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In the last decade, the government has implemented several schemes to address issues related to urbanisation and aid the process of urban development. One of the schemes is the Smart Cities Mission, which intends to take advantage of the developments in information technology in developing the urban development strategy, across 100 cities. Last week the government announced the list of 9 new Smart Cities, taking the total to 99. In light of this, we look at the Smart Cities Mission and a few issues with it.
What is a Smart City?
The primary objective of the Mission is to develop cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and apply ‘smart’ solutions.
However, the Mission document does not provide one definition of a Smart City. Instead it allows cities to come up with their own solutions of what they identify as a Smart City. The guidelines suggest that the core infrastructure elements in a Smart City will include: (i) adequate water supply, (ii) assured electricity supply, (iii) sanitation, including solid waste management, (iv) efficient urban mobility and public transport, (v) affordable housing, (vi) robust IT connectivity, and (vii) good governance. ‘Smart’ solutions may include (i) energy efficient buildings, (ii) electronic service delivery, (iii) intelligent traffic management, (iv) smart metering, (v) citizen engagement, etc.
How were the Smart Cities selected?
The Mission was introduced in the form of a competition, called the Smart City challenge. The first stage was in July 2015 when states nominated their cities for the competition. In August 2015, the Ministry of Urban Development selected 100 of those cities to participate in the competition. These cities were required to develop their smart city plans (SCPs) and compete against each other. The SCPs were evaluated on the basis of the solutions, the processes followed, the feasibility and cost effectiveness of the plans, and citizen engagement. Over the last 2 years, the Ministry has announced winner cities in batches. So far, 99 cities have been selected under the Mission.
What information do these SCPs contain?
The cities had to prepare their SCPs with two primary strategic components: (i) area-based development, and (ii) pan-city development. The area-based development would cover a particular area of the city, and could have either a redevelopment model, or be a completely new development. Pan-city development would envisage application of certain smart solutions across the city to the existing infrastructure.
Each city had to formulate its own concept, vision, mission and plan for a Smart City that was appropriate to its local context and resources. The Ministry of Urban Development provided technical assistance, through consultancy firms, to cities for helping them prepare these strategic documents.
How will the Mission be implemented?
The Mission will be implemented at the city level by a Special Purpose Vehicle (SPV). The SPV will plan, approve, release funds, implement, manage, monitor, and evaluate the Smart City development projects.
The SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level. It will be chaired by the Collector/ Municipal Commissioner of the Urban Development Authority. The respective state and the Urban Local Body (ULB or municipality) will be the promoters in this company having 50:50 equity shareholding.
How are the Plans getting financed?
The Mission will be operated as a Centrally Sponsored Scheme. The central government will provide financial support of up to Rs 48,000 crore over five years, that is, an average of Rs 500 crore per city. The states and ULBs will have to contribute an equal amount. The central government allocated Rs 4,000 crore towards the Mission in the 2017-18 budget.
Since funding from the government will meet only a part of the funding required, the rest will have to be raised from other sources including: (i) states/ ULBs own resources from collection of user fees, land monetization, etc., (ii) innovative finance mechanisms such as municipal bonds, (iii) leverage borrowings from financial institutions (such as banks), and (iv) the private sector through Public Private Partnerships (PPPs).
The total cost of projects proposed under the various SCPs of the 90 winner cities is Rs 1.9 lakh crore. About 42% of this amount will come from central and state funding, 23% through private investments and PPPs, and 19% through convergence with other schemes (such as HRIDAY, AMRUT, Swachh Bharat-Urban). The remaining will be generated by the cities through the levy of local taxes, and user fees.
What are some of the issues to consider?
Financial capacity of cities: Under the Mission, cities have to generate additional revenue through various sources including market borrowings, PPPs, and land monetization. The High Powered Expert Committee on Indian Urban Infrastructure and Services (HPEC) had observed that ULBs in India are among the weakest in the world, both in terms of capacity to raise resources and financial autonomy. Even though ULBs have been getting higher allocations from the centre and states, and tax devolution to them has increased, their own tax bases are narrow. Further, owing to their poor governance and financial situation, ULBs find it difficult to access external financing.
