Reforming Delivery of Urban Services in Developing Countries: Evidence from a Case Study in India

Given the importance of urban public services in attracting firm location, increasing employment and facilitating economic growth, in this paper, the author examines the following questions: Is there a need for reforming public service delivery in Ludhiana (which is a city chosen under India’s leading urban initiative), when judged against national benchmarks? Is there a relationship between the city’s financial performance and its delivery of urban services? We develop several hypotheses. Next, we examine the potential bottlenecks to reform in service delivery, and finally, the triggers for reform in service delivery, if any. Several measures such as the growth of population and land area, service delivery, and its current finances, suggest a need for reforming public services in this city. We find the general decline in the service level of water supply and sewerage in the city could be attributed to a decline in its capital expenditu res on these services. Further, user charges do not adequately cover the production costs of supplying water, or expenditures on sewerage. The major bottlenecks to reforming public service delivery in this city are financial and institutional, as they pertain to existing arrangements for water, sewerage and landuse. Major triggers that could make the reform happen in this city pertain to changes in institutional arrangements for service delivery (privatisation) and public participation, and finances (less of a trigger). Overall, the major lessons for other cities and triggers that could make the reform happen in Ludhiana pertain to changes in institutional arrangements for service delivery, privatisation in service delivery, public participation, and finances. [NIPFP WP 44]