India’s Smart Cities Mission Hits & Misses

Notwithstanding some bright spots, the flagship Smart Cities Mission (SCM), which marked its 6th anniversary on June 25, is yet to live up to its tall promises. Their sub-optimal performance, precipitated by the Corona pandemic, raises a number of issues in terms of the challenges and prospects that lie ahead.
Vinod Behl

The Smarts Cities Mission was launched in the backdrop of rapid urbanisation. It was conceived to promote sustainable and inclusive cities with core infrastructure and facilities to enhance the liveability of cities and improve the lives of the inhabitants.

SMC involves city improvement (retrofitting), city renewal (redevelopment), and city extension (greenfield development), besides pan-city initiatives covering larger parts of the city through smart solutions. Besides transforming existing areas like slums into well-planned locations, fully serviced new areas are to be promoted around urban areas to cater to the fast expanding population.

Core infrastructure elements include efficient water and power supply, solid waste management, smart urban mobility and public transport, and affordable housing. Safety and security of citizens are to be taken up through robust IT connectivity, digitalization, and e-governance. The idea is to create a model that can be replicated both within and outside the smart cities. As Anuj Puri, Chairman, Anarock Property Consultants, puts it: “Smart Cities have the capacity to cope with the challenges of urbanisation and also serve as magnets for investments to catalyse the local economy.”

Investments in Smart Cities
The entire mission is supported through ₹1 lakh crore of investment to be ploughed in equally by the Centre and State governments. Housing & Urban Affairs Minister, Hardeep Puri envisages an investment of ₹205,000 crore, though urban experts peg it at an even higher level.

SCM is heavily dependent on private investment and PPP (public-private participation). While garnering such huge investments is a mammoth task, making available the promised investment from the Centre, and particularly the States, is no less challenging, especially since over the last six years some States have not made the expected investment in their smart city projects. Some States that have released the promised amount, have failed to deploy it.

So far, only ₹45081 crores have gone into smart city projects, and less than half (2665) of the 5924 tendered projects worth ₹178563 crores have been completed. This, despite the ₹146125 crore of work orders being issued in 5236 projects.

According to the performance dashboard of the SCM released by the Ministry of Housing and Urban Affairs, some States have not been able to complete a single Smart City project. Amravati in Andhra Pradesh, Bhagalpur and Muzaffarpur in Bihar, and Meghalaya have failed to deliver a single project.

Others that have a poor track record include Moradabad, which has been able to finish only two projects; Karimnagar Smart City in Telangana has utilised only ₹4 crores to complete two projects; Kalyan Dombivali in Maharashtra only 3 projects by deploying merely ₹5 crore; Delhi and Bengaluru only 4 and 5 projects, respectively.

What ails implementation of Smart City projects
The slow pace of implementation was flagged earlier this year by the Parliamentary Committee. Rajeev Chadha (an expert who has handled such projects) attributes operational flaws in the implementation mechanism of Special Purpose Vehicles (SPVs) created by the States.

Says Chadha, “Besides delay in setting up SPVs, there was a lack of adequate skilled manpower, including contractors, vendors, and CEOs. Many States appointed bureaucrats, giving them part responsibility of heading SPVs. As SPVs depend on project development and management consultants (PDMCs), a lack of coordination between them and the bureaucrats, and issues related to payments, marred the progress. Several cities lacked a master plan which is crucial for project planning and execution. In several cases, there was lack of financial due diligence, as a result of which, such projects were found to be non-feasible, even after securing funding.”

It is also seen that cities have to cover a lot of ground on green cover and air quality, water, energy, and mobility.

Positives in the Smart Cities story
Notwithstanding a total proposed government investment of ₹1 lakh crore, 5924 projects costing ₹1.78 lakh crore have been tendered and work orders have been issued for 2665 projects worth ₹1.46 lakh crore. What’s more, some states have performed notably well, utilising Central and State funds. Indore has completed 223 of 277 projects worth ₹3439 crore. Varanasi has a good track record of completing 69 of 100 projects worth ₹2326 crore. In fact, Uttar Pradesh is credited with taking up 7 more Smart City projects viz. Meerut, Ghaziabad, Ayodhaya, Firozabad, Gorakhpur, Mathura, Vrindavan and Saharanpur. Tirupati in Andhra Pradesh has finished 55 of 98 projects.

It is significant to mention that about 60 projects worth ₹13000 crore have been successful in getting private investment under National Investment Pipeline (NIP). The institution of Climate Smart City Assessment Framework (CSCAF) to promote climate actions by Smart Cities and the introduction of data-based mechanisms for governance delivery are other highpoints.

As many as 42 cities have put in place systems to use data for governance delivery. Pradhan Mantri Awas Yojana (PMAY) and AMRUT, incorporated as part of SCM, have done reasonably well. Under PMAY, 1.12 crore houses have been sanctioned and 83 lakh have been grounded, while under AMRUT, 78 lakh sewage and septage connections have been given.

V Suresh, Chairman, IGBC and President, Good Governance India, that deals with city development agenda under Municipalika and tracks the progress of Smart Cities, says that one should judge or evaluate SCM with a sense of balance. “Smart cities in Europe have taken 10-12 years to show any worthwhile impact. Considering that more than a year was lost in formulating SPVs and another year due to the corona pandemic, the performance of Smart Cities in India is fairly good. Especially in view of the fact that it was in 2017 that the DPRs were finalised to carry out projects after a reasonable consultative process.”

He adds, “It is creditable that out of 100, 70 Smart Cities have made their command-and-control centres functional, which have been very helpful in tackling the corona pandemic. Besides, 300 smart roads have been completed and 459 are in the implementation stage. CSCAF has been mitigating the climate change impact, while IGBC has introduced rating for both brownfield and greenfield cities. At least 16 cities have approached us for rating and Rajkot has already got a platinum rating.”

According to Kunal Kumar, Mission Director, SCM, they are going to incentivise ranking for cities by giving them more funds.

What is the road ahead for SCM
Says Rajeev Chadha, “Besides improving the existing ABD model by empowering SPVs and boosting investments, there is a need to look at long-term financing mechanisms, which no city has thought of.”

Some experts suggest putting more emphasis on greenfield cities, and exploring newer models of development. Comments Anuj Puri of Anarock, “In greenfield developments, there is no difficulty related to upgradation and /or improvement of smart systems. Greenfield smart cities would allow better management and forecasting for budgetary expenses, and it would be easier to expand capacities with minimal disruption of city operations. But then, land acquisition could be a major hurdle; so, developing a greenfield smart city would be an expensive proposition.”

Ashwinder R Singh, CEO, Residential, Bhartiya Urban, suggests that to make smarts cities a reality, there is a need to have an exemplary PPP model like the one in countries like Singapore. “Post-covid, health and wellness of citizens has taken centre stage, but under the current SCM model there is very little focus on developing health infra. As such, there is a need to revisit this model.” According to Elias George, Partner and Head Infra, Government and Healthcare, KPMG India, “It is time to undertake necessary mid-term corrections after critical evaluation of challenges while at the same time taking into account successes attained for ensuring that eventual outcomes are met in full measure. Further, interventions are required at the regulatory, policy and programme management and design levels.”

Considering the current slow pace of progress and prevailing uncertainties regarding the corona pandemic, meeting the Smart City Mission’s deadline of August 2022 seems to be an uphill task.