The Ministry of Housing and Urban Affairs (MoHUA) has introduced a number of programmes and initiatives to address urban issues in an integrated way to improve the quality of life of citizens. The launch of centrally sponsored programmes such as the Jawaharlal Nehru Urban Renewal Mission (JNNURM), Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Pradhan Mantri Awas Yojana-Urban [PMAY (U)], Swachh Bharat Mission and the Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) are expected to play a key role in improving civic infrastructure and building capacity at the local level. In an interview with Indian Infrastructure, Kunal Kumar, Joint Secretary and Mission Director – Smart Cities, MoHUA, shares his views on the progress made in the urban infrastructure sector, experience on the biggest policies/programmes, evolving role of public-private partnerships (PPPs), biggest accomplishments of the ministry, progress of the Smart Cities Mission, key challenges facing the sector and future priority areas…
How do you assess the progress made in the urban infrastructure sector in the past two decades?
In the last two decades, the urban infrastructure sector has largely depicted two noteworthy characteristics. First, what can be called “malnourished urbanisation” – urbanisation that is not commensurate with the population influx into the cities. While there has been a decisive increase in the urban population, the growth of infrastructure and services in the cities has not kept pace, leading to a gap between the delivery and the on-ground expectation.
The other characteristic as I have seen in the past two decades is that though the focus on the growth of cities did increase gradually, there was a serious lack of integrated thinking, of convergence between various stakeholders and a right mix of programme and policies for urbanisation. This can be termed as “incoherent urbanisation”.
Combine the two – malnourished and incoherent urbanisation – and you get a city unable to contain its population, a city that fails to provide livelihood, housing and basic services to its citizens. This concoction can drive cities to a virtual collapse and some cities do depict such qualities.
In the past few years, however, all that has changed. With the launch of JNNURM, Smart Cities Mission, AMRUT, PMAY (U), Swachh Bharat Mission and the DAY-NULM, attempt is being made to take integrated and holistic steps to address the deficits accrued over the years in the field of urban infrastructure.
What are the biggest policies/programmes that have shaped the sector?
After independence, urban development was guided under the Five Year Plans (FYPs). The first three FYPs were marked by efforts in housing development, slum clearance and rehabilitation. The Fourth FYP emphasised the need to limit the growth of urban population; the Fifth FYP promoted smaller towns; and the Sixth FYP focused on towns, developing roads, pavements, bus stands, markets, etc.
During the 1990s, the urban sector was accorded greater attention, which heralded the start of the second phase. The Indian Constitution was amended by way of the 74th Constitutional Amendment, which enabled the devolution of powers, funds and functionsInterest in the development of cities was renewed with the launch of JNNURM in 2005 across 65 large cities.
However, the current mix of programmes involving the development of smart cities through the Smart Cities Mission, providing basic infrastructure in cities through AMRUT, Cleanliness and Housing for All through the Swachh Bharat Mission, PMAY (U) missions and creation of employment for the masses through DAY-NULM can be collectively termed as the biggest integrated urban development initiative ever.
How has the role of PPPs evolved in the urban infrastructure sector over the past two decades?
PPP in India has gone through a learning phase and evolved over the last two decades. More and more sectors have tried to initiate PPPs over this period, for example roads, airports, energy, street lights, solid waste management, housing and so on. We are seeing some exemplary success with PPP in infrastructure. However, there is a lot of scope for improvement in both the amount and quality of PPPs going forward.
It is to the credit of the Smart Cities Mission that it has laid greater emphasis on leveraging financial resources ever since it was launched. The philosophy has been to create inherent capacities in urban local bodies (ULBs), enable the leveraging of funds in a prudent manner and let cities decide for themselves from a gamut of different financing options. About 21 per cent of the total proposed investment of Rs 2,050.18 billion under the Smart Cities Mission is indicated to be developed through PPPs. A total of 122 PPP projects worth Rs 62 billion have either been completed or are being executed, as on date, while 53 projects worth Rs 51.99 billion are in the tendering stage. Multiple models have also emerged under the Mission. This is a welcome development.
How different are the challenges of the urban infrastructure sector at present as compared to two decades ago?
In addition to the above mentioned pseudo urbanisation and incoherent urbanisation, we need to view urban infrastructure from the lens of the economy. The urban infrastructure two decades ago must be seen in light of the brick-and-mortar economy, and that of today in light of the merging of the physical space with the technology ecosystem. We have to be conscious of how we leverage technology for it is one thing, to be seduced by the simplification of complexities that technology seems to provide and another, to be able to harness it in the right way, keeping in mind that cities are built around communities and not physical objects or technology alone. That to my mind is the biggest emerging challenge – finding best uses of the technology now available to us to be able to improve the quality of life of people. We need to create “affordable excellence”.
While climate change, unplanned expansion, lack of master planning, limited financing, etc. are real challenges to deal with, I believe that trying to move over from the brick-and-mortar era would be the biggest challenge.