Such a situation may pose problems when implementing the Mission, where the ULBs have to raise a significant share of the revenue through external sources (PPPs, market borrowings). For example, the Bhubaneswar Smart City Plan has a total project cost of Rs 4,537 crore (over five years), while the city’s annual budget for 2014-15 was Rs 469 crore.
In order to improve the finances of the ULBs, committees have made various recommendations, which include:
The government has recently introduced a few policies and mechanisms to address municipal financing. Examples include value capture financing through public investments in infrastructure projects, and a credit rating system for cities. In June 2017, the Pune Municipal Corporation raised Rs 200 crore by issuing municipal bonds.
Technical capacity of the ULBs: The Smart Cities Mission seeks to empower ULBs to raise their own revenue, and also lays emphasis on the capacity building of ULBs. The HPEC had observed that municipal administration has suffered due to: (i) presence of untrained and unskilled manpower, and (ii) shortage of qualified technical staff and managerial supervisors. It had recommended improving the technical capacity of ULBs by providing technical assistance to state governments, and ULBs in planning, financing, monitoring, and operation of urban programmes. The central government had allocated Rs 10.5 crore towards the capacity building component of the Mission in 2017-18.
The Ministry of Urban Development has been running several programmes to improve capacity of ULBs. This includes MoUs with 18 states to conduct training programmes for their ULB staff.
Coverage of the Mission: The Mission covers 100 cities, of which 99 have been announced as winners so far. The urban population that will be impacted through the Mission is around 96 million (data for 90 cities excluding the recently announced 9 cities).
As per Census 2011, India’s urban population was 377 million. The Mission impacts about 25% of this population. Further, most of the SCPs approved so far focus on area-based development, thus affecting a particular area of the cities. About 80% of the total project cost proposed is towards this model of development. In each city, this area-based development will cover up to 50 acres of area. The remaining 20% of the project cost is towards pan-city development proposals, which provide smart planning solutions for the entire city. It may be argued that even within the selected cities, the Mission will only impact few selected areas, and not necessarily help with development of the entire city.
There are indications that the Lok Pal Bill, 2011 is likely to be taken up for consideration and passing during the current Winter session of Parliament. The Bill was introduced on Aug 4, 2011 in the Lok Sabha after a prolonged agitation led by Anna Hazare (see PRS analysis of the Bill). It was referred to the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice (see PRS note on Committee Systems). The Committee submitted its report on December 9, 2011. The report includes 10 dissent notes from 17 MPs. (a) Kirti Azad, Bal Apte, D.B. Chandre Gowda, Harin Pathak, Arjun Ram Meghwal, and Madhusudan Yadav. (b) Ram Jethmalani (c) Ram Vilas Paswan (d) Shailendra Kumar (e) Prasanta Kumar Majumdar (f) Pinaki Misra (g) A. Sampath (h) S. Semmalai (i) Meenakshi Natrajan, P.T. Thomas, and Deepa Dasmunshi (j) Vijay Bahadur Singh Presently, the government and the Opposition are in the process of formulating their stands on various key issues such as inclusion of the Prime Minister, the lower bureaucracy and the role of the Central Investigation Bureau. We provide a broad overview of the views of the members of the Committee on various key issues. Unanimity on issues On some issues, there was unanimity among the Committee members:
Dissent on issues Certain members of the Committee dissented on specific issues. In Table 1, we list the issues and the reason for the dissent. Table 1: Recommendation of Standing Committee and dissent by individual MPs
Issues | Standing Committee recommendations | Points of dissent | Dissenting MPs |
