On 29th April 2015, the Union Cabinet led by the Prime Minister Narendra Modi allotted close to Rs.1 Lakh Crores (around €14 Billion) towards urban development. The amount will be split almost equally between two mission – Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation of 500 cities (AMRUT). The former appears to lean more towards Greenfield/smaller cities(even though retrofitting and redevelopment are also possible), and the latter (AMRUT) could have a bigger impact on existing major cities. According to estimates, India’s urban population contributes over 60% of India’s GDP, which is expected to 70% in another 15 years.
Smart Cities have been one of the major priority areas of Mr. Modi. During his tenure as the Chief Minister of the state of Gujarat, Mr. Modi conceptuatised GIFT City (Gujarat International Finance Tec City), which is the state’s first (and perhaps India’s first) greenfield smart city. GIFT is nearing completion and is expected to become one of the major global financial hubs in the near future.
(Artist’s view of GIFT City on completion – Image credit: narendramodi.in)
In the first Union budget of the Narendra Modi government presented in July 2014, an ambitious plan to develop 100 smart cities was announced, and an initial outlay of Rs.7060 Crores (about €1 Billion) was proposed.
The latest announcement of allocation of Rs.1 Lakh Crores is the next logical step in the journey towards 100 smart cities. As per the official press release, “under smart cities initiative, focus will be on core infrastructure services like: Adequate and clean Water supply, Sanitation and Solid Waste Management, Efficient Urban Mobility and Public Transportation, Affordable housing for the poor, power supply, robust IT connectivity, Governance, especially e-governance and citizen participation, safety and security of citizens, health and education and sustainable urban environment.”
Some of the major highlights of the smart cities programme are
- Rs.48,000 Crores for 100 Smart Cities
- Each of the selected 100 cities will receive assistance of Rs.100 Crores per year for five years
- The rest will likely come from the respective states where the smart cities are located
- The cities will be selected through a “City Challenge Competition” which will link “financing with the ability of the cities to perform to achieve the mission objectives”.
- All the states will have at least one smart city
- “Special Purpose Vehicles (SPV)” will be created for each city to execute the plans
- Public-Private Partnership model will be used by states to mobilize private investments
The government deserves huge praise for envisioning a massive initiative of this scale, and putting in place a framework for implementation of the plan. However, such initiatives come with their own set of challenges. Given below are a few challenges that are significant but not insurmountable.
- Funds outlay – Rs.500 Crores for each smart city over a 5 year period is considered quite low. According to Mr. Pratap Padode, Founder & Director, Smart Cities Council of India, a Smart City could require as much as Rs.60 Lakh Crores over a 20 year period. It is obvious that additional private funds have to be mobilized in order to meet the funds requirement.
- Role of states – Apart from the funds from the central government, the respective state governments will have to contribute not only in terms of funds, but also in terms planning and execution. Each state has to identify prospective smart cities with the state, participate in the “City Challenge Competition” and come up with its own plan for implementing the smart city projects in the state.
- Land acquisition – If a smart city is proposed to be a greenfield project, land will have to be acquired by the state governments. Land acquisition is not only politically sensitive, but also can be used by speculators to drive up the land prices, thereby escalating the overall costs of the smart city project.
- Upgradation of infrastructure – If existing old cities are proposed to be made smart cities, there is the challenge of completely upgrading the existing infrastructure through means including retrofitting/redeveloping can be a major task.
The government is moving in the right direction with the smart cities initiatives, and has made a good start by allotting Rs.1 Lakh Crores toward urban development. It is now upto the state governments to make use of the support offered by the central government in making the smart cities programme a remarkable success.
(This article originally appeared in Intersolar India portal)