Will the funding for smart cities be enough?
The Cabinet’s approval for 100 smart cities is a welcome step, but the funds allocated are not likely to be adequate for the metros
While most experts have welcomed the Union Cabinet’s approval for 100 smart cities project as a “milestone decision in the development roadmap of India,” others say that the amount allocated is sufficient for small cities but not enough for the metros.
Chaired by Prime Minister Narendra Modi, the Cabinet this week cleared the Smart Cities Mission — under which 100 smart cities would be built — and the Atal Mission for Rejuvenation and Urban Transformation ( AMRUT) for 500 cities with outlays of ₹ 48,000 crore and ₹ 50,000 crore, respectively. Under the Smart Cities Mission, each selected city would get central assistance of ₹ 100 crore per year for five years.
Cities to be developed will be selected through a ‘competition’ intended to ascertain their ability to achieve mission objectives. Each state will shortlist a number of smart city aspirants, which will prepare proposals for the Centre.
The aim of the mission is to more efficiently utilise available assets, resources and infrastructure to enhance quality of urban life and provide a clean and sustainable environment. The 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, power supply, robust IT connectivity, governance, especially e-governance.
“The Cabinet approval for 100 smart cities project is a milestone decision in the development roadmap of India. The concept of smart cities creates opportunity for potential urban sectors t o t ransfor m t hemselves into highly equipped, self sustained and modernised settlements through government aid. The initiative will help reduce pressure on the existing metro cities, allowing disintegration of population evenly,” says Shrikant Paranjape, chairman, Paranjape Schemes (Construction) Ltd.
The scope of improvement under the Smart City Mission is ambitiously widespread to include water supply, sanitation, waste management, transportation, housing for poor, power supply, among others. For a mid-sized city these aspects can be comfortably worked upon and developments can be noticed within the average budgetary allocation of ₹ 500 crore per city. So cities like Varanasi, Vizag, Ajmer etc. can stand to draw huge benefits out of this mission, says Gulam Zia, executive director, Knight Frank India.
However, for a city like Mumbai where transportation projects like the trans harbour Link or the Metro Phase 3 can itself cost upwards of ₹ 10,000 crore each, the proposed amount may not even suffice for a fraction of the interest cost of these projects. In such cases a balanced allocation of resources will be the biggest challenge. Moreover, the fear that real estate may take precedence over the broader economic growth agenda looms large in such situa- tions, as observed in the case of SEZs earlier, wherein the carriage was seen pulling the horse, he adds.
Smart cities will strengthen the infrastructure in Indian cities and drive the economy. The satellite towns will act as magnets of employment. Smart cities are also expected to provide smart solutions for efficient use of available assets, resources and infrastructure with an objective to improve economic efficiency, provide better quality of life and promote sustainable urban development, says R K Panpalia, MD, Wave Infratech.
While the outlay of ₹ 100 crore per city for the Smart City programme may appear to be on the lower side, this would hopefully be supplemented by the state government and the corporations / urban local bodies and more importantly the private sector. However, for private sector players to invest in this space, most cities would have to take a relook at their tariff structure for urban services so that they not only recover the cost of service delivery (which only a few cities currently do) but are also able to service these investments, says Arindam Guha, senior director, Deloitte in India.
Both the smart city programme and the new Urban Renewal Mission which is targeted at bridging service delivery infrastructure gaps would need to work hand in hand to demonstrate benefits on the ground, he adds.