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:

  • State governments make legislative changes to give more taxation powers and autonomy to ULBs for improving their revenue collections.
  • ULBs could raise their own revenue by tapping into land-based financing sources, and introducing reforms to strengthen non-tax revenues (such as water and sewerage charges, parking fees, etc.).
  • Municipal bonds may also be used as a source of revenue for ULBs.

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.

As of May 22, 2020, there are 1,18,447 confirmed cases of COVID-19 in India, which is 76% higher than the cases on May 11, 2020 (67,152). Out of total confirmed cases, there are 66,330 active cases, 48,354 patients have been cured/discharged and 3,583 have died (Figure 1). As the spread of COVID-19 has increased across India, the central government has continued to announce several policy decisions to contain the spread, and support citizens and businesses who are being affected by the pandemic.  In this blog post, we summarise some of the key measures taken by the central government in this regard between May 11 and May 22, 2020.

Figure 1: Number of day wise COVID 19 cases as on May 22, 2020

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Aatma Nirbhar Bharat Abhiyaan

On May 12, the Prime Minister, Mr. Narendra Modi, announced a special economic package of Rs 20 lakh crore (equivalent to 10% of India’s GDP) aimed towards making the country ready for the tough competition in the global supply chain and empowering the poor, labourers, migrants who have been adversely affected by COVID-19.   Following this announcement, the Finance Minister, Ms. Nirmala Sitharaman, in five press conferences, announced the detailed measures under the economic package.  The economic package includes earlier measures taken by the government to support the citizens and businesses of India.  A break-up of the package is presented in Table 1.

Table 1: Break-up of stimulus from Aatma Nirbhar Bharat Abhiyaan package

Item

Key Topics covered

Amount (in Rs crore)

Stimulus from earlier measures

 Pradhan Mantri Garib Kalyan Yojana, Tax Concessions, and the Prime Minister's announcement for health sector

1,92,800

Part 1

Business including Micro, Small and Medium Enterprises (MSMEs)

5,94,550

Part 2

Poor people including migrants and farmers.

3,10,000

Part 3

Agriculture and allied sectors.

1,50,000

Part 4 and Part 5

Part 4: Coal and mineral sectors, defence sector, civil Aviation, airports and aircraft Maintenance, Repair and Overhaul (MRO), power sector, social infrastructures, space, atomic energy.

Part 5: Government reforms and other provisions including public health and education, additional allocation to MGNREGS

48,100

Sub Total

 

1,295,400

RBI Measures (Actual)

Reduction in Cash Reserve Ratio (CRR), Special Liquidity Facility (SLF) for mutual funds, Special refinance facilities for NABARD, SIDBI and NHB at policy repo rate

8,01,603

Grand Total

 

20,97,053

Note: Part 1, 2, 3, 4, 5 in the table above represents the five press conferences conducted by the Finance Minister to announce the details of the economic package.

Source:   Presentation made by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman under Aatmanirbhar Bharat Abhiyaan to support Indian economy in fight against COVID-19, Ministry of Finance, May 13, 2020, PRS.

For more information on the details of the announcements made under Aatma Nirbhar Bharat Abhiyaan, please see here.

Finance

Following the Prime Minister’s and Finance Minister’s announcements, further announcements were also made. 

  • Cabinet approved the additional funding of Rs three lakh crore to eligible MSMEs and interested MUDRA borrowers under the Emergency Credit Line Guarantee Scheme.  The funding will be covered under 100% guarantee coverage by the National Credit Guarantee Trustee Company Limited in the form of a Guaranteed Emergency Credit Line facility.
     
  • Cabinet also approved the special liquidity scheme for Non-Banking Finance Companies (NBFCs)/Housing Finance Companies (HFCs).  The details of the scheme were shared by the Finance Minister in May 2020 under the Aatma Nirbhar Bharat Abhiyaan.
     
