For decades, Indian cities with their overburdened infrastructure have received little or no attention, mainly because the political vote base lay outside Urban India.

This despite the fact that by 2030 Urban India would contribute to 70 percent of India’s GDP and new jobs, as highlighted by a McKinsey report.

To correct this anomaly, Prime Minister Narendra Modi launched the ambitious smart city mission in 2015. But in 2 years, just how much has moved in the 60 shortlisted cities.

CNBC-TV18's Manisha Natarajan caught up with Secretary Urban Development Rajiv Gauba, who is entrusted with the task of this key mission along with others for rejuvenating urban infrastructure, to track the progress.

Q: Critics tracking the progress say, while SPV’s have been formed, the implementation is crawling.

A: The progress of Smart Cities is in the cities, not in New Delhi. I don’t think these critics have visited these cities. They should travel to Pune, Vishakhapatnam, Indore , Bhopal etc, to see the progress. State governments are recognizing the need to move fast on this mission and are deploying some of their best officers for the projects. 70 projects worth Rs.2000 core are under execution already.

Q: Your ministry issued a release saying, 94 cities across 14 states have received credit ratings from agencies such as Crisil as part of their preparations for issuing municipal bonds. The first municipal bonds were to hit the market in March 2017. We haven’t seen any so far.

A: You know we were trying to get a tax-free status for municipal bonds, and that didn’t work out. Now, that the urban development ministry has decided to give an interest subsidy of Rs 400 crore, there is no hurdle left.

The ministry will give an upfront amount for the next 10 years, as a compensation of 2 percent on the total size of the bond issue. This would roughly translate to Rs 60 crore this year. We expect Pune and Ahmedabad to float their bond issue soon. Another 12 will follow.


Q: Would you agree than Indian cities though need much more than just the Smart Cities Mission to succeed, to become livable. Urban Infrastructure in almost all big cities is under stress? 

A: Smart city mission focusses on futuristic renewal projects. It works in conjunction with several other mission launched – key being AMRUT which has a much more focused reform agenda.

The purpose of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is to ensure that 2 crore households have access to a tap with assured supply of water and a sewerage connection; cities develop and maintain green open spaces, and pedestrian, non-motorized and public transport facilities are provided to 500 cities with a population of more than 1 lakh each. Cities must perform is they want to qualify for the incentives and the amount are too large to be ignored.

Under Amrut we have carved out Rs. 10,000 crore as incentives for the remaining 3 years. Another 20% of Rs. 17,400 crore will also be given as incentives from the 14th Fianance commission allocation for city development. These incentives are linked to implementation of 5 key reforms - e-governance, improving efficiency of water and power use, increasing efficiency of revenue collection, single-window clearance for construction permits, and credit rating of municipal bodies.