‘Make cities inclusive, safe, resilient and sustainable’. The German contribution to the project is up to 8 million EUR. The project will continue for a duration of three years (starting from 2018 till December 2020).
MoHUA and GIZ will jointly work on implementing Government of India’s missions, the optimisation of the national orientation framework and the dissemination of practice-proven approaches on sustainable urban development. Amongst others, focus is given to integrated planning approaches for the three Smart Cities with development of local innovations and pilot approaches pertaining to the provision of affordable housing and basic services within the three cities. Experiences and learnings from previous technical cooperation measures in the area of the provision of housing and sanitation as well as solid waste management will be integrated into the new project.


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Indo-German MOU on technical cooperation under Sustainable Urban Development programme & Smart Cities in India

Innovation in priority sector lending

Abee-keeping farmer can be given Rs.2 crore in loans but a paddy farmer can only get Rs.50 lakh. For buying a home in a town with a population of more than a million, exactly Rs.28 lakh as a home loan is allowed but only if the overall cost of the house is less than Rs.35 lakh Rs.10 lakh in an education loan or the same amount to install a solar panel in a home will also qualify.

Bankers in India have to contend with 20 pages of such rules and restrictions on a daily basis. These form the basis for ''priority sector lending'', or PSL, norms laid out by the Reserve Bank of India (RBI) as a diktat for all banks in the country. Directed lending through a PSL framework has been in existence since the 1970s in India. All banks in India have to lend up to 40% of their total loan book in eight defined priority sector categories with a quota for each category and subcategory. Interest rates for loans to these sectors are as per RBI?s directives.

Thankfully for bankers, all this is about to change. RBI issued a notification on 7 April permitting the issue and trading of PSL certificates. This means that bank A which has a comparative advantage in, say, bee-farming loans and is required to lend, say,Rs.50 crore as per its PSL guidelines, can now lend Rs.100 crore to bee farmers. It can then sell the extra Rs.50 crore as PSL certificates to banks B and C that have to meet their quota of such loans but don't have the skills to do so.

More importantly, banks B and C will not be responsible for a sudden downturn in honey demand in the country that will impact the recovery of these loans. That is entirely bank A's responsibility. In effect, the larger social objective of loans to priority sectors and weaker sections of society will be met without burdening each bank with the specific responsibility of doing so. There is a certain laudable, Ricardian elegance to this initiative of the central bank.