What are some of the strategies needed to overcome these challenges?
If I were to give a city a three-point mantra to overcome challenges in developing/managing urban infrastructure, it would be this:
Cities are complex systems with millions of moving parts, with a lot of interconnections and interdependencies. Operating and managing cities and urban infrastructure is a Herculean task. Experience has taught us that trying to manage these parts individually is an inefficient way of dealing with the matter. We need to develop and manage urban infrastructure in an integrated manner. Technology is a tool available; it’s just a means and not an end in itself.
We need to focus on developing innovative ways to finance our infrastructure. Value capture financing, PPPs, municipal bonds, and tax increment financing are some tools that can be used. We also need to look at changing the regulatory environment as needed to allow more innovations in finance.
Lastly, but most importantly, we must treat the issue of climate change with utmost respect. It is not science fiction – it is real. And it is here. The vagaries of climate change can cause irreparable damage to the best laid infrastructure, very quickly. Impacts of climate change are exorbitantly expensive under the best case scenario and apocalyptically catastrophic to life in the worst. Every city must have a mitigation/adaptation/ resilience strategy for their city.
If we get urban governance right, manage to secure our finances and save our life and property from the impacts of climate change, we have got ourselves on the right track.
What are the ministry’s top priorities for the next few years?
The ministry’s approach is very clear and transparent – it is to address urban issues in an integrated way to improve the quality of life of citizens. It is reflected in its current missions. If you see, the missions cater to all the 4,000-plus towns of the cities in a hierarchy of needs – from cleanliness, employment and housing, which is the very core of all cities, to infrastructure development in 500 cities through AMRUT and the creation of lighthouses in 100 smart cities.
Each mission has a specific area to focus on, but collectively they address every significant aspect of urban life and infrastructure. They work in coherence with each other and leverage their strengths wherever possible. Convergence between them is an important element in their implementation plans. The ministry would continue to spearhead the efforts to meet the challenges and to grab the opportunities that India’s urbanisation is going to offer in the future. Citizen-centric governance in ULBs and ease of living for citizens will be the key focus areas in this effort.
What are the key focus areas under the Smart Cities Mission?
The long-term focus of the Smart Cities Mission is just one – creating a model of urban renewal that is sustainable at the social, economic and environmental levels; a replicable model that can become the lighthouse for the remaining 4,000-odd cities in the country. In order to get that right, we have to ensure that our focus is on the right goals – providing better quality of life to citizens, and deployment of integrated infrastructure and services through the use of smart solutions.
We all know that cities are the engines of economic growth. More than 60 per cent of India’s gross domestic product comes from the urban areas. Cities bring productivity advantages, catalyse innovation, create jobs, help in networking with people and create a virtuous cycle of growth. However, the rapidly surging urban population has left the cities bursting at their seams. In 40 years (1970-2010), India’s urban population has increased by about 250 million. It would take less than half the time for the addition of another 250 million. We currently grapple with myriad problems, which are vestiges of this unorganised growth. Inadequate and substandard housing, crumbling infrastructure and scanty services unable to meet people’s needs are some of the challenges. Some cities appear to be on the brink of a collapse.
The business-as-usual future does not appear great. By 2025, only seven years from now, one fifth of the world’s working age population would be Indian and they would all want to live in cities. Ban Ki-moon, the former UN secretary general once said, “Our struggle for global sustainability will be won or lost in cities.” That’s how important urban future is for India, and indeed for the planet!
It gives me goosebumps to think that India’s urban future depends on how well our Urban Missions fare. Therefore, we would like to focus on empowering cities across the country to be able to make the right decisions for them now and in the future; raise funds for them; and make the best possible use of technology, data and smart solutions to address urban problems. In short, the key focus areas are making cities more liveable, resilient, connected, adaptive and competitive.
What are the targets and timelines of the Smart Cities Mission? What has been the progress so far?
As per their Smart City Proposals (SCPs), all cities have prepared their implementation plans, detailing timelines for the achievement of the physical and financial targets. The target date of completion has been given by the cities in their SCPs:
- Round 1 cities (2019-20 to 2020-21) – Projects worth Rs. 480.65 billion
- Round 2 cities (2019-20 to 2021-22) – Projects worth Rs 836.98 billion
- Round 3 cities (2020-21 to 2021-22) – Projects worth Rs 573.94 billion
- Round 4 cities (2020-21 to 2022-23) – Projects worth Rs 138.65 billion.
The SCM is just one of the ways in which the cities are working to make themselves smart. There are other urban missions like AMRUT, Swachh Bharat Mission (urban), Housing for All, DAY-NULM, which are solving various pieces of the urbanisation challenge that Indian cities pose. Besides, there is a bigger role to be played by bottom-up innovators, citizens and communities within cities. Rome wasn’t built in a day and neither will be smart cities. An earnest beginning has been made and the cities have started working in the right direction. Cities will evolve organically and chart their own paths to their smart futures.
