Fulfilling 100 smart city dream: Here is a workable but controversial solution

The call for creating 100 smart cities is not new and was mooted first last year in the 2014-15 Budget. The idea is evidently compelling as there is growing urbanization which requires space in cities that have to grow with the requisite infrastructure. With the urbanization rate now at 40% and growing fast, the compulsion is palpable. Further, there is too much concentration in the big metros and therefore, we should have more of these cities so as to distribute the population as well as potential wealth. This way there will be more balanced growth. Therefore having modern smart cities is necessary from the point of view any planning perspective.

There is an element of skepticism when it comes to building our cities. While creating new ones is laudable, we never get down to maintaining what we have. A look at Mumbai serves as an example. It is the financial hub of the country and the capital of the state which is probably the most prosperous one in the country adding incrementally the highest value addition in the country’s GDP. But the same city is a sad testimony to everything that has gone wrong in our cities. Some of the negatives are: bad roads, low quality of connectivity, proliferation of slums, rise in crime, apathetic civic administration etc. We just have not managed to balance growth with the appropriate infrastructure and super structure. The metro project that has been embarked upon is partial, and the future plans are nebulous and a system analogous to the one in Delhi will take at least a decade to complete if not more leading to horrendous cost overruns (remember the Worli Sea Link cost overrun of 430 percent and time run of five years). This holds to various extents in other cities too.

There are two aspects to this plan. First is that there is need for funding and the second is a change in mindsets. The government has to be the prime driver of this initiative, but frankly there are no funds available. It is also not likely that they can spend more given the fiscal constraints. Let us look at Budget 2014-14, where Rs 7016 cr was provided by the Union Budget. The revised estimate showed Rs 924 crore and the Budget FY16 number is Rs 143 crore for smart cities. For other urban development which includes the JNNURM projects, the budget 2014-15 number was Rs 6273 cr of which only Rs 240 crore was pent. The number for FY16 is just Rs 1 core.

Now we are talking of spending Rs 3 lakh crore or Rs 60,000 crore over annum over the next 5 years, the funding challenge remains. The Centre evidently cannot do so and while the states have been told to shoulder this responsibility partly given that they get more funds from the Centre through the Finance Commission recommendations, they would have their own priorities. In fact, even the capital cities which should logically be the best developed cities in any state are in various states of disrepair with roads, power, water supply, transportation (public and private taxis) being of indifferent standards. Can we really think of states actually trying to reform this set up?

Now several issues concerning cities reside in the domain of our municipal corporations. These entities have run on an ‘as is needed basis’ and deliver whatever is possible given their resources. Hence, expecting them to spend on urban infrastructure has always been a challenge and the JNNURM had worked, albeit with mixed results to get the urban local bodies to create these structures. The issue is always with funding. As long as funds come to these ULBs they get the balance money and make the project proceed. However, any change of guard at the Centre makes schemes like JNNURM redundant and when there is a new programme with different goals, the effort really dissipates.

A way out is to have a BOT system where the private sector gets involved. This is controversial as there will always be allegations that the government is handing over cities to the corporate world. But if this has worked well in roads there is no reason why this cannot be experimented with where the company gets rights to build, charge and then probably finally transfer the rights to the ULB. This will ideologically be difficult to accept as even today one senses that India Inc. is controlling some policies. But privatizing cities is a way out as we can see it happening in a coherent manner.

The second is the mindset which has to change. We always are very enthusiastic when it comes to starting big programmes which are good because any reform in small measures is less likely to have an impact given the size and complexity of the country and economy. However, we do lack in implementation and give up along the way. Further, the absence of audit and any responsibility for non-completion of the projects ensures that there is no one responsible for completing the project. It becomes difficult when there are three levels of government involved along with another set of private contractors – each with different tenures and parties in power.

For this to happen we should target a smaller number- maybe just one city in a state so as to make it more achievable. Otherwise, it could become like our social programmes where Rs 500 crore is to spend on creating schools and this ends up with structures coming up without roofs or chairs not being installed because the programme has run out of funds.

So how should we view the concept of 100 smart cities? Is it another slogan or is it doable. The answer is that for it to go beyond a slogan, we must have a single point of responsibility. Privatization, though a less acceptable solution for the majority, could work better for creating an end-to-end solution. Otherwise, we would go back to having pockets of development in a city – with some cities having good roads, but unsatisfactory transport systems, fair drainage and poor garbage collections and so on. Or the governments have to allocate the money without any change in budgeting and treat it as a committed expenditure. But given the feeble nature of our fiscal balances, this is just not feasible.

If it is to remain in the public domain, then a smaller number must be targeted on a pilot basis and completed so as to serve as templates for other cities. This may be more workable and involve more manageable resources.