Inclusion of Prime Minister | Committee left the decision to Parliament stating that there are pros and cons to each view. | - PM should be included. - PM should be brought under the Lok Pal with some exceptions for national security, foreign policy, atomic energy etc. - The decision to investigate or prosecute the PM should be taken by the Lok Pal with 3/4th majority. | - Prasanta Kumar Majumdar, A. Sampath. - Kirti Azad etc, Shailendra Kumar, Pinaki Misra. |
Grievance redressal mechanism | Enact separate law for a grievance redressal mechanism. | Include in the Lok Pal Bill. | Kirti Azad etc, Ram Jethmalani, Shailendra Kumar. |
Inclusion of bureaucracy | Include Group B officers in addition to Group A. | - Include all groups of govt employees. - Include Group ‘C’. - Do not include bureaucrats. | - Kirti Azad etc, A. Sampath. - Meenakshi Natrajan etc, Shailendra Kumar, Prasanta Kumar. Majumdar, Pinaki Misra, Vijay Bahadur Singh. - Ram Vilas Paswan. |
Lokayukta | Single, central law to deal with Lok Pal and state Lokayuktas to ensure uniformity in prosecution of public servants. | States should retain power to constitute Lokayuktas. | - S. Semmalai. |
Private NGOs, media and corporate | Include all entities with specified level of govt control or which receive specified amount of public donations or foreign donations above Rs 10 lakh. | No private organsiations should be included. | - Kirti Azad etc., Ram Vilas Paswan. |
Composition of search and selection committees | Selection Committee: In addition to PM and Speaker, it should include the Chief Justice of India, an eminent Indian unanimously nominated by the CAG, CEC and UPSC chairman and only Leader of Opposition of Lok Sabha. Search Committee: Mandatory to constitute. Minimum 7 members with 50% members from SC/ST, OBC, minorities and women. | Selection Committee: PM, Minister, LoPs of both Houses, two judges and CVC. Search Committee: CJI, CAG, CEC, Cabinet Secretary, judges of Supreme Court and High Courts. Selection Committee: PM, LoP in the Lok Sabha, one judge of SC and one Chief Justice of a HC, CVC, CEC and CAG. Search Committee: 10 members out of which 5 should be from civil society and 5 should be retired Chief Justice, CVC, CAG and CEC. Half the members to be from SC/STs, OBCs, minorities or women. | - Kirti Azad etc. - Shailendra Kumar. |
Removal of Lok Pal | In addition to petitioning the President, a citizen should be allowed to approach the Supreme Court directly with a complaint. If admitted, it would be heard by a 5 judge bench. If President does not refer a citizen’s petition, he should give reasons. | Investigation should be conducted by an independent complaint authority. Heavy fines should be imposed in case of a false or frivolous complaint. Instead of the President, the Supreme Court should have power to suspend a member pending inquiry. | - Shailendra Kumar. |
Role of CVC and CBI | CVC should investigate Group C and D employees. Instead of Lok Pal’s investigation wing, the CBI should investigate cases after inquiry by the Lok Pal. CBI to have autonomy over its investigation. Lok Pal shall exercise general supervision over CBI. | CBI should be under the control of the Lok Pal. The CBI Director should be appointed by the Lok Pal’s selection committee. The CVC should be under Lok Pal and the SVCs under the state Lokayuktas. | - Ram Jethmalani, Shailendra Kumar. - A. Sampath. - Meenakshi Natrajan etc. |
False and frivolous complaints | Term of imprisonment should be maximum six months. Amount of fine should not exceed Rs 25,000. Specifically provide for complaints made in good faith in line with the Indian Penal Code. | The term of imprisonment should not exceed 30 days. | - Kirti Azad etc. |
Article 311 | Article 311 of the Constitution should be amended or replaced with a statute. | The procedure adopted by the disciplinary authority should conform to Article 311. | - Kirti Azad etc, Meenakshi Natrajan etc. |
Finance | Lok Pal Bill states that all expenses of the Lok Pal shall be charged to the Consolidated Fund of India (no need for Lok Sabha clearance). The Committee did not make any recommendation with regard to finances of the Lok Pal. | Lok Pal’s expenses should be cleared by the Parliament. Lok Pal should present its budget directly to Parliament rather than through a ministry. | - Kirti Azad etc. - Shailendra Kumar. |
Sources: The Lok Pal Bill, 2011; the Department Related Standing Committee Report on the Lok Pal Bill, 2011 and PRS. |