  • Securities and Exchange Board of India (SEBI) revised the post-default curing period for credit rating agencies (CRAs) in their circular dated May 21, 2020.  Now, once the default is cured and payments are regularised, CRAs will upgrade the rating from default to non-investment grade after a period of 90 days based on the satisfactory performance by the company during the period.  As of now, after the entity corrects the default, the CRAs upgrade the rating from default to speculative grade in 90 days and from default to investment grade in 365 days.
     
  • On May 22, the Monetary Policy Committee of Reserve Bank of India (RBI), reduced the policy repo rate under the liquidity adjustment facility (LAF) by 40 bps to 4% from 4.4%.  The marginal standing facility (MSF) and the bank rate have been reduced to 4.25% from 4.65%.  The reverse repo rate has been also reduced from 3.75% to 3.35%.
     
  • The Reserve bank of India (RBI) issued a statement with various development and regulatory policies.  The policies specify details on measures (i) to improve the functioning of market; (ii) to support exports and imports; (iii) to ease financial stress; (iv) for debt management.  The cash reserve ratio (CRR) of all banks will be reduced by 100 basis points to 3%, which will provide a liquidity support of Rs 1,37,000 crore across the banking system. The policy extends the moratorium on payment of instalments of all type of loans as on March 1, 2020 by another three months (up to August 2020).   This is applicable to loans from all commercial banks including Non-Banking Finance Companies (NBFCs) and co-operative banks.   

Lockdown 4.0

The Ministry of Home Affairs (MHA) passed an order extending the lockdown till May 31, 2020. This lockdown will have more relaxations compared to earlier lockdowns.

Zoning of areas

The new guidelines have authorised states/union territories (UTs) to define the red, green and orange zones based on the parameters prescribed by the Health Ministry.  The states/UTs can define a district, or a municipal corporation/ municipality or even smaller administrative units such as sub-divisions, etc. as a red or green or orange zone.

  • Red and Orange Zones: Within red and orange zones, the local authorities will identify containment and buffer zones based on the guidelines from the Health Ministry.  Buffer zones are areas adjacent to containment zones which have a high probability of cases.
     
  • Containment Zones: Movement of individuals will not be allowed in containment zones to ensure strict perimeter control except for medical emergencies and supply of essential goods and services.

The prohibition of certain activities or restrictions in various zones within a state will be at the discretion of the state/union territory as deemed necessary.

Prohibited Activities

Some activities will continue to remain prohibited throughout the country.  These include:

  • all international air travel of passengers, except for domestic medical services, domestic air ambulance and for security purposes or purposes as permitted by MHA;
     
  • metro rail services;
     
  • running of schools, colleges, educational and training/coaching institutions;
     
  • hotels, restaurants and other hospitality services, except for the running of canteens in bus depots, railway stations and airports;
     
  • places of large public gatherings such as cinemas, shopping malls, and gymnasiums entertainment parks;
     
  • social, political, cultural, and similar gatherings and other large congregations; and access to religious places/places of worship for the public. 

Online/ distance learning is encouraged and permitted; and, restaurants will be allowed to operate kitchens for home delivery of food items.

National Directives for COVID Management

The Ministry of Home Affairs issued the National Directives for COVID Management, which apply to public places and work places. As per these guidelines:

  • wearing of face covers is compulsory; 
     
  • spitting will be punishable with fine as may be prescribed in accordance with its laws, rules or regulations by the State/ UT local authority; 
     
  • social distancing is to be followed by all persons in public places and in transport;  
     
  • marriage related gathering has been limited to 50 guests;  
     
  • for funerals/ last rites, the maximum number of persons allowed is 20;  
     
  • consumption of liquor, paan, gutkha and tobacco etc., is not allowed in public places.  

Guidelines for workplaces include:

  • employers will encourage practice of work from home to the extent possible; 
     
  • staggering of work hours will be adopted in respect of all offices and other establishments.  
     
  • there will be provision for thermal scanning, hand wash and sanitizers at all entry and exit points and common areas;
     
  • all work places and other sensitive locations are to be sanitized regularly.  
     
  • social distancing will have to be ensured through adequate distance between workers, adequate gaps between shifts, staggering the lunch break of staff and so on.

