8 Years On, Are India’s Smart Cities Ready?

Bengaluru is not alone. Since 2015, only 34 cities have been able to meet their targets under the Smart Cities Mission while the remaining 66 are yet to complete work. The Smart Cities Mission was originally supposed to conclude by 2020 and was extended to June 2023 due to disruptions during the Covid-19 pandemic. It has now been extended till June 2024 due to incomplete works. Despite the extensions, the programme has seen slow progress.

The Parliamentary Standing Committee on Housing and Urban Affairs, in its report in March 2023, noted that 68% (5,343 out of 7,821) of projects were completed under the Smart Cities Mission (SCM). The city-wise numbers show that the Mission still has a long way to go. Some cities reported excess projects being implemented while others were yet to complete the originally planned projects. In addition to Covid-19, regional considerations, the report cites land issues and multisectoral projects as reasons for the delay in meeting the targets.

What is a ‘smart city’?

SCM was launched in June 2015 with the objective of promoting cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘smart’ solutions. The purpose of the Mission is to “drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to smart outcomes”.
Models of development followed in smart cities were expected to act as replicable models in other aspiring cities.

However, the Mission statement does not provide a concrete definition of a ‘smart’ city and leaves open a wide ground for its interpretation.

“There is no proper definition for a smart city. Other countries have at least defined it in some form while India hasn’t. Our transportation model for instance is totally borrowed from the western model,” said Mahalaya Chatterjee, Professor of Urban Economics at the University of Calcutta. There is a serious need to define what a smart city is in the Indian context. The way Europeans view it and Americans view smart cities are poles apart, she added.

“While it is not mandatory to have a smart city paradigm, there is a case for India to have specialised economic zones and cities with particular specialities. In that backdrop there is a need to define what a smart city is, in the indian context,” said Srikanth Viswanathan, Chief Executive Officer at Janaagraha - Centre for Citizenship and Democracy, a Bengaluru-based research-cum-advocacy group actively working in the urban sector, with the Union government and various state governments.

The Mission guidelines say the priority is to develop the core infrastructure elements in a smart city: water and electricity supply, sanitation, public transport, affordable housing, IT connectivity, e-governance and citizen participation, sustainable environment, safety and security, and health and education.

“The Mission is actually a pilot study, using a test-learn-scale approach to understand how certain projects could be implemented in cities. Technology or ICT [Information and Communication Technologies] component has been given importance in smart cities and it is helping bring about a collaborative approach with multiple stakeholders, with transparency and accountability,” said Sivasubramaniam Jayaraman, National Lead - Transport Systems and Electric Mobility, at the Chennai-based think tank Institute for Transport and Development Policy (ITDP), which works with cities to create healthy and liveable communities through high-quality public transport including e-mobility, safe spaces for walking and cycling.

Shedding further light on a possible definition, Viswanathan said state governments need to play a strong role in identifying the need for Special Economic Zones or new cities “with specific purposes such as attracting investments and creating jobs”. If a city has whatever is needed to attract investments, create jobs, and offer basic dignity of life for citizens living, working and playing, then that becomes a Smart City, he added.

“No longer is it a government-driven approach. Many experts are being roped in to build the cities under the Mission. We are designing cities to meet the needs of the local population and the Mission is enabling cities to learn from each other in various dimensions,” added Jayaraman.

Kakinada tops the list followed by Davanagere; Amaravati shows zero progress

A closer look at the data presented by the Ministry of Housing and Urban Affairs reveals that the ground realities vary significantly across cities.

The report of the Parliamentary Standing Committee on Housing and Urban Affairs, tabled in the Parliament in March 2023, said the total number of completed projects--68% of planned projects, as we said above--is ‘misleading’, as this includes excess projects completed by 33 cities. Sixty six of the 100 ‘Smart Cities’ are yet to meet their physical targets eight years after the flagship scheme of the Narendra Modi government was first launched, while one city completed exactly the number of projects planned.

In a response to an RTI filed by IndiaSpend, the ministry issued a clarification that, as of May 17, 2023, there were 7,847 projects for which orders were issued of which 5,732 have been completed--a revised progress rate of 73%.

Of the 34 cities which completed their targets, 17 saw a completion rate of more than 200%--that is, they had completed at least double the number of projects originally planned. Seventeen others saw a completion rate between 100% and 200%. Kakinada in Andhra Pradesh recorded the highest rate--it completed 72 projects against the 10 that were originally planned. Aligarh recorded a 100% rate, completing all its 32 planned projects.

A deep dive into the data showed 22 cities to have completed less than 25% of the projects and 19 other cities completed 25-50% of the projects. Of the 66 cities which are yet to see results, 25 cities completed more than half the projects originally planned.

Urban experts caution against reading too much into the figures of completion.

“Completing more projects than planned indicates projects outside the ambit of SCM would also have been included in the whole thing, indicating resource mis-allocation. The projects have to be very specific and not everything can be resolved by using technology or smart solutions,” said Chatterjee.

Amaravati, which is currently the de-facto capital of Andhra Pradesh, saw zero projects being completed (of 42) despite an infusion of a combined sum of Rs 976 crore from both Union and the state governments. There has been confusion on the issue of AP’s capital, with Chief Minister Y.S. Jagan Mohan Reddy announcing on multiple occasions (January and April 2023) that he would shift the entire administration to Visakhapatnam.

