Finance Minister Arun Jaitley’s big push for smart cities in Thursday’s Union Budget will finally provide fresh direction and a sense of legitimacy to a concept that has long been popular but not enthusiastically implemented.
Mr. Jaitley set aside a sum of Rs. 7,060 crore for the development of 100 smart cities, which was originally promised in the Bharatiya Janata Party’s election manifesto.
“As the fruits of development reach an increasingly large number of people, the pace of migration from the rural areas to the cities is increasing. Unless new cities are developed to accommodate the burgeoning number of people, the existing cities would soon become unliveable,” Mr. Jaitley said.
The cities will be developed as satellite towns of larger cities and by modernising existing mid-sized cities.
The basic premise of any small city is making infrastructure network and delivery of services more efficient. This is done across verticals such as telecommunications, logistics, water and gas supply through methods such as smart meters, sensors and global positioning systems.
In India, setting up smart technology in established cities takes a much longer gestation period as most of these cities were not built keeping technology advancement in mind. On the other hand, greenfield smart cities that are coming up in and around metros — the ones in the Delhi-Mumbai industrial corridor or the Lodha Group’s Palava city in Mumbai — come with greater potential and turnaround time.
“I’d say the amount that is allocated is very reasonable and will help in slowly making the smart city concept popular. There are close to 50 smart grid pilot projects being conducted in mid-sized cities around India, but the municipal corporations move slowly as funds for technology-aided development are scarce,” said a top executive at an American conglomerate that is currently participating in a number of Indian smart city projects.
By allocating money exclusively for smart city projects, the Centre will therefore be able to gently nudge the more entrepreneurial of cities while convincing the late adopters that smart technology is worth it.
Other steps to get the process moving, including relaxing the conditions required for foreign direct investment, will help in the creation of more greenfield satellite cities. This is because, in most cases, information technology only accounts for five per cent of the project’s total cost.