An autonomous research institute under the Ministry of Finance


Cost of Urban Infrastructure: Evidence from Indian Cities

Publication date

Jan, 2006


Report submitted to the South Asia Network of Economic Research Institutes (SANEI)


Kala S. Sridhar, O. P. Mathur, A. Nandy


This research study examined the costs of providing urban infrastructure services. The marginal costs of providing water supply are estimated, using data from several cities of India. The findings suggest that the supply of every additional kilolitre of water imposes extra burden on the cities in the Rs. 2.62 to Rs. 5.05 range, as marginal operating costs. Even based on these short-run marginal cost estimates, some Indian cities such as, Jaipur and Pune, are found to be undercharging their water. As far as the other urban services are concerned, cities’ per capita expenditure on basic services such as street lights and toilets appeared to be abysmally low, let alone adequate, in any sense, to meet the demands of an increasing population. The study finds weak municipal finances still the core of the issue.

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