IndiaSpend has reached out to Vikas Yadav, Managing Director and Chief Executive Officer, Amaravati Smart and Sustainable City Corporation Limited, over email and phone seeking clarification on the progress of the works.

We have also reached out to Lakpa Sherpa, Chief Executive Officer, Gangtok Smart City Limited, T.V. Krishna Murthy, Chief Executive Officer, Shillong Smart City Limited, Lakshmanan S., Managing Director, Guwahati Smart City Limited (GSCL) and Selva Eslavath, Commissioner, Karimnagar Municipal Corporation, over phone and mail. The story will be updated once we receive the responses.

While funds see 88% utilisation, cities struggle to complete projects

As part of the scheme, financial support amounting to Rs 48,000 crore was pledged by the Union government, over a period of five years, with every city being provided a grant of Rs 100 crore per year subject to a matching share being contributed by state governments. The scheme works on a formula of 50:50 fund matching with an SPV [Special Purpose Vehicle, which is a subsidiary company] being operationalised to plan, approve, implement and evaluate the progress in each city.

Of the total pledged financial support, Rs 37,410.43 crore had already been provided by the Union government as of March 2023, government data show, of which 88.4% (Rs 33,074.4 crore) has been utilised by the states.

Eleven states reported a fund utilisation rate of more than 90% of the Union government funds, with the highest being reported by Jharkhand (98.7%), followed by Rajasthan (95%) and Karnataka (93.7%). Assam and Mizoram reported the lowest utilisation rate at 70% and 68%, respectively.

Amongst the Union territories, Lakshadweep reported the lowest fund utilisation with only 24% of the funds being utilised, as against Delhi and Jammu and Kashmir which reported more than 80% use of the funds disbursed by the Union government.

Despite the utilisation of Union government funds, work on smart cities has not been able to progress due to multiple roadblocks. While the Ministry of Housing and Urban Affairs pointed to disruption owing to Covid-19, multisectoral projects and land issues as the reasons for the delays, experts IndiaSpend spoke to have pointed to lack of timely availability of funds, differences in states’ priorities and bureaucratic delays as additional reasons.

“Covid-19 saw diversion of funds from SCM to other important programmes. So, state governments were not very keen. This fund crunch delayed the works,” said Chatterjee.

“There is an irony that many of our cities don't have enough capital to meet their infrastructure and service delivery requirements on the one hand. But on the other hand, they are left with unspent funds at the end of the year,” said Viswanathan. He also highlighted long-drawn timelines to conceive projects, obtain vendors, and to execute works in a time-bound manner as challenges that remain, as the Mission gets extended for an year more to meet the targets.

“Funds have never been a constraint for smart cities. The SPVs can change the projects when they do not seem relevant to the needs of the cities; they have been given everything, delays are very common in any infrastructure projects, the stakeholder coordination is one of the important factors” explained Jayaraman. He, however, said that progress should not be defined only by project completion rate or funds’ usage and added that “several other factors are at play such as transfers, political priorities” and felt “a more detailed lens” was needed to look at the progress of the programme.

States’ contribution to Smart Cities Mission has been lesser than the Union govt’s

While states have been able to utilise most of the Union government funds, they have not matched the Union government’s share of funds. The states’ cumulative contribution to the SCM, between the years 2015 to 2022, was Rs 32,149.14 crore against the Union government’s contribution of Rs 36,561.16 crore--a deficit of Rs 4,481.82 crore.

Barring Assam, all states in the northeast reported a significantly low contribution of the state governments, impacting the progress of the Mission. Odisha, Kerala, Jharkhand and Haryana reported zero deficit.

Experts attribute the slow progress of work and lesser contribution by their state governments, in smart cities in the northeast to lower levels of industrialisation, a difference in priorities and the structure of their economy, given the topography.

“They however seem to be showing much enthusiasm in micro-projects such as bicycle adoption for commute, especially Agartala,” pitched in Jayaraman, quoting ITDP’s work in collaboration with North Eastern states as part of the SCM.

Amongst the UTs, which are centrally administered, Jammu and Kashmir (including Ladakh) and Puducherry saw a significant difference between the funds provided by the Union government and the contributions made by the local administration.

While the trends in expenditure by the smart cities and the associated state support suggest more room for improvement, experts feel the Mission should be assessed on other parameters.

“The scheme ideally ought to be assessed on the outcomes of the proposals made originally. We need to compare the goals and targets laid out in the smart city proposals submitted by cities with what was achieved against them, and at what cost” noted Viswanathan. “Each city has different needs and capabilities and thus cannot be evaluated on a single set of parameters” he added.

“Smart solutions are fine but who is benefiting from it should also be assessed. Technical interventions have to be practical as well. In addition, there should be an assessment made if the powers of a Smart City SPV to implement are overlapping those of the local municipal body,” suggested Chatterjee.

IndiaSpend has also reached out to Kunal Kumar, Mission Director, Smart Cities Mission, over phone and mail, seeking clarification regarding the reasons for delays in the Mission and the efforts being made by the government of India to speed up the works. We have also reached out to Hitesh Vaidya, Director, National Institute of Urban Affairs seeking comment about how the think-tank is aiding the Mission’s progress. The story will be updated once we receive a response.

(This is the first part of a two-part series on the Smart Cities Mission and urbanisation trends in India.)

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