The Smart Cities Mission which envisions the “smart” development of select Indian cities is one of the premier initiatives of the central government. The mission was launched by the government in June 2015 with the release of guidelines and a mission statement for the 100 Smart Cities project. The mission has been allotted a budget of Rs 480 billion for five years.
While the concept of a smart city lacks a clear, set definition, it is widely accepted that it varies from city to city, and essentially involves “urbanising” cities. Thus, “smart” is a relative term. The extent of “smart” features required to be put in place in a city will depend on the existing level of development as well as the targeted level of development. An examination of smart city proposals (SCPs) reveals that a holistic approach has been proposed across cities, in a bid to renew the entire urban ecosystem. The mission aims for comprehensive development of the selected cities, at the institutional, physical, social and economic infrastructure levels.
After the first round of selection of 20 cities was concluded, the government announced 13 new cities in the next round (May 2016). Detailed plans have been chalked out for these 33 cities in terms of their “smart development”. Indian Infrastructure provides a snapshot…
The 33 cities selected under the mission have different focus areas, depending on the current level of infrastructure development. Across these cities, there are over 1,500 projects worth at least Rs 720 billion (the cost of only those projects has been considered of which information was available) across a vast variety of sectors such as energy, mobility, housing, water supply and sewerage systems, waste management, safety and security, governance, education, health care, public amenities, rainwater harvesting, etc.
Projects to be undertaken in the cities essentially fall under the broad categories of infrastructure development and information and communication technology (ICT) initiatives. Key projects typical in the mobility sector include traffic management systems, smart parking systems, development of roads and non-motor transport corridors, e-rickshaws, etc. In the energy sector, most projects involve the installation of consumption meters, deployment of supervisory control and data acquisition and other similar technologies, tapping of renewable energy sources, etc. A number of housing projects involve slum redevelopment as well as construction of new housing societies. With regard to water and sewerage systems, the routine type of projects are those for the provision of 24×7 water supply, smart metering, installation of energy-efficient pumps, etc. In this space, there are also projects related to the development of sewerage systems and wastewater recycling.
Waste management is another area that has a significant number of projects. Those for geotagging of bins, door-to-door waste collection, solid waste management systems, etc. are common across a number of selected cities. A number of proposed projects also involve the installation of safety and security systems. Some of these are the installation of fire hydrants, equipment for firefighting, disaster management systems, and the deployment of closed-circuit television cameras on the streets.
Other key projects pertain to digitisation of classroom learning in schools, creation of healthcare centres, development of parks and recreational areas, street lighting, rainwater harvesting, restoration of heritage monuments and sites, etc.
Implementing agencies: SPVs
The key implementing agency of any given smart city project will be the special purpose vehicle (SPV) that is to be established for each city. A typical SPV will be headed by a full-time chief executive officer and its board will comprise nominees from the central government, as well as the respective state governments and urban local bodies (ULBs). The SPV will plan, appraise, approve, release funds for, implement, manage, operate, monitor and evaluate the smart city development projects.
The state governments and ULBs are mandated to ensure that a dedicated and substantial revenue stream is made available to the SPV so as to make it self-sustainable and to enable it to evolve its own creditworthiness for raising additional resources from the market. Project execution can be through joint ventures, subsidiaries, public-private partnerships (PPPs), turnkey contracts, etc. suitably dovetailed to revenue streams.
As present, barring the New Delhi Municipal Corporation (NDMC), Chennai and Coimbatore, all the other cities (of the 20 announced in the first round) have SPVs in place. Formation of SPVs for the 13 cities announced in the second round will be undertaken soon.
An investment of Rs 508.02 billion was proposed for the 20 cities announced in the first round. For the 13 cities announced in the second round a total investment of Rs 302.29 billion has been planned. Together, these 33 cities selected under the mission entail an investment of at least Rs 800 billion. Clearly, the financing requirements are huge.
As per the SCPs of various cities, the main sources of funds are outlays by the central government (under the Smart Cities Mission) and those by the respective state governments. Besides, funds are also likely to be diverted from the ongoing schemes of the central and state governments.
While at the state level these schemes may vary, some important central schemes that will financially assist projects proposed in the SCPs are the Pradhan Mantri Awas Yojana (housing projects), the Atal Mission for Rejuvenation and Urban Transformation (for transportation/mobility projects, water supply, etc.), Digital India (for ICT implementation/e-governance projects), Skill India, the Integrated Power Development Scheme (for power projects), the Swachh Bharat Mission, the MNRE Solar City Mission, the National Urban Livelihoods Mission, and the National Health Mission. Convergence with such schemes will be an important source of financing for the Smart Cities Mission. Further, international funding agencies such as the Asian Development Bank and the World Bank are also key sources of funds, and some financial commitments have been made for select cities. Private sector participation (through PPP projects) will also be crucial to bring in finances from the private sector.
There are certain risks that could impact the successful implementation of the Smart Cities Mission. For instance, the digital divide that exists among citizens poses a risk of non-inclusion of those without access to the internet. These citizens are not likely to benefit from the potential gain from those projects that involve ICT implementation for better services. On the capacity side, the implementation of SCPs will require skills that are not available across various government agencies and will routinely require the formulation of strategies to deal with day-to-day challenges.
The scale of the mission is immense, given the involvement of the government machinery and the task at hand. This is also an opportunity for various stakeholders. According to the National Association of Software and Services Companies, the Smart Cities Mission can create business opportunities worth $30 billion-$40 billion for the information technology industry over the next five to ten years. These opportunities will emanate from the ICT-based projects that are planned to be taken up across all the selected cities.
There will also be tremendous scope for urban planners, equipment and technology providers, etc. However, certain issues need to be addressed before the transformation of a city into a smart city is possible. The current situation reflects fragmented accountability where cities are subject to rules and regulations drawn up by the centre, state and district administrations. Also, not all departments that operate in a city have a central command and thus departments are often not coordinated. The approach for developing these cities into their “smart” versions calls for a concerted effort by all the stakeholders involved. Approaching the mission in silos will only serve to thwart it.
The way forward
The successful implementation of the Smart Cities Mission rests crucially on a collective approach by the government (central and the respective states) and the citizens. Political will and the technical capability to engage citizens in policymaking will shape these urban centres. In this sense, building social capital is of prime importance. Technology is another crucial factor which will bridge the existing gaps in the system, as well as enhance efficiency and governance levels.