Urban Poverty Alleviation through Service Delivery : Fund-Based Approach to Finance Urban Services for the Poor in India

With the rising levels of urbanisation, urban poverty is increasingly becoming an important challenge faced by Indian cities. Poverty alleviation programmes are traditionally implemented by the State governments with or without external/ donor assistance and are aimed at providing either income or employment or both to the poor. The 74th Constitutional Amendment has made urban poverty alleviation as an item on Urban Local Government (ULG) list, thereby making them to be responsible for undertaking some steps towards it (but also adding to the burden by not providing corresponding funding mandate). Cities continue to approach poverty alleviation in different ways. An important approach to be taken towards addressing urban poverty is to deploy financial intermediation approaches by establishing special Fund to address it efficiently and in a targeted manner. The experiences of some existing models suggest that it is possible to use finance flows wisely through constitution of specialized Funds for this purpose. This paper argues the need for taking this approach after discussing some existing Fund-based models; the relevance of these approaches to provide Basic Services to the Urban Poor (BSUP) in India is also discussed. The paper also provides a broad framework for setting up an exclusive BSUP Fund to finance the provision of basic services to the urban poor through various channels