Implications of alternate policies on welfare of slum dwellers: Evidence from Pune,India

In this paper we examine how slum dwellers value location-based amenities. In most developing country cities, residents living in slums have poor-quality dwellings and limited access to basic public services and amenities. Using data from Pune, India, we estimate the residential location choices of slum dwellers, which are conditional on housing quality, neighborhood amenities, and community structure. We use these estimates to simulate the impact of alternate interventions on household welfare. We find that households derive benefits from housing quality and neighborhood amenities. While relocating households to the periphery has adverse consequences for household welfare, we show that households could be adequately compensated out of the increased tax revenue accruing from alternative uses of the vacated central land.     

Road Funds, User Charges, and Taxes

Insufficient or uncertain budgetary allocations to road maintenancehave resulted in road deterioration that has significantly increasedproduction and transport costs in many countries. To avoid thisproblem, highway proferssionals advocate the establishment ofdedicated road funds, managed by independent road boards madeup of user representatives. The road boards would have the powerto determine both the level of charges for road use and thelevel of expenditure on road maintenance. By contrast, macroeconomistsand public finance specialists have tended to resist the establishmentof dedicated road funds. They argue that road funds reduce fiscalflexibility, do not adequatedly address problems associatedwith the provision of public goods or the internalization ofexternalities, and often are not well managed. In general, there are two long-term institutional options forreconciling fiscal prudence with asset maintenance; a road agencythat is operated commercially (subject to the normal oversightof behavior accorded to privatized monopolies), or a reformedand well-functioning budget process. This article argues thatroad funds must be viewed as a provisional, case-specific intermediatestep in the direction of one of the long-term solutions. Therole and nature of road funds should be assessed not on generalprinciples but on a case-by-case basis through the analysisof likely micro-and macroeconomic effects. The article recommendsindicatiors for use in specific cases to determine whether aroad fund should be introduced, continued, or abolished.