Budget 2021: Reviving urban centres post-pandemic
Finance minister Nirmala Sitharaman, speaking at the CII Partnership Summit 2020 on January 5, this year promised a 2021 Budget like "never before" with the intent of making India an engine of global growth.
To achieve this, cities and towns, which produce more than 70 percent of the national GDP, would have to make a dramatic comeback in terms of productivity. In order to make this recovery just and resilient, governments at various levels will have to focus on different and imaginative uses of cities’ economic centres.
Below are three strategies by which urban cores can be repurposed and revitalized.
A new business model: collaborative use of central business district (CBD) areas
COVID-19 and the subsequent lockdowns in our cities have emptied the once bustling CBDs. Many employers have issued open-ended work from home orders, are contemplating flexible hours, and reconsidering their expensive office space leases in these premium areas.
As firms downsize their real estate requirements, the freed up real estate holds the potential to become a vibrant mixed-use neighbourhood that can serve multi-purpose functions, including affordable housing.
CBDs have historically not just been well-connected, often pedestrian-friendly, hubs of jobs and capital, but also places for interaction, culture, innovation, and knowledge exchange. Even though a good portion of job functions might still work from home, CBDs will continue to serve as areas for gathering and collaborations.
Many cities across the world, with support from Real Estate Investment Trusts (REITs), revitalised their core city areas to create innovation districts and new job growth centres. In Somerville, Massachusetts, Federal Realty Investment Trust (FRIT) in partnership with city, state and federal governments has undertaken a transformative development at Assembly Row that brought jobs, tax revenue, and a sustainable economy to the city.
Budget 2021 should make provision for a retrofitting or rejuvenation fund that incentivises state, local governments, and REITs to collaborate for revitalising these core areas of cities with a focus on affordable housing and the creation of new jobs centred on innovation.
Fostering equity and inclusion: expanding affordable housing
During the COVID-19 crisis, millions of workers travelled across state borders to reach their villages. A possible reason for the exodus can be traced back to the low and slow Indian urbanisation story that made prominent the lack of basic infrastructure and services such as access to clean water and sanitation and affordable housing. For Indian cities, rethinking affordable housing and urban services is paramount.
Urban India’s conundrum is in the gap between supply and demand for housing. On one hand, there are more than 1.3 million houses lying vacant, while on the other, 9 million people are clamouring for affordable housing. In his article, Bloomberg columnist Andy Mukherjee emphasises that the prices of unsold housing inventory would have to be cut by at least 15 percent to attract buyers.
Provisioning affordable rental housing has fallen through the cracks in the annals of the policy discussions and implementation. Economist Chinmay Tumbe has referred to the masculine urbanisation of India, due to a predominantly male migration, however housing designs still largely cater to families, neglecting the profiles and needs of the single migrant.
To make the revenue losses tolerable for real estate developers and to kickstart the real estate cycle, which employs surplus labour at a decent wage, the Budget 2021 should provide a mechanism and incentives to assure a decent rental yield (which currently is at just 2-4 percent per annum) through tax breaks and tax exemptions on rental incomes.
The projected fall in occupancy of real estate in centre city locations could well cater to this need. Especially, since these urban cores are well-connected to job opportunities and amenities.
Building environmental resilience: promoting nature based solutions
The pandemic has revealed the faultiness of the traditional building blocks of cities and issued a warning on the things to come in the wake of unmitigated climate change. The lack of open spaces, ineffective resource management and disruptions to service flows exacerbated the severity of the pandemic.
While the COVID-19 induced dividends, in the form of reduced air pollution and congestion, are temporary, a synergistical strategy needs to be conceived with a clear focus on circular economy frameworks, nature-based solutions, sustainable mobility, and green infrastructure.
Cities like Melbourne are aiming to increase forest cover by 40 percent, which will serve as carbon sinks. Milan, Bogota, and Barcelona have made plans to reduce the road space for vehicles and have increased the space for walking and cycling. Similarly, the UK government put in place a £2 billion fund to encourage cycling and walking and a further £5.2 billion has been allocated for flood management using man-made and nature-based solutions.
The Government of India, through its Budget 2021, should include measures to catalyse a long-term change in addressing climate-related issues in cities by tapping into nature-based solutions and circular economy principles.
Recovering from the COVID-19 pandemic and moving towards a new growth path is likely to dominate the narrative of not only the upcoming Budget, but also subsequent economic decisions. It is therefore imperative that the Budget 2021 makes a case to re-strategise and reposition urban centres so they can evolve and become responsive to new trends while meeting the socio-economic needs of cities and citizens.
This will also signal the government’s commitment towards environmentally sensitive and inclusionary growth. Budget 2021 might just be the opportunity to rein in rampant suburbanisation and bring in policies and practices that manifest compact urban forms and lead to a new imagination of urban cores.
For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)