A 4,00,000 booster dose for economy
The smart cities mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) schemes launched by prime minister Narendra Modi will attract huge investments from international companies and even the private sector which has been shying away from public private partnerships, say experts.
“With the PM’s international overtures already made, the smart cities mission will attract huge investments from international companies and even the private sector which has been shying away from PPPs. The smart cities mission and AMRUT are likely to infuse a t otal amount of ₹ 4, 00,000 crore, once integrated with all other missions like Digital India, Swachh Bharat mission, Housing for all etc,” says Pratap Padode, founder-director, Smart Cities Council India.
However, to successfully implement these schemes, there are many challenges that need to be overcome. Many states are keen on upgrading as many as four to five cities, if not more, to smart cities. Given the budgetary and related constraints, it is unlikely that the urban development ministry’s (MoU) smart city programme would be able to accommodate more than one or two cities in each state. States and urban local bodies may, therefore, need to develop their
This initiative seeks to provide housing to all in urban areas by 2022
own replicable models and plans to upgrade all identified cities to smart cities, while learning from and leveraging the MoUD Smart City programme to the extent possible, says Arindam Guha, senior director, Deloitte in India.
The budgetary outlay for an individual city under both schemes ie AMRUT and Smart City is ₹ 100 crore each every year. Given the significant outlays envisaged for basic infrastructure (like water and sewerage network expansion / replacement) alone, even after state and local government investments, private sector investment would be critical. This investment may not be forthcoming unless the tariff levels (and collections) for urban services are adequate for recovering cost of service delivery and servicing private investments made.
Jaijit Bhattacharya, partner, infrastructure and government services, KPMG in India, says the two biggest challenges for attaining the articulated goals are financing and capacity. The audacious goals being set up would require capital that would be in multiples of the total current size of the Indian economy. It would be a challenge to garner this capital, and a bigger challenge to navigate that capital in an efficient manner into the Indian economy.
That brings the second set of challenges, that is the capacity to absorb this capital and to create the cities and effect the rejuvenation that is planned. The capacity includes capacity of the financial systems, the industries, the construction capacity, the project management capacity, the supply chain capacity etc, he says.
However, this goal would open up a plethora of opportunities ranging from the opportunity to be able to deliver the cities to the ability to innovate and to export the capabilities to other economies. The cities goals would lead to a very exciting set of opportunities for the industry, academia and start-ups, he adds.