Guest Column
T
HE Smart Cities Mission, presently covering
33 cities and expected to cover 100 cities
over the next five years poses a unique chal-
lenge to the incumbent cities: raising money
for realisation of the vision.
For the most part, the Government of India has made
a significant provision – Rs. 48,000 crore over the next
five years, distributed over the 100 incumbent cities, im-
plying close to Rs 100 crore per city per annum. This is
to be matched by a similar contribution from the state
government.
In addition, each of the smart city incumbents also
have access to funds under other schemes such as Atal
Mission for Rejuvenation and Urban Transformation
(AMRUT), Swachh Bharat Mission, Digital India, Skill
development, Housing for All, etc. These funds together
are meant to leverage other sources of ‘returnable capi-
tal’ such as debt and private sector investment – com-
monly referred to a Public Private Partnerships or PPP
arrangements – which is still believed to the second larg-
est source of funds after government grants assigned in
the fiscal plans for smart cities.
In particular, it will be interesting to see how PPP ar-
rangements play out in the development of smart cities.
While the private sector has evinced interest in smart
cities, there are several concerns about the public private
partnership model.
Typically, PPPs thrive on bankability of projects be-
cause private sector players try to keep the cost of capital
low by relying more on debt than equity. In the case ofBy Sachin Sandhir
FINANCIAL
SUSTAINABILITY
IS KEY TO SMART
CITIES MISSION