To Build Smart Cities, India Should Have A Planned Approach Towards PPPs

To Build Smart Cities, India Should Have A Planned Approach Towards PPPs

To Build Smart Cities, India Should Have A Planned Approach Towards PPPs

The ambitious launch of 100 Smart Cities Mission by the government is an overture to upgrading the infrastructure in these cities on a large scale. Over the next four years, the Indian government plans to invest $7.5 billion in the cities chosen, with an equivalent involvement from various state governments, to improve physical infrastructure (water, energy, built environment, waste, and mobility) and social infrastructure (health, education and recreational facilities).

The 100 smart cities are being selected through a 'smart city challenge' that makes cities compete against each other. Citizens are expected to identify the key challenges faced by cities, and formulate a plan to deliver smart solutions. So far, 20 cities have been selected.

From many decades, the Indian government largely focused on rural development. The smart cities mission places greater emphasis on developing cities, and this is a great improvement. The mission has also attracted the attention of international and domestic investors. Investors believe that public-private collaboration is important to enable India to bridge the infrastructure investment gap.

Investors strongly believe that smart cities cannot exist without smart governance and smart regulation. Urgent reforms are required at every level to build smart cities in India.

Key challenges to be addressed immediately

Institutional challenges: The 100 Smart Cities Mission is an important program that depends on many factors. Urban local bodies (ULBs) will be major players in implementing 100 Smart Cities Mission, but they lack the resources to execute the mission. ULBs are the least prepared of all stakeholders, and this includes state governments, central government, the private sector and academic institutions. There are a few strong reasons why urban local bodies are not prepared for the challenge. Poor revenues, lack of strong leadership, inadequate institutional capacity, a lack of collaboration between multiple planning and administration bodies, and dated processes are among the major reasons.

Business environment challenges: For a better private sector, we need a stable business environment. At present, major reforms are essential in land acquisition, proper approving process, procurement process and dispute resolution. Reforms should also address risks in public private partnerships (PPPs), such as changes in scope, market distortion, community risks and breach of contract risks. To attract investment from the private sector, all these reforms should be seen as urgent.

Sector-specific challenges: Sectors with major 'demand and supply' gaps such as water, waste, and sanitation are those that are the least appealing for private sector participation. The challenges in these key sectors include the lack of user charges (to fund infrastructure capacity expansion) the tendency to not pay such charges, distribution losses, and behavioural issues. To make such key sectors attractive to the private sector, major reforms need to be implemented.

What are the key reforms that can facilitate building smart cities in India?

Reinforce city administration: Presently, mayors are powerless in Indian cities, and the municipal commissioner, who is deputed by the state government and accountable to the state, is the executive head of the city. A decision-making mayor with an incorporated command over all the city functions can help transmit proper accountability and resolution to city-level administration. At present, the city administration is beleaguered by recurrent leadership changes.

Create the right business environment: A single-window system that can streamline the approval process during the beginning of the project will fast-track project implementation, lower cost and time overrun, and improve intra- and inter-departmental teamwork. Additional process improvements during land acquisition in using technology and advanced methods of land acquisition will improve infrastructure development for greenfield development and redevelopment initiatives. With an emphasis on project preparation and ideal risk sharing to boost investor confidence, India should adopt a planned approach to public-private partnerships (PPPs).

Reform every sector: To build better urban infrastructure, major reforms are required in every single sector. The government should establish independent regulators, develop skilled resources, carry out collections from large defaulters and implement integrated planning. Likewise, for social infrastructure, financially supportable models should be formed for the private sector so that it can contribute to ensuring safety, education, and healthcare.

If planned properly, urbanisation can improve living standards in India. Besides, diversity of people can trigger invention and innovation. Lack of proper planning can lead to the whole system crumbling down.

Last Updated: Sun Aug 14 2016

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