Aarogya Setu

The District authorities will ensure installation of the Aarogya Setu application on compatible mobile phones of all individuals and will have to regularly update their health status on the app.

Aarogya Setu Data access and knowledge sharing protocol, 2020

The Ministry of Electronics and Information Technology, Government of India issued a notification on the data access and knowledge sharing protocol, 2020 in reference to the Aarogya Setu mobile application.  The protocol will: (i) ensure secure collection of data by the mobile application, (ii) protect the personal data of individuals, and (iii) ensure efficient use and sharing of personal or non-personal data of the application users.  The protocol provides principles for: (i) collection and processing of response data, (ii) sharing of response data, (iii) obligations of entities with whom the data will be shared, and (iv) sharing of data for research purpose.  A sunset clause is applicable to the protocol subjecting it to a review after 6 months unless there is any extension of sunset clause in wake of the pandemic.

Travel and Movement

  • The Ministry of Railways announced to run Shramik special trains from all districts connected by railways in the country.  The ministry is awaiting details on migrants from each district to operationalise the trains.
     
  • The Ministry of Home Affairs (MHA) has written to Chief Secretaries of all states allowing them to arrange special buses to carry people from railway stations to their home.  This provision is applicable, with condition of maintaining proper social distancing norms, only at places where public or personal transport is not available.
     
  • On May 11, 2020, MHA passed an order permitting movement of individuals by trains.   Following the order, 15 pair of trains are being run   connecting New Delhi to Dibrugarh, Agartala, Howrah, Patna, Bilaspur, Ranchi, Bhubaneswar, Secunderabad, Bengaluru, Chennai, Thiruvananthapuram, Madgaon, Mumbai Central, Ahmedabad and Jammu Tawi.
     
  • The Ministry of Railways in consultation with the MHA and the Ministry of Health & Family Welfare, issued guidelines on partial restoration of train services (other than the Shramik trains) from June 1, 2020.  200 passenger trains with AC, Non-AC and general classes will be operationalised.   Booking for these trains commenced on May 21, 2020.  The guidelines contain detailed information on (i) booking of tickets and charting, (ii) quota permitted, (iii) catering, and (iv) linen and blankets.  All passengers will have to download and use the Aarogya Setu mobile application.
     
  • On May 19, 2020, MHA issued a Standard operating Procedure (SOP) for movement of stranded workers by trains.   As per the SOP, the Ministry of Railways will permit the movement of stranded workers by trains in consultation with MHA.  The Ministry of Railways will finalise the schedules for trains including the stoppages and destinations and will communicated it to state/UTs.  On arrival at the destination, the travelling passengers will have to adhere to the health protocols as prescribed by the destination state/UT.  The inter-state movement of stranded persons by bus and vehicles will be allowed subject to mutual consent of the concerned States/UTs.  The intra-state movement of vehicles will be at the discretion of the states/UTs.
     
  • The MHA amended the order on Lockdown 4.0 to facilitate domestic air travel for stranded persons.  Following the amendment, the Ministry of Civil Aviation issued the order for commencement of domestic air travel of passengers from May 25, 2020.  The passengers will have to show a self-declaration, using the Aarogya Setu mobile application, that they are free of COVID-19 symptoms and those with Red status will not be allowed to travel.  The order contains three annexures with (i) general instructions for commencement of domestic air travel, (ii) the detailed guidelines to be followed by air passengers, and (iii) specific operating guidelines for major stakeholders.

Health

  • The Ministry of Health and Family Welfare issued: (i) updated containment plan on COVID-19, and (ii) updated containment plan for large outbreaks of COVID 19.   These plans provide information on various scenarios of COVID-19 and strategies to control the spread of the disease including definitions, action plans and specific details on (i) identification of containment zones and buffer zones; (ii) perimeter control; (iii) support from various stakeholders such as testing laboratories and hospitals; (iv) pharamaceutical and non-pharmaceutical interventions; and (v) risk communication.

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.