A few weeks ago the government released the third list of 27 cities included in its Smart Cities Mission.
The 60 cities out of a total of 100 cities to be developed in the next three years include five from Maharashtra, four each from Tamil Nadu and Karnataka, three from Uttar Pradesh, two each from Punjab, Rajasthan and Madhya Pradesh, and one each from Andhra Pradesh, Odisha, Gujarat, Nagaland and Sikkim.
All of these cities will get Rs 200 crore each for improving their infrastructure. The selection process for the remaining 40 cities will start in January next year. The mission’s focus is governance and experts say that the increase in infrastructure spending and redevelopment will lead to an increase in property prices. Some small and medium size cities in the list will also be able to attract investments and thereby create jobs. However, if the government has to really leverage its spending, it has to focus on creating jobs and empower the city administration to take decisions on not just area planning but also economic planning, say experts.
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Sunil Agarwal, managing director, Black OliveVentures, a consultancy on real estate asset management, says as of now public spending on infrastructure and public governance has no co-relation with job creation. Citing Mumbai’s example, he adds, “Job creation and investment in the city so far have been incidental and driven by availability of manpower in a city, rather than quality of life and real estate factors. The conditions in which people live in Mumbai are not great (expensive housing and long commute times). Even in Bengaluru, while there are enough jobs and a stable property market, the infrastructure is crumbling.”
{{/usCountry}}Sunil Agarwal, managing director, Black OliveVentures, a consultancy on real estate asset management, says as of now public spending on infrastructure and public governance has no co-relation with job creation. Citing Mumbai’s example, he adds, “Job creation and investment in the city so far have been incidental and driven by availability of manpower in a city, rather than quality of life and real estate factors. The conditions in which people live in Mumbai are not great (expensive housing and long commute times). Even in Bengaluru, while there are enough jobs and a stable property market, the infrastructure is crumbling.”
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Apart from pushing property prices up because of infrastructure spends and redevelopment, the mission will also ensure that infrastructure development in Tier 2 and Tier 3 cities will attract investments from companies and impact real estate prices.
Amit Bhatt, strategy head- urban transport, EMBARQ, agrees with the premise that only sufficient job opportunities will ensure that the city is truly smart. Cities that have made it to the smart cities list now need to think about not only utilising the funds to create better infrastructure but also plan what economic activity will be required to sustain them over the years. For example, authorities in Faridabad, which is town focused on heavy industries, need to understand that this will not carry it forward for the next 20 years and therefore it needs to develop ancillary allied industries to attract talent and create jobs. It needs to realise that a diverse economic base is essential for it to grow and develop.