THE LAUNCH of the Smart Cities Mission by Prime Minister Narendra Modi on June 25, 2015 in New Delhi has rekindled hopes for making India’s cities clean, green, vibrant, modern and whatever else is associated with the dream concept of smart cities. The process of making a city smart would involve harnessing innovative technologies, which, in turn, would require two critical resources: finances and managerial arrangements.
The central government has been fairly liberal, and with good reason, in extending financial support to the tune of 50 percent of the project cost for the Mission Cities, amounting to Rs. 100 crore per year per city, on an average. In total, the Centre’s share in the Smart Cities Mission is estimated to be Rs. 48,000 crore over a five-year period, with an equal contribution expected from the urban local bodies (ULBs) together with state governments. The number of cities eligible for Mission funds, per state, has already been allocated based on the twin criteria of urban population and number of notified municipalities. However, actual selection within each state will be based on a report card from the cities, assessing their preparedness. State governments will have to create Special Purpose Vehicles (SPVs) for each selected city.
While the finances for the Mission have been made fairly uniform and secured ab initio, the governance aspect needs to be deliberated upon and resolved soon, since the administrative arrangements will significantly impact programme planning and implementation. Administrative arrangements for the cities are governed by state laws and vary significantly from state to state.
Interestingly, in some states, individual municipal corporations exist and function under specific statutes. While the powers and functions of the municipal corporations vary among states, city governance becomes even more complicated owing to the existence of parallel statutory authorities for cities. A typical city would have, besides the municipal corporation, separate authorities for: development; environment/ pollution control; transport; electricity; water and sewerage, and urban arts, besides numerous state government departments like the district collectorate, police, fire and forests, among others – each operating under different statutes.
In the midst of the myriad authorities operating in the city, the municipal corporation tends to become relatively inconsequential in planning and managing the infrastructure and services for the city. For instance, the city’s Master Plan is generally prepared by the development authority, with the role of the municipality being confined to according approvals for individual building plans. Water supply and waste management planning is assigned to the state water and sewerage board, or city lighting to the electricity boards/companies. Many bodies are supposed to be operating on behalf of the municipality and remain answerable to the latter. In reality, however, state governments often make direct payments to such parastatal authorities on behalf of the municipality by diverting even statutory grants such as those under the awards of the State or Central Finance Commissions. This weakens the role and status of the municipality in the planning and management of civic affairs. The same trend is likely to continue – get strengthened, even – with the SPVs mooted under the Guidelines for the Smart Cities Mission.
Municipalities and the City
Of the numerous authorities in the city that regulate development activities, it is only the municipality that is a truly representative body for residents. The councillors elected from the respective wards are in touch with citizens on a daily basis and function as a link between them and the municipality, with respect to various schemes and services. They also offer a more comprehensive platform for representing people’s choices, for planning purposes. It is only the municipality that carries the legal and social heft of being called a city government. People relate more easily to the city government for their day-to-day needs, than to other levels of government.
It is not surprising, therefore, that municipalities and mayors have a very strong presence, authority and acceptability in cities around the globe. India is an exception, at least among the developed and fast developing countries. The awe and respect that mayors inspire in cities such as Moscow, New York, London, Shanghai, Tokyo, to name a few, is astonishing. Mayors are held in high esteem, as next only to the head of the government of the country/state. This stands in stark contrast to the status of mayors in India, where they are largely given a ceremonial role.
For want of any constructive role, most mayors behave like an opposition party, rather than as city fathers. The cause and fall out of this situation is generally seen as political. However, while the cause could be political, in reality, the impact of having enfeebled municipalities and weak mayors has been causing great damage to city management. Today, no one can speak in a single voice on behalf of the multiplicity of authorities or take responsibility for the city. A municipal commissioner comes to the city from an alien background and for a limited and extremely uncertain tenure. The district collector has numerous responsibilities to shoulder for the entire district, which prevent him from identifying himself with the city alone. Members of Parliament and the state legislature represent only a part of the city and wear a different mantle. In short, there is no substitute for an effective mayor and an adequately-empowered city municipality to provide a realistic framework for the development of Smart Cities.
Guidelines for the Smart Cities Mission mandate the creation of an SPV for each city, with shareholding of the state government and the municipality in a 50:50 ratio. The Board of Directors (BOD) of the SPV shall have representatives from the central and state governments, the municipality and independent directors. The CEO of the SPV shall be appointed with the approval of the Centre. Independent Directors shall be selected from the data bank maintained by the Ministry of Corporate Affairs. The state government shall delegate the powers of the municipal council/ corporation and of the state government to the SPV, with regard to the Smart City project activities. All Mission funds for the city shall go to the SPV. Thus, SPVs have been mooted as an effective substitute for the municipality of the city for Mission activities.
It is apparent that the SPV provisions are going to further undermine the powers and prestige of municipalities. Whether this is by design or default is conjecture but surely the municipalities would be enfeebled by the SPV, as mooted under the Guidelines. Assigning powers of the state government to the SPV too is not a prudent move as has been seen with respect to the delegation of powers to the district rural development societies under rural development programmes.
Moreover, mandating central government nominations to the BOD of the SPVs is a very unrealistic move. It would not be possible for the Centre’s representative to sit in on deliberations of all 100 SPVs, whose number could increase in the future. The nominees would not be able to attend Board meetings, often leading to postponements. Similarly, the mandate to select independent directors from the data bank maintained by the Ministry of Corporate Affairs for the BOD of each SPV, which is set up to handle only city-level matters, is not very sound when the municipal councils and councilors, as also state-level experts, could do the job very well. Of course, the checks and balances provided in the state/municipal laws as well as in the statutory arrangements relating to the Comptroller and Auditor General of India ought to be continued and also enforced with the required vigour, to ensure accountability of the municipality/SPV.
It’s time to do away with the proposed structure of SPVs and, instead, strengthen the municipalities. Here are some specific suggestions. The central government, through the Guidelines for the Smart Cities Mission, should unequivocally advise and encourage state governments to delegate all powers and responsibilities envisaged in article 243W – read with the Twelfth Schedule – to the municipalities. It should also mandate states to equip municipalities with adequate staff and decision-making powers, to effectively discharge their assigned functions and responsibilities. The mayor or municipal commissioner should chair the proposed SPV and the municipality should have 51 percent shareholding, while citizens should be encouraged to buy bonds and equity shares of the SPV. The central government should completely withdraw from participating in the administrative structure of the proposed city-level SPVs, which includes its role in appointment of the SPV’s CEO. It should trust, and have faith in, the municipalities and motivate state governments to follow the same approach.
All in all, the entire approach and philosophy underlying the governance and management aspects of the Smart Cities Mission should aim at strengthening local governance systems. That calls for a thorough review of the arrangements proposed for city-level SPVs to make way for developing smart and empowered municipalities for the development of Smart Cities.