Region: South Asia
The Ministry of Urban Development aimed to provide guidance to State Governments and Union Territories to leverage their assets, and in particular make use of underutilized resources such as land to finance infrastructure. Although in some areas value capture as a tool has been in use for financing urban infrastructure, it has not yet gained ground as a systematic instrument for revenue generation. Further, there is a need to bring together the various stakeholders involved in the financing and implementation of infrastructure projects, the existing mechanisms and the required parameters for local bodies to generate sustainable financial resources.
The VCF Policy Framework has been developed as an essential document to enlighten States and Union Territories of the country with the concepts and the key idea behind introducing VCF mechanisms at the local level to enhance financial strength and thereby provide better infrastructure. In addition to the policy framework, a Guidance Note on one of the VCF tools – Impact Fees – has also been prepared to highlight the practical aspects of successfully implementing impact fees. Many different tools have been in practice for a considerable period in India, as well as in other countries around the world. Success stories of the implementation of some of these tools to projects such as urban transport and urban infrastructure have been compiled as a supplement to the policy framework and the guidance note. With the formulation of this framework policy and guidance note, it is anticipated that the States/Union Territories will be able to implement land value capture mechanisms successfully, in addition to their traditional financing methods. This would further allow them to gain financial sustainability, and thereby bridge the gap between narrowing resources and increasing demand for infrastructure from an increasing urban population.
Updated: August 8, 2023