Choosing smart cities easy, implementing change will be the challenge

Hindustan Times | By, New Delhi
Mar 13, 2017 08:32 AM IST

Before 2017 ends, the NDA government will complete the process of selecting 100 cities that will be developed into smart economic hubs, under its ambitious programme to transform India’s urban landscape.

Before 2017 ends, the NDA government will complete the process of selecting 100 cities that will be developed into smart economic hubs, under its ambitious programme to transform India’s urban landscape.

A hike in property prices is not expected soon in cities that have been given the smart tag.(HT File)
A hike in property prices is not expected soon in cities that have been given the smart tag.(HT File)

Sixty cities have made the cut so far after the programme was launched in June 2015.

The chosen cities will have to develop smart infrastructure — 24x7 power and water supply; sewage disposal system, IT-backed efficient public transport, and e-governance facilities.

But work began at a snail’s pace with just 3.3 % of the 731 approved projects completed so far.

Building physical infrastructure will be the easier part of the government’s ambitious smart city mission.

Urban sector experts said the real challenge will be to put institutional mechanisms in place to improve municipal governance and ensure efficient service delivery, if our cities have to become smart.

Currently, a majority of Indian cities have abysmal service delivery standards with decrepit infrastructure, largely on account of lack of capacity of municipalities — the closest governance system to citizens — to undertake reforms and garner resources.

A Brookings India study to show the minimum amenities a city needed to be turned into a smart city, compared three smart-city picks — Vizag, Ajmer and Allahabad — with nine metropolises across Asia, Africa and Latin America having similar demographic and economic traits.

The report released last year found the cities lagging behind on almost all counts — personal wealth, access to basic amenities such as piped water, toilets and electricity.

“The common view of smart cities is narrow and limited to IT, digital solutions. But if we are to take lessons from the previous federally driven city efforts, the smart city mission can only reach its objective if it focuses on specific technologies and more on economic goals, governance reforms and sustainable capital flow,” said Dr Shamika Ravi, senior fellow, governance studies programme, Brookings Institution. She is the lead author of the report.

India’s per capita spending of $17 on urban infrastructure is just 14% of China’s $116, according to the 2010 McKinsey Global Institute report.

The 14th Finance Commission report says municipal revenue accounted for a little more than 1% of the GDP in India in 2012-13. That’s much less than emerging economies such as Brazil and South Africa, where it was 5% and 6%.

“Putting in place smart city systems would be the principal need of the hour. These comprise spatial development plans, municipal finances and talent, empowered mayors and councils, and transparency and citizen participation,” said Srikanth Viswanathan, CEO, Janaagraha.

India does not have a directly elected mayoral system with much more empowered city governments, unlike London or New York. A majority of states have mayors elected by the municipal councilors.

The 74th constitutional amendment act provides for transfer of 18 powers to urban local bodies (ULB), including electing the mayor directly for five years, levying taxes, and urban planning.

But states, fearing that their power will be curtailed, have implemented the reforms patchily.

Under the mission, each of the selected cities has to set up a corporate-style special purpose vehicle (SPV) mandated to implement projects.

Junaid Kamal Ahmad, the World Bank’s country director, said the challenge for India is to design the SPV.

“If you design an SPV to be a parallel system, it will be a parallel system, if you design it to actually be a service-delivery arm that feeds the municipality, or that supports the municipality, than it’s an altogether different story.”

Ahmad cited Johannesburg to illustrate his point. The South African city’s mayor runs six or seven SPVs, and each one acts as a corporate-delivery machine. So water, electricity, solid waste, IT, almost everything has been put in SPVs.

“They are run under company laws with a full governing board and they have both the responsibilities for investment as well as running operations and they are able to manage operations directly but they are accountable to the city. And there is an MoU between the city and the SPV,” he said.

Ravi of Brookings Institution agrees. She said the big challenges are the creation of SPVs with clear terms and conditions.

“….to spur private investments into smart cities and implementation of the 74th constitutional amendment act giving more executive and fiscal powers to ULBs and stronger mayoral leadership,” she said.

According to experts, getting the private sector to invest in urban upgrade programmes is another area of concern.

Out of the total investment of Rs 131,000 crore approved for smart cities, Rs 60,000 crore will come from central and state governments. Rest has to come from other sources, including private investments and municipal bonds.

But Union urban development ministry officials are confident that the private sector will not shy away from investing.

“By June, projects worth about Rs 35,000 crore will be in the implementation stage, of which about 22% investment would be from the private sector,” said a ministry spokesperson.

SR Shrivastava, chief engineer, Naya Raipur Development Authority, admitted that getting private investment in building cities is a Herculean task.

Closely involved in the development of Naya Raipur in Chhattisgarh, the first smart greenfield capital city to come up in India after Chandigarh, Shrivastava knows the difficulty of relying only on state funds.

“New cities have a long gestation period before they become habitable. Private players will have to see value in the overall project. Unless you create value they will not come forward. In Naya Raipur’s case, we first put in place the trunk infrastructure before reaching out to the private sector. States have to act as facilitator,” he said.

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