Shaping Future- The Government Needs to Harness Technical, Financial And Administrative Capabilities

India is a land of opportunities and an increasing number of people are moving to cities each day in pursuit of better job opportunities and an improved lifestyle. Statistics show that in another 15 years, the urban population in India will contribute 75% to the Indian GDP from 60% now. This kind of urbanization is a major sign of the development of the nation and Indian cities are said to be its engines of growth.

Naturally, then, the cities must go through a facelift to be equipped to handle urbanization of such a massive scale. Indian cities must, therefore, become smart enough to handle complexities of urban life efficiently and provide enough facilities and opportunities to make its citizens feel happy and safe.

With 65% of the Indian population under the age of 35, young India is set to be the harbinger of change and the biggest beneficiary of urbanization. Taking cognizance of this fact, the current NDA government is going all out to fuel the dreams of its young and aspirational populace.

Over the next two decades, therefore, the government has plans to develop 100 “smart cities” and has already allocated ‘70.6 billion for development of the same in its Budget of 2014-15. The Indian government is also keen on roping in both investments and expertise from Japan, Singapore and China that have deployed smart city models in their own nations.

The President of the United States, who had visited India, also made a public announcement that the US would partner with India to help achieve its goal of building 100 “smart cities” in 20 years.


Simply put, it is a city that is able to use information and communication technology (ICT) to enhance living and working conditions in the city, thus leading to its greater sustainability. There are three pillars on which this can be achieved. These are “collecting”, “communicating” and “crunching” data or relevant information for the improvement of such a city.

By mining data from various systems that control basic utilities in a city such as power, transport, water, and emergency services, amazing insights can be brought forth. When these insights are presented to the regulatory authorities, they can deploy resources for the betterment of the quality of life in such cities.

In the long run, due to improvement of vital infrastructure in these cities, businesses are encouraged to invest in them. This creates a long-term sustainable urban environment that in turn aids economic development.


The world over, governments are on an overdrive to implement “smart city” models. The global market for “smart cities” is, therefore, forecasted to grow from $410 billion in 2014 to $1.1 trillion by 2019, clocking a compound annual growth rate (CAGR) of 22.5%. Not only are developed nations such as the US and the UK working towards such implementation, countries in the far east too are fast implementing such innovative models.

Iskandar is Malaysia’s first “smart city” that is already functional, Fujisawa in Japan and Songdo IDB in Korea are two cities that are in advanced stages of development and Singapore claims to become a smart nation by the end of 2015.

China that is particularly an inspiration for India, boasts of its state of the art “eco-city” Tianjin that has now been globally acclaimed for bringing in modernization through urbanization. Based on the success of the Tianjin model, the Chinese government is replicating the development plan in 193 other cities.


The question that arises is why have “smart cities” become so critical for India’s progress now? The answer lies in a single word – “urbanization”. Economic development goes hand in hand with urbanization.

Research experts predict that by year 2050, the number of people living in Indian cities will touch 843 million as an estimated 25-30 people will migrate every minute to major Indian cities from rural areas in search of better livelihood and lifestyles. To accommodate such mass scale urbanization, the need of the hour is to look for smart solutions to reduce expenses, manage complexities and increase efficiency.

Consider, for example, a smart water or a power grid that can accurately monitor usage, detect patterns and thus regulate distribution accordingly during peak and non-peak hours. Leakages and the likes are also taken care of due to efficient monitoring, thus ensuring that there is no wastage.


Drawing inspiration from China, which has a large population like India, the Indian government believes that India will be able to achieve its ambitious goal of developing 100 smart cities in 20 years. However, this will require a lot more than mere replication of models deployed in China or elsewhere.

Each Indian smart city should be developed around the needs and wants of its people. Rather than just focusing on technology, there should be a strategic plan for urbanization with clear laid-down objectives of economic inclusion, job growth and overall productivity.

Taking cognizance of the same, the government has plans to have different categories in smart cities based on population and importance. As per the government plan, the focus is on state and union territory capitals and cities of religious and tourist interests (even if the population is 1 million or less).

Followed by this category are cities in the bracket of 0.5 to 1 million population, cities in the population range of 1 to 4 million people and finally cities with a population of 4 million people or more. Indian smart city models will have to be hinged on three important pillars of institutional, physical and social infrastructure. Institutional infrastructure refers to planning and management activities that have to be carried out by regulatory authorities.

Physical infrastructure has to focus on improving public transport systems and improvement and enhancement of roadways. Social infrastructure pertains to the betterment of healthcare, education and entertainment systems. Though all this sounds good in theory, ground realities are starkly different. There is no clarity from a policy perspective of what these smart cities will set out to achieve.

Pertinent questions that need to be answered are: will such smart cities address issues of safety, economic inclusion and productivity? From what we have heard from public speeches and media reports, Modi’s smart city vision has proposed to not just build new cities but to overhaul existing urban settlements.


The idea of an overhaul is a step in the right direction for it can be said that over the years Indians have conditioned themselves to make do with erratic power and water supply, hazardous levels of pollution, unsafe public places and public transport, be it in metros or the suburbs.

However, the so called overhaul is easier said than done. The roadblocks of building smart cities at this stage are plenty. The first is with regards to governance. India, unlike China, lacks the presence of an autonomous regulatory body. Each city is managed at best by a patchwork of city, state and municipal bodies that lead to overlapping of regulations and delays in clearances.

For a smart city model to be operational, a centralized governing structure has to be put in place. Clearances should be timely and carried out online and for tariffs, a single regulatory body that keeps financial sustainability in mind for all players should be set up.

The second and perhaps the most crucial problem is that of financing such an ambitious project. Investment estimates in urban infrastructure shows that a Per Capita Investment Cost (PCIC) of ‘43,386 will be required over a 20-year period. Considering an average of 1 million people live in each of the 100 smart cities, the total estimate of investment requirements comes to ‘7 lakh crore over 20 years (with an annual escalation of 10%). This works out to a requirement of around ‘35,000 crore annually.

Given the fact that Indian processes are long drawn and contentious and its previous experiments of building industrial parks as a precursor to smart cities have seen little success, it is understandable that global investors are wary at this stage. This is despite the fact that Japan has pledged its support in transforming Varanasi into a smart city, while American companies have offered help in the cities of Ajmer, Aurangabad and Vishakapatnam.

The Modi government’s preferred model for funding smart cities is the Public-Private Partnership (PPP) model that will serve both public as well as private interests instead of a private only model that may be myopic in its vision and cater to affluent residents only.


In a country like India, localization and systemic research are key. For instance, higher educational institutes such as IITs and IIMs can be roped in for suggesting innovations with regards to important issues such as waste management, pollution as well as contamination.

The need of the day is for implementors to be aware of relevant technologies that have to be tailor-made and used effectively, taking into account the topography, location and natural resources of the considered area. The government must, therefore, harness technical, financial, administrative capabilities and focus on developing an urban agenda that is both inclusive and sustainable in the long run.

The desire for better quality of living and working conditions is palpable pan India and the onus cannot be on the government alone. Residents, entrepreneurs and visionaries must all put their best foot forward and support government initiatives in the best way possible.

The time is ripe to focus the collective energy of the society on taking India to a new realm of urbanization and long-term sustainable development through the smart cities route.

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