Smart Cities in India: An Overview

Overview of the 100 Smart Cities Mission

The Government of India announced its flagship programme- the 100 Smart Cities mission in the year 2014 and was launched in June 2015 to achieve urban transformation, drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology. Initially, the Mission aims to cover 100 cities across the countries (which have been shortlisted on the basis of a Smart Cities Proposal prepared by every city) and its duration will be five years (FY 2015-16 to FY 2019-20). The Mission may be continued thereafter in the light of an evaluation to be done by the Ministry of Urban Development (MoUD) and incorporation of the learnings into the Mission. The Mission aims to focus on area-based development in the form of redevelopment of existing spaces, or the development of new areas (Greenfield) to accommodate the growing urban population and ensure comprehensive planning to improve quality of life, create employment and enhance incomes for all - especially the poor and the disadvantaged. ^[1] On 27th August 2015 the Centre unveiled 98 smart cities across India which were selected for this Project. Across the selected cities, 13 crore population ( 35% of the urban population will be included in the development plans. ^[2] The mission has been developed for the purpose of achieving urban transformation. The vision is to preserve India's traditional architecture, culture & ethnicity while implementing modern technology to make cities livable, use resources in a sustainable manner and create an inclusive environment. ^[3]

The promises of the Smart City mission include reduction of carbon footprint, adequate water and electricity supply, proper sanitation, including solid waste management, efficient urban mobility and public transport, affordable housing, robust IT connectivity and digitalization, good governance, citizen participation, security of citizens, health and education.

Questions unanswered

• Why and How was the Smart Cities project conceptualized in India? What was the need for such a project in India?
• What was the role of the public/citizens at the ideation and conceptualization stage of the project?
• Which actors from the Government, Private industry and the civil society are involved in this mission? Though the smart cities mission has been initiated by the Government of India under the Ministry of Urban Development, there is no clarity about the involvement of the associated offices and departments of the Ministry.

How are the Smart Cities being selected?

The 100 cities were supposed to be selected on the basis of Smart cities challenge^[4] involving two stages. Stage I of the challenge involved Intra-State city selection on objective criteria to identify cities to compete in stage-II. In August 2015, The Ministry of Urban Development, Government of India announced 100 smart cities ^[5] evaluated on parameters such as service levels, financial and institutional capacity, past track record, called as the 'shortlisted cities' for this purpose. The selected cities are now competing for selection in the Second stage of the challenge, which is an All India competition. For this crucial stage, the potential 100 smart cities are required to prepare a Smart City Proposal (SCP) stating the model chosen (retrofitting, redevelopment, Greenfield development or a mix), along with a Pan-City dimension with Smart Solutions. The proposal must also include suggestions collected by way of consultations held with city residents and other stakeholders, along with the proposal for financing of the smart city plan including the revenue model to attract private participation. The country saw wide participation from the citizens to voice their aspirations and concerns regarding the smart city. 15th December 2015 has been declared as the deadline for submission of the SCP, which must be in consonance with evaluation criteria set by The MoUD, set on the basis of professional advice. ^[6] On the basis of this, 20 cities will be selected for the first year. According to the latest reports, the Centre is planning to fund only 10 cities for the first phase in case the proposals sent by the states do not match the expected quality standards and are unable to submit complete area-development plans by the deadline, i.e. 15th December, 2015. ^[7]

Questions unanswered

• Who would be undertaking the task of evaluating and selecting the cities for this project?
• What are the criteria for selection of a city to qualify in the first 20 (or 10, depending on the Central Government) for the first phase of implementation?

How are the smart cities going to be Funded?

The Smart City Mission will be operated as a Centrally Sponsored Scheme (CSS) and the Central Government proposes to give financial support to the Mission to the extent of Rs. 48,000 crores over five years i.e. on an average Rs. 100 crore per city per year. ^[8] The additional resources will have to be mobilized by the State/ ULBs from external/internal sources. According to the scheme, once list of shortlisted Smart Cities is finalized, Rs. 2 crore would have been disbursed to each city for proposal preparation.^[9]

According to estimates of the Central Government, around Rs 4 lakh crore of funds will be infused mainly through private investments and loans from multilateral institutions among other sources, which accounts to 80% of the total spending on the mission. ^[10] For this purpose, the Government will approach the World Bank and the Asian Development Bank (ADB) for a loan costing £500 million and £1 billion each for 2015-20. If ADB approves the loan, it would be it will be the bank's highest funding to India's urban sector so far.^[11] Foreign Direct Investment regulations have been relaxed to invite foreign capital and help into the Smart City Mission. ^[12]

Questions unanswered

• The Government notes on Financing of the project mentions PPPs for private funding and leveraging of resources from internal and external resources. There is lack of clarity on the external resources the Government has/will approach and the varied PPP agreements the Government is or is planning to enter into for the purpose of private investment in the smart cities.