Under the mission, so far we have been able to set up 97 special purpose vehicles and appoint 82 project management consultants across the 100 cities. In terms of physical progress, we have completed 425 projects worth around Rs 80 billion; started the implementation of 782 projects worth more than Rs 300 billion and tenders have been called for about 500 projects worth around Rs 250 billion.
What are the funding arrangements for the Smart Cities Mission?
The Smart Cities Mission covers 100 cities for five years. It is a centrally sponsored scheme and the central government has proposed to give financial support to the Mission to the extent of Rs 480 billion over five years, amounting to Rs 1 billion per city per year on an average. An equal amount is to be contributed by the state/ULBs. Hence, nearly Rs 1,000 billion will be available through government/ULB funds for the development of smart cities. In addition to the central government funds and the matching contribution by states/ ULBs, other remaining project costs are to be mobilised through states’/ULBs’ own resources such as user fees, impact fees, beneficiary charges, innovative financing mechanisms such as PPPs, municipal bonds, pooled finance mechanism, etc., and other central government schemes. Borrowings from financial institutions including bilateral and multilateral institutions, and both domestic and external sources can be utilised as well.
As per the SCPs, 100 cities have proposed to finance 45 per cent of the project costs from the Smart Cities Mission funds, 21 per cent from convergence with other government missions/schemes, 21 per cent from PPPs, 4 per cent from loans, 1 per cent from their own resources and 8 per cent from other sources.
What measures are planned to accelerate private participation in the Smart Cities Mission?
An innovative feature of the mission is to help cities leverage the grants made available to them. The idea is to enable cities to think of mission grants as seed capital and build on that by accessing various other sources of finance, namely municipal bonds, value-capture finance, tax increment financing, land monetisation, PPPs, multilateral loans, among others. Around 118 projects costing Rs 61.60 billion are under implementation through PPPs. It is our endeavour to work with the best industry partners, leverage their strengths, form the right partnerships, focus on the right risk management frameworks and improve governance structures so that the right kind of PPPs can be made possible. The broad categories where PPP investments have been proposed currently are affordable housing, public bike sharing systems, stadiums, public transport, solar rooftop, hospitality, LED street lighting, public utilities, etc. More and more cities are also trying to raise finances through municipal bonds. Three cities, namely Pune, Indore and Greater Hyderabad have already raised close to Rs 5.40 billion.
What are the key issues and challenges in implementing the Smart Cities Mission?
Challenges are at multiple levels. For me, the challenge is twofold: How to complete the mission in time and how to achieve quality implementation comparable to the best in the world.
It is not going to be an easy task. This mission is a first of its kind. There are no templates or prototypes that we can follow. The deadlines are stringent. The scale is huge! Thousands of people are working in the mission mode. I do not see these 100 cities as individual cities – it is a whole, in many ways, a new ecosystem is being developed.
While issues of financing, institutional and technical capacities, and integration does exist, to meet the challenge of time and quality, I need to address three significant issues.
First and the most important idea is that of developing the right kind of networks – human networks, physical networks and knowledge networks. This network of networks embodies the vital ingredients critical to the cities’ success. The human networks we are developing consist of city administrators like CEOs and SPV officials, smart city fellows and interns, domain experts, smart city/urban professionals. Physical networks consist of complete streets, renewable power, water and sewage grids and so on. Knowledge networks focus on industry-government-academia-city partnerships at both the national and international levels.
Second, how to infuse adaptability in the teams and systems that is so vital for cities. As they say, change is the only constant. And that is how it is going to be like in the future. In my experience, projects often get stuck whenever circumstances are not ideal. The situation is very dynamic. I am working on developing capacity at the city level to quickly evaluate what options are available with them instead of staying put when a situation emerges to be different from what was envisaged when planned. Adaptability would be vital after the implementation is complete in effectively managing the cities.
Optimising diversity is another significant challenge within the Mission. You have too much of it or too little, and the mission risks the chance of floundering! Striking the right balance is a big challenge. While we make sure all cities design and implement their projects to suit their unique context we also need to ensure there is enough standardisation so we don’t reinvent the wheel every time for every project.
What are the key priorities for the next year?
Since its launch, the mission has achieved a level of maturity that allows us to focus on accelerating the implementation.
There are 27 integrated command and control centres where work has already started and are likely to be completed well within the next year. Another 32 have been tendered out, some of which will also become operational within the next year. Similarly, 34 complete street projects are now grounded and 10 tendered out. About 32 PPP projects worth almost Rs 50 billion are grounded. We will look at completing them at the earliest. More than 60 smart water and waste water projects worth Rs 60 billion are under implementation. We are focussing on completing most of them by next year, while we continue setting up a robust foundation for the smart city ecosystem in India, as discussed earlier!