Partnering for Success

The government must assure investors and partners about the commercial viability of their Smart City investments to successfully address funding gaps and implementation hurdles

Anil Chaudhry, MD& Country President, Schneider Electric India

There's a nationwide debate on the government’s latest move to develop 100 Smart Cities. Given that most metropolitan areas are bursting at the seams due to a 40 percent urbanisation rate, many stakeholders are eagerly looking forward to the creation of these Smart Cities. Presently, there are plans to spend Rs 48,000 crore across India to create these 100 cities. City selection will be based upon their population, area and some competitive norms defined by the government. It’s no surprise that India’s most populous state, Uttar Pradesh, will have 13 Smart Cities. Tamil Nadu with 12, Maharashtra at 10 and Karnataka and Gujarat with six each follow UP. Each chosen city will receive Rs 100 crore annually for five years from the Centre. Funding Concerns Though the government’s plans seem to be moving forward steadily, voices of caution are arising from some sections vis-à-vis the funding required. A reality check seems perfectly in order if one looks at the funding requirements of creating Smart Cities. Greenfield Cities with a population of about 500,000 to one million will probably take around eight to ten years for completion and will require significant investments, according to a DNA newspaper report from June 27, 2015 titled ‘Investors seek enabling norms for smart cities’. The present funding allocations from the central government are just enough to jumpstart this ambitious initiative. However, there needs to be greater clarity on how the additional funds will be garnered. Multiple ways of deriving these funds through joint public-private initiatives, innovative taxation policies, revenue sharing models and even citizen-oriented crowd funding, to name a few, are certainly the need of the hour. Of course, not all Smart Cities will need the same amounts, since the costs will differ for different cities that are at different stages of their requirement in the ‘smart’ cycle. While retrofitting and Brownfield projects may not cost as much as Greenfield initiatives, these will, nevertheless, not come cheap. Many cities will need to upgrade their infrastructure to deploy the latest smart technologies to provide world-class infrastructure in utility services, sanitation, security, healthcare, traffic management and other segments. A couple of simple yet good examples of this are the free Wi-Fi in Bengaluru and city surveillance in Puri, Odisha. Smart Cities remain connected 24x7 to ensure the highest living standards by utilising technology in all aspects of creation, management and maintenance. With last-mile connectivity and automation in every sphere being vital, Machine to Machine (M2M) and Internet of Things (IoT) technologies will be mandatory. The programme should be implemented public-private partnership (PPP) model, which will include urban local bodies and private developers, among others, as partners. Promoting the PPP Model Whereas the PPP model would be excellent for utilising the best of both worlds from the public and private domains, it may not necessarily help in addressing the funding gap for each Smart City. It is imperative to get both the public and private sectors together to devise a commercially-viable policy to attract national and international investments, institutional or private, in procuring funds for each of the Smart Cities being planned. Constant monitoring and central oversight will also be crucial if most of the 100 Smart Cities are to be completed, or be anywhere near completion, by the official deadline of 2022. As past experience has shown, a mere allocation of funds will not ensure that projects are implemented as planned. Public bodies and other entities sometimes leave allocated funds unutilised and, in some cases, even untouched. If the country’s problems of overcrowded cities and the concomitant travails of rapid urbanisation are to be addressed, it’s imperative that we learn from our own past experience. The crux of the matter lies in whether the government can assure investors and other partners about the commercial viability of their Smart City investments. The PPP model has worked very well for a select set of infrastructure projects but has not been consistently successful in a majority of projects across India. It is clear that investors will need reassurance that there are firm plans in place to overcome conventional challenges endemic in infrastructure projects. Single-window clearance and online approvals would be one way to reassure domestic and foreign partners. Success stories related to the creation of world-class airports via Greenfield and Brownfield ventures serve to emphasise the fact that Smart City investments can bear fruit. Eventually, however, the overall success of the 100 Smart Cities’ initiative will depend upon how well funding and implementation issues are addressed.