SMART CITIES MISSION (SCM)

Why in the news?

Standing Committee on Housing and Urban Affairs presented its report “Smart Cities Mission: An Evaluation”. 

Progress highlighted by the Report

• Financial progress: Out of its proposed share, the Central Government has released 86% up to December 2023. 
  • While 45 smart cities have received 100% of central funds, only 28 cities have received 100% of their share of funds from States/ULBs. 
• Additional funding sources: While half of cities could not undertake any project under PPP model, only six cities could generate funds through loans for Smart Cities projects. 
• Physical progress: Till December 2023, out of 7,970 projects taken up by Smart cities, 6,419 projects have been completed. 
  • Progress of work is from 80% to 100% in 57 cities amongst which Madurai is the only Smart City which has completed 100% of its projects. 

About Smart Cities Mission (SCM)

• Launch: Centrally Sponsored Scheme launched by Ministry of Housing and Urban Affairs in 2015. 
• Objective: To promote cities that provide core infrastructure, clean and sustainable environment and give a decent quality of life to their citizens through the application of ‘smart solutions’.
• Smart Cities: 100 cities have been selected for development as smart cities. 
  • The timeline of five years for completion of the projects was set between 2019 and 2023. However, the Mission is now extended to June 2024.
• Funding: Central Government gives financial support to the extent of Rs.48,000 crore over 5 years i.e. on an average Rs.100 crore per city per year. 
  • An equal amount on a matching basis is being provided by the State/Urban Local Bodies (ULBs), apart from 13 Himalayan and North-eastern States where the sharing ratio has been revised to 90:10.
  • Additional resources are raised through convergence, from ULBs’ own funds, grants under Finance Commission, innovative finance mechanisms such as Municipal Bonds, other government programmes and borrowings.
• Public Private Partnership (PPP): Emphasis has been given on the participation of private sector through PPP. 

Development Strategy under Smart Cities Mission

• Area Based Development (ABD): Strategic components of ABD are city improvement (retrofitting), city renewal (redevelopment) and city extension (greenfield development).
  • Retrofitting will introduce planning in an existing built-up area consisting of more than 500 acres to make the existing area more efficient and liveable. 
  • Redevelopment will effect a replacement of the existing built-up environment and enable co-creation of a new layout with enhanced infrastructure using mixed land use and increased density. Redevelopment envisages an area of more than 50 acres.
  • Greenfield development will introduce most of the Smart Solutions in a previously vacant area (more than 250 acres) using innovative planning, plan financing and plan implementation tools (e.g. land pooling/ land reconstitution) with provision for affordable housing, especially for the poor.
• Pan-city development: It envisages application of selected Smart Solutions to the existing city-wide infrastructure. Application of Smart Solutions will involve the use of technology, information and data to make infrastructure and services better.
• Implementation: Implementation at the city level will be done by a Special Purpose Vehicle (SPV) created for the purpose. 
  • SPVs plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects.
  • SPVs are entities registered under The Companies Act, 2013, with 50:50 ownership of ULBs and respective States.
• Integrated Command and Control Centre (ICCC): ICCCs are built to provide centralised monitoring of various functions of the city and use of digital technology for faster and improved decision-making.

Issues and challenges affecting Smart Cities Mission

• Frequent variations in projects: Cities had initially planned to execute around 5,151 projects, but projects have increased to 7,970 due to modifications and changes in initial planning. 
  • Such modifications are attributed to on-ground implementation challenges such as land availability, litigations, regulatory challenges, financial difficulties, technology selection issues etc. 
• Lack of financial progress: Fund transfer has been slow as some cities have received below 50% of their eligible funds. 
  • Fund transfer from central government has been slow due to low utilization of funds by SPVs.
• Intercity disparity in progress: In comparison with an average 6% incomplete projects in the rank-wise 20 best performing cities, almost 47% projects are at work order stage in the 20 cities at the bottom of the ranking. 
• Lack of monitoring for convergence projects: Since the convergence projects involve multiple stakeholders and implementation is done by different agency, there have been instances of delay in implementation and receiving feedback.
• Lack of cross-learning: Multiple platforms have been created for cross-learning including Sister Cities concept but these have not been utilized to their full potential. 
  • Eg. Chennai had established a sister city relationship with the Chinese city of Chongqing.
• Lack of defined governance structure of SPVs: Project execution was affected due to frequent transfers of CEOs of SPVs and lack of clear guidelines and directions for dedicated CEOs with fixed tenure.
  • Various SPVs have underperformed due to lack of staff, capabilities, execution abilities and monitoring mechanisms. 

Recommendations / Way Forward

• Master plan for Greenfield Development: MoHUA should spearhead the planning and provide expertise for preparing the master plan of ULBs and it should incorporate sustainable green technologies. 
• Governance structure of SPVs: Appointment of dedicated CEOs with a minimum fixed tenure along with strong governance structure for SPVs including representation from city administration, local self-government, experts in urban development and concerned stakeholders.
• Next phase of Smart Cities Mission: The Ministry should get the third-party assessment of the various projects undertaken in the Smart Cities Mission and thereafter, consider to launch next phase of the Mission.
  • In the next phase, thrust should be on tier 2 cities, located between 50 to 100 kilometers from capital cities and tourist cities, if not already covered. 
• Pan-city projects: Smart Cities Mission should put greater emphasis on Pan City projects focusing on implementing technology-driven solutions across the entire city for ensuring comprehensive and holistic development. 
  • Presently, pan-city projects do not comprise more than 50 percent of total projects in 76 smart cities. 
• Strengthening ULBs: A plan should be chalked out to strengthen the capabilities of the ULBs in small cities and enhance their capacity to tap innovative financing mechanism such as municipal bonds, pooled finance mechanism etc. 
• Role of ICCCs: Role of ICCCs should be expanded by enabling them to provide a variety of services in the field of health, internal security, waste management, traffic management, disaster management and e-governance etc.