July 20, 2014

Budget Puts Urban Poor At the Mercy of Corporate Capital

Archana Prasad

THE Modi government’s first budget lays out a clear road map for the privatisation of governance and corporatisation of public spaces. Key to this strategy is the development of smart cities which have emerged as the pet project of Prime Minister Modi. As the finance minister stated in his speech, “the pace of migration from the rural areas to the cities is increasing. A neo middleclass is emerging which has the aspiration of better living standards. Unless, new cities are developed to accommodate the burgeoning number of people, the existing cities would soon become unlivable”. The development of the smart cities is to be done in order meet the demands of this increasing migration and the rapid process of urbanisation. The budget 2014-15 envisages the development of 100 smart cities in the next five years. The total budget allocation for urban development has gone up by about Rs 10,081 crore of which Rs 7060 crore is meant as a startup fund for smart cities. Today the total urban development budget constitutes 30.6 percent of the entire planned expenditure. This is a huge increase from 14.6 per cent in the budget of 2013-14. Apart from this, there is also a sharp increase in the budget of the ministry of housing and urban poverty alleviation whose budget has also gone up by about Rs 5000 crore or about 40 percent. Both these allocations are apparently made to improve the life of the urban poor, but a closer look at the budget suggests that the urban poor are the biggest losers in Modi’s vision for a new India.




With growing urbanisation and burgeoning cities, the idea of the ‘smart city’ was first introduced in Japan with a focus on improving ‘efficiency’ while providing information technology driven solutions for urban problems. The concept is focused on the idea of a digitally networked city which will induce participatory governance to make decision making more inclusive through information technology. Thus small satellite towns are to be networked with larger metros for the benefits of an emerging ‘neo-middle class’, i.e., a class of educated youths who have benefitted from growth but not reached the status of a middle class. This neo-middle class was earlier seen as a cornerstone of the ‘Gujarat model’ and is now seen as the basis for the future development of the country. Within India, the smart city has been conceived in close coordination with the development of industrial corridors, especially the Delhi Mumbai Industrial Corridor (DMIC) and the National Manufacturing and Industrial Zones (which encompass SEZs within them). A booklet published by the Confederation of Indian Industries clearly states that the development of satellite towns or ‘smart towns’ on the Delhi is for servicing these hubs which will form the basis of attracting foreign investment.

The status of urban and rural poor within this scheme of things is quite clear. The hubs and industrial corridors are based on massive land acquisition plans with active real estate mafias. The project is spread over six states and four lakh hectares will be acquired by the government leading to massive displacement. Hence it is clear that farmers will become part of the reserve army of labour and fuel the casual labour market. At the same time the reordering of urban spaces under the eight smart cities to be developed will have new housing projects and workspaces for networked people. They will also channelise and rationalise the use of power and water for such spaces. Experts have shown that the Delhi-Mumbai Industrial Corridor is based on a region with extreme water scarcity and that it will drain the fields and the peri-urban habitation of its drinking water supply. Thus it is clear that the majority of the working poor who are not in the web of the information and technological network will be left out of the planning process. In this sense, the urban poor will also be displaced from their own lands and be at the mercy of builders and real estate dons. It is therefore not surprising that protests have erupted along the pathway of the industrial corridor.




Seen in this context, the Budget of 2014 lays the foundation of corporate urban development on the DMIC lines.  As the finance minister states, the aim is to build 100 smart cities in the next five years. For this, he has allocated Rs 7060 crore as start up fund. At an average it means that each city will get about 80 crore as start up fund. This inadequate funding will ensure that the entire urban development plan is dependent on corporate investments. This is made amply clear by the fact that the finance minister has set up a Real Estate Investment and Infrastructure Investment Trusts for keeping corporate investment outside the net of taxation. This shows the government’s intent: it seeks to tackle the problems of urbanisation through private investment.

The government has diagnosed the problems of the lack of safe drinking water and sewage management, use of recycled water for organic agriculture, infrastructure development and digital connectivity. In the next ten years, the government proposes to provide 500 habitations with these facilities mainly through the harnessing of private capital. It is notable, that in all these priorities, the government does not identify the redevelopment of slums for urban poor as a priority area. Rather the entire housing project is targeted at the low income groups through the home loan scheme. The urban poor living in the slums are at the mercy of the private sector since the finance minister has added slum development to the list of corporate social responsibility.

It is therefore clear that the urban poor are the worst victims of the Modi government’s first budget. This is not surprising because the Gujarat model of development, which the government seeks to replicate, is based on the displacement and the penury of the urban poor. Following this model, the government has intensified its attack on the urban poor in its very first budget. It is now up to the Left and democratic forces to mobilise and organise the urban people of towns and cities in order to prevent the corporatisation of urban development.