AUGUST 28, 2015
The Smart Cities Mission Statement provides a base for an autonomous and an independent city.
The Mission Statement and Guidelines on Smart Cities released by the Ministry of Urban Development attempts to modify the governance structure and finances such that the cities become autonomous and self reliant entities. Setting up of Special Purpose Vehicles (SPVs), devolution of authorities and opening up the options for raising finance are basic steps made in this direction. The Mission statement also emphasises on replication of the learning from the smart cities and on increasing citizen involvement.
The Mission Statement and Guideline gives a comprehensive outlook into the objectives and the focus areas of the Smart City Mission launched a month ago on July 25 by Prime Minister Narendra Modi. The Prime Minister claimed that a selection of cities on competitive parameters will end the top-down approach, and lead to people-centric urban development.
The Smart Cities Mission is a centrally sponsored scheme as per which Rs. 48,000 crore will be provided to 98 local bodies selected after a rigorous process. The purpose of this mission is “to improve the quality of life of people by enabling local area development and harnessing technology”. As per the guideline, the definition of smart city varies “depending on the level of development, willingness to change and reform, resources and aspirations of the city residents”. There are four pillars of comprehensive development identified to develop the urban eco-system- institutional, physical, social and economic infrastructure.
The Mission will be using the compact city concept which is called ‘the compact area’ in the document. Compact city refers to sustainable urban forms which include characteristics like high residential density, mixed land use, redevelopment of central areas and has facilities including hospitals, parks etc. Keeping in line with the compact city approach, the strategy of the smart cities Mission is classified into three components plus an additional feature. The three component are city improvement (retrofitting), city renewal (redevelopment), and city extension (greenfield development). The added feature is a Pan-city initiative which is to be applied to larger part of the city.
The first component of area-based development is retrofitting. Retrofitting is short term strategy. It focuses on improving the infrastructure levels and using smart applications while keeping the existing structures intact. Redevelopment, the second component, includes replacement of the existing built-up environment with an enhanced infrastructure using mixed land use and increased density. The examples provided are redevelopment of East Kidwai Nagar in New Delhi and the Saifee Burhani Upliftment Project in Mumbai. The third component, greenfield development refers to the development of a previously vacant area with more than 250 acres. It’s objective is to address the the needs of the expanding population. Finally, the Pan-city development aims to use technology and data to work on existing city infrastructure. To implement these strategies, a SPV is to be created under the Smart Cities Mission.
The vehicle for autonomy
The primary objective of the SPV is to ensure operational independence, and autonomy in decision making and Mission implementation at the city level. As per the guidelines, “the SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects”. The SPV is to be set-up as a limited company where private institutions are allowed to take equity on the SPV, as long as, the state/UT and the ULB have the majority shareholding.
The SPV is to be headed by a full time Chief Executive Officer (CEO) and have state/UT, central and ULB representatives on the board. The CEO of the SPV is going to be appointed based on the approval of MoUD, the chairperson by the state government and the director by the centre. The rights and obligations of the municipal council with respect to the Smart City project have been delegated to them. The board of directors have been given the approval or decision making powers available to Municipal Administration. The Chief Executive Officer of the SPV is provided the decision making powers available to the ULB under the municipal act/ Government rules. In addition to the SPV, a State Level High Powered Steering Committee (HPSC) for Smart Cities is to be set-up for the matters that require the approval of the State Government.
To level with the authority provided, the Mission has also assigned conditions for the SPVs to avail the government funds. The conditions ensure that State government and the ULBs have made adequate contribution and the funds are devolved based on the performance.
Moreover, the government funds and the matching contribution by the States/ULBs is going to be provided only for part of the project. The balance is to be mobilised from charges and fees, the resources transferred as per the fourteenth finance comMission, finance mechanisms like municipal bonds, and borrowings from financial institutions. The SPVs can also use the central government schemes and funds like the National Investment and Infrastructure Fund.
Devika Kher is a Research Associate at Takshashila Institution. Her twitter handle is @DevikaKher.
Adhip Amin is a Research Associate at Takshashila Institution. His twitter handle is @AdhipAmin1.
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