New Delhi: Government is mulling setting up a Rs 1,000 crore Credit Risk Guarantee Fund to encourage banks to give loans to the poor, Prime Minister Manmohan Singh said on Tuesday even as he asserted that policies cannot have one-size- fits-all approach towards both big and small cities.

"To encourage banks to lend in significant volumes to the economically weaker sections and low income groups, we are considering the establishment of a Credit Risk Guarantee Fund with a corpus of Rs 1,000 crore in the current year," Singh said in his speech at the national conference on JNNURM.

He maintained that the experience of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) has been "mixed" since it was launched in December 2005.

"But we are encouraged by the good work that has been done and also the lessons learnt. Perhaps, the most important achievement of JNNURM is that there is much greater awareness today of the need to plan for urban habitats consistent with aspirations of modern India," Singh said.

The government had appointed two committees- headed by Arun Maira and Isher Ahluwalia- and is likely to implement some of the recommendations made by them to improve JNNURM.

Referring to Ahluwalia's recommendations, Singh said, "Some of these include introducing a local bodies finance list in the Constitution, empowering the bodies with exclusive taxes and unlocking land value by putting in place a transparent and accountable mechanism of public land..."

He cautioned against having an all encompassing policy. "Our policies cannot have a one-size-fits-all approach towards both big and small cities," Singh said.

The Prime Minister said rapid growth will bring a faster rate of urbanisation. As a result, urban population is projected to increase from 377 million today to 600 million by 2031.

"Today urban India generates two-thirds of India's GDP. Leveraging India's urban transition presents a significant opportunity for development and growth.... We must focus on increasing livelihood opportunities in industry and services sectors and improving productivity in the agricultural sector," Singh said.

He rued that master plans in the past did not consider spatial requirements for living and working of the poor and insisted that this must change.

"City planners must rethink traditional concepts of town planning," Singh said.

"Unless our institutions are reformed and governed well, they will neither attract the huge investments required to build and maintain city infrastructure nor deliver efficient services in a sustained manner," he said.

The Prime Minister suggested that smaller cities will have to be treated differently from big cities and metros with regard to financing, content and pace of reform. Public private partnership should be encouraged to play a larger role in big cities.

Interestingly, Singh batted for Citizens' Charters for delivery of services to ensure that public agencies and private sector service providers are accountable to citizens. Team Anna has been demanding that Citizens' Charter be brought under the Lokpal while the government is opposed to it.

(Agencies)