How is the scheme being implemented?

Under this scheme, each city is required to establish a Special Purpose Vehicle (SPV) having flexibility regarding planning, implementation, management and operations. The body will be headed by a full-time CEO, with nominees of Central Government, State Government and ULB on its Board. The SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level, in which the State/UT and the Urban Local Body (ULB) will be the promoters having equity shareholding in the ratio 50:50. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the shareholding pattern of 50:50 of the State/UT and the ULB is maintained and the State/UT and the ULB together have majority shareholding and control of the SPV. Funds provided by the Government of India in the Smart Cities Mission to the SPV will be in the form of tied grant and kept in a separate Grant Fund.^[13]

For the purpose of implementation and monitoring of the projects, the MoUD has also established an Apex Committee and National Mission Directorate for National Level Monitoring^[14], a State Level High Powered Steering Committee (HPSC) for State Level Monitoring^[15] and a Smart City Advisory Forum at the City Level ^[16].

Also, several consulting firms^[17] have been assigned to the 100 cities to help them prepare action plans.^[18] Some of them include CRISIL, KPMG, McKinsey, etc. ^[19]

Questions unanswered

• What policies and regulations have been put in place to account for the smart cities, apart from policies looking at issues of security, privacy, etc.?
• What international/national standards will be adopted while development of the smart cities? Though the Bureau of Indian Standards is in the process of formulating standardized guidelines for the smart cities in India^[20], yet there is lack of clarity on adoption of these national standards, along with the role of international standards like the ones formulated by ISO.

What is the role of Foreign Governments and bodies in the Smart cities mission?

Ever since the government's ambitious project has been announced and cities have been shortlisted, many countries across the globe have shown keen interest to help specific shortlisted cities in building the smart cities and are willing to invest financially. Countries like Sweden, Malaysia, UAE, USA, etc. have agreed to partner with India for the mission.^[21] For example, UK has partnered with the Government to develop three India cities-Pune, Amravati and Indore.^[22] Israel's start-up city Tel Aviv also entered into an agreement to help with urban transformation in the Indian cities of Pune, Nagpur and Nashik to foster innovation and share its technical know-how.^[23] France has piqued interest for Nagpur and Puducherry, while the United States is interested in Ajmer, Vizag and Allahabad. Also, Spain's Barcelona Regional Agency has expressed interest in exchanging technology with the Delhi. Apart from foreign government, many organizations and multilateral agencies are also keen to partner with the Indian government and have offered financial assistance by way of loans. Some of them include the UK government-owned Department for International Development, German government KfW development bank, Japan International Cooperation Agency, the US Trade and Development Agency, United Nations Industrial Development Organization and United Nations Human Settlements Programme. ^[24]

Questions unanswered

• Do these governments or organization have influence on any other component of the Smart cities?
• How much are the foreign governments and multilateral bodies spending on the respective cities?
• What kind of technical know-how is being shared with the Indian government and cities?

What is the way ahead?

On the basis of the SCP, the MoUD will evaluate, assess the credibility and select 20 smart cities out of the short-listed ones for execution of the plan in the first phase. The selected city will set up a SPV and receive funding from the Government.

Questions unanswered

• Will the deadline of submission of the Smart Cities Proposal be pushed back?
• After the SCP is submitted on the basis of consultation with the citizens and public, will they be further involved in the implementation of the project and what will be their role?
• How will the MoUD and other associated organizations as well as actors consider the implementation realities of the project, like consideration of land displacement, rehabilitation of the slum people, etc.
• How are ICT based systems going to be utilized to make the cities and the infrastructure "smart"?
• How is the MoUD going to respond to the concerns and criticism emerging from various sections of the society, as being reflected in the news items?
• How will the smart cities impact and integrate the existing laws, regulations and policies? Does the Government intend to use the existing legislations in entirety, or update and amend the laws for implementation of the Smart Cities Mission?