The Modi Years: How close is India to getting 100 Smart Cities?

• 100 cities selected for Rs 500 crore central grant
• Only small pockets and populations in each city stand to benefit
• Critics call it ‘smart enclave scheme’
• Slow progress as only 1.83% of the funds utilised till March 2018
• Many cities have seen evictions and displacements

Building 100 smart cities was an election promise of the Bharatiya Janata Party in 2014. After coming to power, the Modi government allocated Rs 7,060 crore for this purpose in its first budget. It formally launched the Smart Cities Mission in June 2015, with an allocation of Rs 48,000 crore. Over the next two years, 100 cities were selected for central grants of Rs 500 crore each.

The mission guidelines acknowledge there is “no universally accepted definition” of a smart city. But the mission objective is described as promoting “cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions.”

The core infrastructure must include the assured supply of water, power, sanitation, solid waste management, public transport and affordable housing “especially for the poor”. The smart solutions are largely technology-based interventions such as traffic management using cameras and public transport using mobile applications and the Global Positioning System or GPS.

But critics say the mission is creating “smart enclaves” at best. Analysis by the Centre for Policy Research shows small slices of land benefitting small fractions of the population in the selected cities are set to claim around 80% of the total funding under the Smart City Mission.

Analysis by the non-profit Housing and Land Rights Network shows many of the winning cities’ proposals do not contain anything for marginalised sections and do not even mention affordable housing.

Progress is implementing the mission has been slow – only 1.83% of the funds released by government had been utilised till March 2018.

How were the cities selected?

In 2015, the ministry of urban development solicited proposals from municipal corporations and state governments outlining the smart city projects they wanted to implement.

The ministry capped the number of cities that could be selected from one state based on the size of its population and the number of towns located there.

Twenty cities were selected in the first round in January 2016, followed by three more rounds in September 2016, June 2017 and January 2018, taking the tally to 100 cities. The total number of approved projects is 5,151.

How are smart city projects funded?

The cost of the winning proposals range from a little over Rs 777 crore for Port Blair to around Rs 6,200 crore for Chandigarh, later revised to Rs 5,600 crore.

Each city gets Rs 500 crore of central funds, matched equally by the state, as seed funding. It must raise the rest of the money independently to implement its plans.

The ministry’s document on the financing of Smart Cities lists a number of ways a local body may raise funds – user-charges, public-private partnerships, borrowing from financial bodies, municipal bonds and convergence with other schemes.

The Pune municipal corporation issued municipal bonds in June 2017, a move that came with increase in taxes and user-charges. In Udaipur, citizens protested against a fivefold increase in charges for water and electricity.

Analysis by the Centre for Policy Research shows that almost 70% of the funds are “sourced from public sources”. In the winning proposals in successive rounds, there is a “reduction in reliance on market-based sources of finance”.

What forms can the development take?

Smart city development can take two main forms – area-based development, which is limited to small pockets of urban territory, and pan-city development, which extends to the entire city.

Area-based development can range from:

1. Retrofitting – installing services and utilities within a pre-existing colony
2. Redevelopment – wholesale razing of existing development to rebuild
3. Greenfield projects – setting up a smart area and a previously vacant one

While some cities such as Bhubaneswar has settled mainly on retrofitting, Bhopal has undertaken a complete redevelopment of its project area.

Most pan-city development projects involve the use of “technology, information and data” to improve services. In many cities, this has translated into mobile application based, GPS-enabled public transport and bike-sharing systems.

According to the Ministry’s website, area-based development projects across the 100 cities are worth Rs 1,64,204 crores while the pan-city ones amount to just Rs 38,914 crores.

This is why the Housing and Land Rights Network has criticised the mission as the “smart enclave scheme”. Analysis done by the non-profit shows the percentage area of the total city covered by area-based development varies from 61% in Kavaratti, Lakshadweep to just 0.3% in Ludhiana, Punjab. With the area, the impacted population also varies widely – from 77% in Port Blair, Andaman and Nicobar Islands, to just 0.8% in Pune.

In Chandigarh, the city with the maximum budget outlay for smart city projects, a single sector is getting 90% of the proposed budget of Rs 5,600 crore.

What is the progress so far?

Despite cities having some plans ready from even before they are selected, progress has been slow.

Till February 2017, just 3% of the approved projects had been completed.

By July 2018, this had gone up to 21.56% of approved projects.

By December 2018, the number of completed projects had risen to close to 33%.

However, in terms of funding, the completed projects represent a small fraction of the total. In July 2018, a report of the Parliamentary Standing Committee that examines the work of the urban development ministry said that only 1.83% of the funds released by government had been utilised till March 2018. By December 2018, 50% of the first 20 Smart Cities had not utilised even 50% of their funds.

The ministry told Parliament in December that the pace of completion picked up in 2018. It attributed the delay to the time taken – 12 to 18 months – to set up the special body the scheme requires states and cities to form to execute the plans.

Who runs smart cities?

To implement the smart city projects, the winning city needs to set up a “Special Purpose Vehicle” in the form of a company under the Companies Act 2013.

Special purpose vehicles were also formed under the Jawaharlal Nehru National Urban Renewal Mission, the United Progressive Alliance government scheme which was the precursor to the Smart Cities Mission. Multiple companies were created for the implementation of specific projects, mostly infrastructure ones.

Under the Smart Cities Mission, however, only one company is formed to handle every type of project in a particular city. For example, the Bhopal Smart City Development Corporation will own and manage everything from roads, sanitation, housing and parking in certain areas of the city, which will no longer come under the purview of the Bhopal Municipal Corporation.

Each company’s board will have nominees of the government of India, the state government and the municipal corporation. Private parties and financial institutions investing in the company can be members, provided the majority membership lies with government. The special purpose vehicle does not require any elected representative.

Urban development experts and activists say this creates a potential conflict with the municipal corporation, an elected body whose members are answerable to the public.

“The Smart City Mission appears to bypass the democratic process,” said Persis Taraporevala, a researcher currently pursuing her PhD on the subject.

In Bhopal, there has been friction between the smart city corporation and local politicians. In Pune, however, elected representatives have been included in the board.

Activists fear that the functions of the municipality will slowly shift to the Smart City company and the private members on the board could gain enough power to influence all aspects of governance.

Who gets space in smart cities?

The Housing and Land Rights Network studied the smart city proposals from a human rights perspective and found questionable approaches to migrant labour and the homeless. While some cities proposed to build shelters and low-cost accommodation, others advocated strict action against any form of “squatting” and “encroachment”.

The proposals lack “concrete plans on how housing will be provided to the urban poor and the most marginalized individuals, groups, and communities”.

On the ground, the project has led to evictions and displacement in several cities.

Read more

Who’s the Smart City for? As India develops its decrepit urban centres, the poor have to suffer

Everything you wanted to know about Narendra Modi’s 100 smart cities

This article is part of The Modi Years series which recaps the major milestones, controversies and policies of the BJP government.