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Making Smart Cities

By Ibu Sanjeeb Garg

Beating the Rhetoric 

The Smart Cities Mission, which intends to take advantage of the developments in information technology in building the urban development strategy, across 100 cities, is one of the flagships programmes of the Government of India in order to give fillip to urban development.  Continuing with the practise of announcment in phases recently the government announced the list of nine new Smart Cities taking the total to 99.

In discussing Smart City one must understand what drives the core of this mission. The mission document does not clearly identify one defintion of a Smart City. This does not mean that it doesn’t have a set defined objective. The primary objective of the Mission is to develop cities that would provide core infrastructure. It would also seek to give a decent quality of living to the citizens by providing sustainable solutions. The cities would seek to do the same by integrating information technology or ‘smart solutions’.

The guidelines suggest that the core infrastructure elements in a Smart City will include: (i) adequate water supply, (ii) assured electricity supply, (iii) sanitation, including solid waste management, (iv) efficient urban mobility and public transport, (v) affordable housing, (vi) robust IT connectivity, and (vii) good governance.  ‘Smart’ solutions may include (i) energy efficient buildings, (ii) electronic service delivery, (iii) intelligent traffic management, (iv) smart metering, (v) citizen engagement, etc. However these are not conclusive and are merely indicative in nature.

In 2015 competition for the Smart City challenge was drawn. During the middle of 2015 different states sent their own nominations for the Smart City challenge. Subsequently in the next few months the Ministry of Urban Development selected 100 of those cities to participate in the competition. These cities were selected on the basis of the parameters that the Ministry of Urban Development had drawn.The cities that were selected as eligible were required to develop their smart city plans (SCPs) and compete against each other. Once the plans had been declared the winning cities are being announced in batches from time to time. Since the inception of the programme cities from across the length and breadth of the country have been selected ensuring that the urban push is not limited to one geographical part of the country alone.

The cities which had to prepare their SCPs had two primary strategic components. These were area-based development, and pan-city development.  The area-based development would cover a particular area of the city. It could either have a redevelopment model, or it could be a completely new development.  The Pan-city development would envisage application of certain smart solutions across the city to the existing infrastructure.

Once the mission kickstarts after the selections are completed it will be implemented at the city level by setting up a Special Purpose Vehicle (SPV).  The SPV will plan, approve, release funds, implement, manage, monitor, and evaluate the Smart City development projects.

The SPV in this case will be a limited company incorporated under the Companies Act, 2013 at the city-level.  It will be chaired by the Collector/ Municipal Commissioner of the Urban Development Authority.  The respective state and the Urban Local Body (ULB or municipality) will be the promoters in this company having 50:50 equity shareholdings.

The central government will provide financial support of up to Rs 48,000 crore over five years, that is, an average of Rs 500 crore per city.  The states and ULBs will have to contribute an equal amount.  For the 2017-18 budget the Central Government has allocated almost 4000 crores. The states and the ULB’s have to envisage how to raise their part of the funding. While most of it would perhaps be from fees, loans from credit instuitions new instrutments like municipal bonds could also perhaps play a vital role in financing the scheme. Yet while implementing this scheme the issue of finances for urban and local bodies is going to be an issue in itself because traditionally local bodies have not been able to earn much taxes. If the scheme has to become a success local bodies will have to find new ways of generating capital for the scheme.

Further in order to improve the finances of the ULBs, committees have made various recommendations, which include legislation to give more taxation powers and autonomy to ULBs for improving their revenue collections. ULBs could raise their own revenue by tapping into land-based financing sources, and introducing reforms to strengthen non-tax revenues (such as water and sewerage charges, parking fees, etc.).The government has recently introduced a few policies and mechanisms to address municipal financing.  Examples include value capture financing through public investments in infrastructure projects, and a credit rating system for cities.  In a first of many in June 2017 the Pune Municipal Corporation raised Rs 200 crore by issuing municipal bonds.

According to the Census 2011, India’s urban population was 377 million.  The Smart City Mission in its full strength would impact about 25% of the population of the country. It will undoubtedly give the Indian economy a new round of push and a new tracetory of growth and development.

 (The views expressed by the author are personal)

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