The challenge with policy implementation - the case of urban development

Formulating policy is hard, but perhaps easier when compared to implementing initiatives flowing from the policy. The problem is that so much can be lost in translation between the intent of the policy and the version that is actually implemented. This also highlights the folly of resting on the laurels of a good policy. As the example discussed below shows, good policy can be implemented in a manner that makes no dent on the problem.

The Government of India has promulgated policies on metro railways, transit-oriented development (TOD), and land value capture (LVC). A handful of state governments have in turn formulated their own policies and issued certain regulations thereon, especially on TOD and LVC. Karnataka is apparently a pioneer in the implementation of integrated metro rail, TOD, and LVC policies. But a new study of the regulations issued by the State government draws attention to several implementation failings. 

In particular, I can think of four broad categories of deficiencies that prevent effective implementation of policies.

1. Policy design failing - The details are very important in any policy. For example, consider the sale price of FAR or the magnitude of the cess/development charge. Typically the development authorities are inclined to err on the side of revenues maximisation and discount the primary objective of increasing the stock of supply or built-up space in the notified areas. In fact, in case of Bangalore and Mumbai too, there are reasons to believe that the introduction of the concept of base FAR and premium purchasable FAR may have actually lowered the free FAR available since the earlier available free FAR was much higher. It does not help that generalist bureaucrats who take decisions on such matters have shorter time horizons and their resource maximisation preferences dominate over long-term planning considerations. This in turn defeats the very purpose of the intervention. Furthermore, it ends up causing unintended effects like gentrification with its long-term distortions. There may be a Laffer curve type relationship between revenue extraction and FAR rates. 

Or consider the small amount of purchasable FAR (4 and 150 m around stations) or the restrictions/difficulties around availing the additional FAR (minimum plot-size, road width etc). There were just 260 properties around Indira Nagar station, the busiest metro station in Bangalore, which could avail the additional FAR, with half of them being less than 250 sqm. Given restrictions on road width, the actual number of eligible plots may be even lower. Further the FAR of 4 within 150 m of the station will cover only about 1% of the Bangalore city area. Further the CBD and central areas of city remain off-limits for higher FAR and TOD. In simple terms, even the proposed FAR and TOD implementation, leave aside those already implemented, covers a negligible area of the city as to have only a very marginal effect. 

2. Implementation failing - Many policies while in place take inordinate time for operationalisation by way of appropriate rules for its implementation. For example, in Karnataka, the actual operationalisation of the TOD, Metrorail, and LVC policies (compared to the full potential) have been limited. Enabling regulations on set backs, height, parking, open space, road width etc are not promulgated even where additional FAR is allowed, thereby leaving implementation still-born. Often even exact delineation and notification of the ToD areas are not done. It is as though everyone relaxes after a policy is announced, not realising that a policy without enabling regulations is meaningless. 

3. Administrative failing - LVC/TOD policies are often viewed in terms of promulgate-and-forget. But in reality, effective implementation of LVC/TOD requires dynamic engagement to address emergent bottlenecks and revise/refine enabling regulations. And there are likely to be several and unanticipated emergent challenges. For example, the issue of Premium FAR depressing the demand for TDRs is an issue which may require some tweaks to the existing regulations. Or emergent gentrification concerns, always likely, have to be met with appropriate responses. 

4. Co-ordination failures - Finally, with most complex issues, co-ordination among different entities, mainly (in this case) the metro rail corporations, municipality and the Urban Development Authority (UDA) is critical. For example, infrastructure investments should start as soon as TOD/FAR/LVC regulations are put in place. Typically it takes several years before infrastructure investments start - eg. betterment levies being collected for several years after the regulations are in place and LVC is collected. In general, the municipality (and the UDA too) often has the least proximate stake (at least for its officials and councillors) in the metro rail and its sustainability - they don't feel the need to show urgency with utilising their share of funds devolving from the LVC policy. In practice, the money gets diverted to other more pressing concerns.

In many ways these are all to be expected given the priorities of municipal commissioners/mayors, weak state capacity at municipal level, narrow and old-fashioned views of planners, revenues maximisation bias of LVC policy etc. In simple terms, the failing is not with the concept of LVC and TOD, but the manner of its implementation. And I am inclined to think that it will be the same with other states and cities too.