The government is setting a new example in city governance by adopting special purpose vehicle (SPV) model under the smart cities mission. Basic challenges in city governance, however, remain

If things go as planned, India will have a set of clean and livable urban localities in the coming five years. These localities will be small islands of excellence in cities. They will have assured water and power supply, smart waste management, walkway, security of women and children and electronic governance, among others. Thanks to ministry of urban development’s (MoUD) '48,000 crore smart cities mission which would develop an area of a minimum size of 50 acres to 500 acres as smart localities or say pilots in 100 cities. To ensure time bound implementation and prevent cost escalation in smart cities projects, the government has brought in the concept of special purpose vehicle (SPV), to be registered under companies Act, having representation from urban local bodies (ULB), state government and private partners. The government’s strategy, however, is not foolproof. The programme faces teething troubles of raising resources and capacity building of municipal cadres. Moreover, it is mute on the lack of political representation and empowerment of ULBs.  

First let us have a look at what and how urban residents are going to get benefited by the mission.

According to the smart cities mission guidelines released by prime minister Narendra Modi in June, these localities will act as “a light house” to other aspiring cities and areas within a city. For Jagan Shah, director, national institute of urban affairs (NIUA), a think tank of the MoUD, these localities would be a “demonstration” of sound planning and professional urban management and governance. The objective is to provide, the mission document says, “core infrastructure and give decent quality of life to its citizens, a clean and sustainable environment and application of smart solutions”.

The mission provides for two strategies for development activities: area base development and pan city project. The area development, say the guidelines, can be done in three ways: retrofitting -- upgrading a city infrastructure in an area of minimum 500 acres; redevelopment -- replacing the existing infrastructure and new construction in minimum 50 acres; and Greenfield -- building an area of minimum 250 acres from scratch. Irrespective of the model, the area will have all basic civic amenities. 

The pan city project provides for use of technology in the existing city-wide infrastructure, intelligent transportation for example.

As per the guidelines, ULBs have asked city residents to choose the kind of area based development, location of the area and the project which can be taken up under pan city category. “It is interesting to note that the smart cities mission has placed people in centre of activity. People have to be consulted for making the smart city plan. One hopes the government will have an institutional arrangement to continue this engagement,” says M Ramachandran, an urban development expert and former urban development secretary.

All these work would be undertaken by the SPV. The ULB and state government, as written in the mission guidelines, will have equal equity shareholding in the SPV.

SPV for professional city management

Under the smart cities framework, the state governments and ULBs will have to delegate powers to the SPV to make it a single body to approve, execute and monitor projects related to the smart cities mission. It would also collect user charges, taxes and surcharges as authorised by the ULBs in the particular area.

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