gence of self-sustainable city. For the
successful implementation of the
project cities are supposed to be the
equal partners in financing the pro-
ject. The government has recom-
mended to mobilize funds by states
and ULB’s own resources from col-
lection of user fees, beneficiary
charges and impact fees, land mone-
tization, debt, loans, etc. According
to the Ministry of Urban develop-
ment, cities must look at Innovative
finance mechanisms such as munici-
pal bonds with credit rating of ULBs,
Pooled Finance Mechanism, Tax In-
crement Financing (TIF) to raise ad-
ditional fund requirements.
Apart from that there is also the
provision to leverage borrowings
from financial institutions, including
bilateral and multilateral institu-
tions, both domestic and external
sources. There was a specific provi-
sion to set up National Investment
and Infrastructure Fund (NIIF) by
the finance Ministry with an initial
corpus of Rs.20,000 crore.
Mission statement talks of exter-
nal borrowing and financial aid from
the foreign direct investment and international fi-
nance agencies such as World Bank and International
Finance Corporation (IFC). The mission also recom-
mended the convergence with other Central Govern-
ment schemes like Swachh Bharat Mission, AMRUT,
National Heritage City Development and Augmenta-
tion Yojana (HRIDAY).The challenges
“Several challenges remain with respect to the devel-
opment of smart cities including those related to pro-
ject funding, project management, government deci-
sion making and policy and regulatory framework,” P
N Sudarshan, a senior director at Deloitte said.
Unlike other more developed markets internation-
ally, India’s urban local bodies (ULBs) have fre-
quently lacked institutional capacity to develop pro-
jects and collaborate with private-sector partners on
their own. Indeed, the inability to attract alternative
revenue streams and develop more durable local
funding sources is a severe financial constraint tostates and cities alike. Although SPVs offer a new ap-
proach to chart more efficient urban development,
they are unlikely to solve all of these various govern-
ance and investment concerns by themselves.
One of the major challenges of the ‘mission’ is the
uneven financial health of cities. There is a huge gap
in the financial position of all 33 cities. This creates
unequal opportunities for the cities to raise funds.
That is the reason, cities like Pune, Bhubaneswar,
Kochi are doing very well in terms of raising money,
while other small cities like Guwahati, Solapur and
Jaipur are struggling to attract funds and investors.
Even the private players are avoiding cities where in-
frastructure challenges are larger and opting for cities
where project implementation is smoother and infra-
structure bottlenecks are minimal.
“This project is tougher than what we had thought.
We are now discussing how to collect this amount.
People thought that as Guwahati is included in the
list of Smart City projects, so lots of money will come.
But this is not the case,” Assam’s Urban DevelopmentCover Story