T
HE financial viability of
the Smart Cities Mis-
sion depends a great
deal on the huge invest-
ment by private players. However
the government and the local ur-
ban bodies need to work on viable
business models and a systemic
structural reform to attract the
private players to invest in the
smart city projects. Lack of clarity
on the Public Private Partnership
(PPP) policy, unprofitable busi-
ness models and slow tender pro-
cess from the local urban bodies
are creating many stumbling
blocks to attract private players for
the ambitious project.According to an estimate by
McKinsey and Co, a startling $1
trillion is needed to finance these
cities by the 2022 target. The High
Power Expert Committee (HPEC)
on Investment has also estimated
that Indian cities require
Rs.35,000 crore per year till 2022
for the supporting infrastructure
and maintaining them. Of the
huge investment requirement, the
central government will be provid-
ing grant of Rs.48,000 crore with a
matching amount from the state
exchequer. Experts say that still re-
mains a huge financial gap, which
can be bridged by the participation
of private players.“Developing the project in the
shortlisted cities would ensure
quality infrastructure, technol-
ogy-enabled services, and sustain-
able public transport. The Smart
Cities Project would require huge
fund mobilization that could be
brought about by public-private
partnerships”, says Sanjay Dutt,
Managing Director, India, Cush-
man and Wakefield.
Apart from the financial re-
quirement, the concept of smart
cities has many challenges in im-
plementation, and that is the rea-
son the government is encourag-
ing PPP model for effective
implementation of smart cities.Smart Cities
Require Smart
PPP Model
Smart cities require smart funding models. Apart from the
government grants, city projects require robust public private
partnership models to become financially viableCover Story