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Smart cities mission hit by funding blocks

Half of the 23 cities surveyed do not generate enough revenue to even pay for the salaries of their municipal staff.

, ET Bureau|
Updated: Sep 26, 2019, 11.35 AM IST
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BENGALURU: The central government’s ambitious plan to develop smart cities across India — with the aim of converting 100-500 acres of land across 100 cities — is hamstrung by multiple challenges such as long-term funding, lack of private participation and capacity building, and is far from achieving its target.

As per Smart Cities Council India (SCCI), half of the 23 cities surveyed do not generate enough revenue internally to even pay for the salaries of their municipal staff, while a third of municipal staff positions remain vacant.

“The funding for smart cities is falling through the cracks as there are very few cities doing value capture financing. Some cities will lack the time and resources to complete the projects. There needs to be an incentive-based mechanism, rather than grant-based,” said Vivek Mittal, director, Deloitte Touche Tohmatsu India. According to SCCI, the name ‘Smart Cities Mission’ should be replaced with ‘Smart Area Mission’ as no city under the plan will turn smart with the funding provided under the mission. Only an area will receive focused attention in its transformation.

Even “cities planning ‘Smart Areas’ are facing an uphill task because of stumbling blocks like local mindsets and capacity building. As we have been visiting several cities around the country, we are convinced that unless capacity building for the conceptualisation of projects, procurement and standards and specification guidelines are not carried out, the rollout will face delays,” said Pratap Padode, founder, SCCI.

So far, around 10% of the planned projects have been completed over the past three years and only five years are left to complete the mission started by the Centre.

“The government has tendered out 3,880 projects worth ?1,418 billion; grounded 3,100 projects worth ?1,004 billion and completed 1,100 projects worth over ?201 billion. The remaining projects are expected to be tendered out by March 2020,” said Kunal Kumar, joint secretary and director of Smart Cities Mission at the urban affairs ministry.

LONG-ROAD


Chennai is working with different government departments to unlock surplus and under-utilised land parcels across the city, which is included in the list of smart cities, to generate revenue. “The biggest challenge lies in the Municipal Act, which needs an overhaul as its DNA is contaminated. With a redrafted Municipal Act, the basic issue of accountability and responsibility can be addressed, to begin with. With credit rating having been secured, cities are at an advantageous position to raise funds through bonds,” said Padode.

Building 100 smart cities was an election promise of the Bharatiya Janata Party (BJP) in 2014. After coming to power, the Narendra Modi-led government allocated ?7,060 crore for this purpose in its first budget. It formally launched the Smart Cities Mission in June 2015, with an allocation of ?48,000 crore. Over the next two years, 100 cities were selected for central grants of ?500 crore each.

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