Cover Story
cern remains the rewarding return on the project.
Also the gap to maintain the projects is also signifi-
cant. The ‘smart cities’ programme plans extensive
coverage to facilities such as- Water, Sanitation,
Waste and Garbage treatment, Sewerage, Urban
transport, Street lighting, Roads maintenance etc.
Additionally, large scale urban migration also exerts
pressure on the ULBs to create new urban infrastruc-
ture while also maintaining the existing facilities that
have been built over the years.
Arindam Guha, senior director, Deloitte in India
said: “The basic infrastructure project costs would be
at least 10 times the sanctioned amount. The gap
would have to be met by states, urban bodies
and companies. Companies were unlikely
to come forward if their assessment of
the business was not rewarding enough”.The Road ahead
Taking lessons from the previous feder-
ally driven city efforts, the Smart City
Mission can only reach its objectives if it
focuses more on economic goals, govern-
ance reforms, and sustainable capi-
tal flows.
“India must elevate the
financial standing of its
urban areas, making
them more attrac-
tive destinations for
future investment.
Across all levels of
government, par-
ticularly among dif-
ferent city agencies,
India must ensure
that dependable
capital is available
to meet economic
goals in years to come. Increased private-sector en-
gagement should be a paramount concern, which
requires more active, coordinated leadership in pro-
ject management, technical guidance, and risk miti-
gation,” said a recent report by the Brookings Insti-
tute, a US think tank on the ‘challenges of smart
cities in India’.
This clearly signals the need for urban India to get
more ‘smart’ about the way it funds its infrastructure
and service delivery.
The government has already started working onvarious models to help cities draw up plans to raise
money. The government has directed the Urban De-
velopment Ministry to issue Value Capture Financing
(VCF) guidelines that will provide cities with innova-
tive options to generate more funds. The PMO is di-
rectly monitoring the progress and is holding monthly
meetings to ensure that the guidelines are rolled out
effectively and without delay.
Currently the state governments collect urban tax,
area-based development charges and charges for reg-
ularisation of unauthorised colonies. The VCF pro-
poses Tax Increment Financing (TIF) followed in the
United States. The TIF allows the government to set
up an incremental revenue from future increase
in property taxes.
The government is also looking at the
option of implementing the land pooling
schemes followed by Gujarat and Hary-
ana where land owners agree to exchange
their barren lands for infrastructure ser-
viced smaller plots. Increased Floor Area
Ratio to generate additional funds is also
being discussed.
Another reform which is re-
quired is that many munic-
ipal services, such as
electricity and water,
are treated as public
goods. By making
infrastructure and
services “smarter,”
urban planners hope
to maximize these
scarce resources.
Strong multi- stake-
holder partnerships
are integral in order
to implement the
good governance
strategies that can ensure the delivery of goods and
services and make these cities truly “smart” as well as
sustainable.
However, there is a need for institutional reform
measures in the areas of public financial manage-
ment, and capacity building at urban local bodies
(ULBs). A mindset change is also required among
citizens, who should be willing to pay for services,
while administrators should provide quality services
at affordable rates to bring about sustainable devel-
opment.<Basic infrastructure projects
cost would be at least 10 times
of the sanctioned amount