Smart Cities and the North East: A Pipe Dream?

With its heavy reliance on central support and an economy that is still trying to find a strong foothold, the North East Region needs planned intervention to ensure sustainable development


With the Prime Min­ister introducing a Smart City vision for urban development, most cities in the country are com­peting to make it to the 100 cities quota, for which the initial plan has been announced. The Ministry of Urban Development (MoUD) ex­pects to build smart cities from those that already have a proven track record in city planning and management in aspects such as city development, vision, transparency, efficiency and financial stability. This scheme can play a crucial role in reshaping the troubled socio-eco­nomic conditions of many cities, in­cluding those in the North East Re­gion (NER) states – Arunachal Pradesh, Assam, Manipur, Megha­laya, Mizoram, Nagaland, Sikkim and Tripura. The question one needs to ask is: does the smart city scheme hold any hope for the NER states? As per the 2011 census, the dec­adal rate of urbanisation of NER (37 percent) is higher than the na­tional figure (32 percent) but the average urbanisation level of NER is 18 percent, and only Mizoram (52 percent) is above the national ur­banisation level (31 percent). Also, the NER states comprise only 2.2 percent of India’s urban population. Considering the motive of the Cen­tral government – to focus on smart city development in states with big­ger urban population – the NER states are likely to be sidelined in this scheme. An April 12, 2013 article titled ‘Special Category status and centre-state finances’ on PRS Legislative Research’s official blog reports that in 1969, the 5th Finance Commis­sion introduced preferential treatment in the form of central assis­tance and tax breaks for a special category of states due to various rea­sons such as hilly and difficult ter­rain, low population density, sizea­ble share of tribal population, strategic location along the national borders, economic and infrastruc­tural backwardness and weak state finances. The NER has been receiv­ing enhanced central support since then. The region is unable to yield a substantial Gross Domestic Prod­uct (GDP), and relies heavily on the Central government’s assistance and other multilateral financial in­stitutions for funding. It is also vital to consider that the NER states were created based on socio-politi­cal-ethnic grounds, rather than purely economic considerations. According to the North Eastern Region Vision 2020 document published in 2008 by the Ministry of Development of North Eastern Region (DoNER) and North East Council (NEC), there is a slight de­valuation of the rupee in NER as the cost of all inputs for development projects are relatively much higher in this region (about 15 percent higher than in other developed states). The Jawaharlal Nehru Na­tional Urban Renewal Mission (JN­NURM), the flagship programme under the previous government at the Centre, had a special provision for the NER with 90:10 (Centre:State) share of funding. In the case of the Smart Cities pro­gramme, till now, the Centre has not indicated any specific scope to ad­dress the differential situation in the NER states. The High Powered Expert Committee (HPEC) on Investment Estimates in Urban Infrastructure of Indian Cities has assessed a per capita investment cost (PCIC) requirement of Rs. 7 lakh crore over the next 20 years. This works out to a whopping Rs. 35,000 crore every year, to put the requisite infrastructure for Smart Cities in place. In contrast, only INR 7,060 crore had been earmarked in the last fiscal year to ‘provide the necessary focus’ on the scheme. The ministry is relying heavily on industry involvement through public private partnership (PPP) to achieve these targets. However, most infrastructure development projects in the NER are usually taken up by the state governments, through investment from the Central Plan Fund, and there is minimal private intervention. As per an Asian Development Bank report published in 2006, individual state policies are acting against extremely generous public promotions provided by the central government, for attracting private investment in the NER. Apart from these concerns, none of the NER cities have so far managed to garner the interest of potential investors and developers from the US, Japan, Singapore or others. With heavy reliance on central support and an economy that is still trying to find a strong foothold, the question that remains is: how viable will the private sector’s participa­tion in the NER be? The numerous ethnographic peculiarities and, more prominently, the issue of land acquisition in the region further complicate matters. The absence of a regulated land tenure system in most parts of the region means that acquiring tribal land for develop­ment will be a tedious task. The newly-announced Smart Cities Mission can achieve geographical spread in the NER via measures like i) Direct Central funding for a majority of the Smart City projects; ii) Active participa­tion from the State Governments; iii) Mandatory Special Purpose Ve­hicle (SPV) to manage and fund each Smart City; iv) Ensuring full implementation of the 74th Consti­tutional Amendment Act; and v) Special consideration during the city selection process on aspects of urban population and existing city infrastructure status. The ‘City Challenge’ framework, proposed by MoUD, could also pose an opportu­nity for the cities to participate in schemes to build smart cities in this region. The NER needs efficient towns and cities to boost economic growth. The region is urbanising fast, and planned intervention is essential not only for ensuring sustainable development but also for the Centre to realise its Look East Policy. The Smart City scheme is an op­portunity to fill some of the gaps of necessity and hope in the region.