The National Democratic Alliance government's ambitious Smart Cities programme will at best be able set up only 100 pilot projects in the first five years. Contrary to general perception, no 'smart city' will be created in the next five years, though a successful programme could see several smart colonies come up across the country.

A Business Standard analysis of the Smart Cities project shows its success will depend on three factors. First, the extent to which state governments and urban local bodies delegate their powers for the smooth functioning of special purpose vehicles (SPVs) mandated to run the scheme. Second, how the private sector is accommodated in this SPV structure, while maintaining the delicate balance of power between the Centre, states and urban local bodies. Third, how well the SPVs and the private companies involved are able to generate revenue from the real estate they develop in these 'smart' colonies. Considering government funds under the programme are no match for the investment required and the fact that there are few other sources to give the private sector good returns on investments, unlocking the developed land in these colonies will be critical. (BUILDING THE FUTURE <http://bsmedia.business-standard.com/_media/bs/data/general-file-upload/2015-10/100315_02.pdf>)

Detailed queries sent to the Ministry of Urban Development remained unanswered till the time of going to print.

Smart colonies, not cities

To begin with, the government has announced it will soon select 20 cities from the shortlisted 98. Next year, it will select another 40, followed by 40 in the subsequent financial year. By end of this financial year, the first 20 cities are expected to put in place their SPVs to drive the projects.

The Union government has specified what a city needs to achieve to be labelled 'smart'. It has set SPVs at least two targets in this regard. First, redevelop at least 50 acres or retrofit 500 acres or build a green-field project over 250 acres. For any of these, the SPV will have to provide an entire bouquet of smart services, such as electronic delivery of services, intelligent handling of municipal solid and waste water, smart parking and energy-efficient buildings. Achieving this would take 3-10 years, depending on which of the three options a city chose, former urban development secretary Shankar Aggarwal had said in a presentation in Washington in January this year.

The second criterion requires any of the smart services from the entire bouquet being implemented across such a city, such as an intelligent traffic management system or smart metering.

The strategy document of the smart city programme reads: "Since the smart city is taking a compact-area approach, it is necessary that all residents feel there is something in it for them. Therefore, the additional requirement of some (at least one) citywide smart solution has been put in the scheme to make it inclusive."

Jagan Shah, director of the National Institute of Urban Affairs, which is working with the ministry on the programme, says, "These are demonstration projects through which urban local bodies' capacity to execute will be shown. This could later be replicated and scaled up to the city level."

Consider, for instance, the case of Navi Mumbai, with a total area of 85,004 acres. To declare the programme here successful after five years, the authorities will have to either retrofit at least 500 acres with smart services, or redevelop 50 acres or build a new 250-acre smart colony. In addition, Navi Mumbai will have to provide only one pan-city service that could be labelled 'smart'. Though a city could do more if it chooses to, the funds from the Centre are capped.

"Yes, one can say at the moment, we are looking at pilot projects in the selected cities. With the resources made available, it is a start," says Arindam Guha, senior director of Delloite India, one of the consultants empanelled to help states develop smart-city plans.

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