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Smart Cities projectFrom France to US, a rush to offer assistance, funds

Private investments to account for 80% of estimated spending.

Written by Shalini Nair | New Delhi |
July 12, 2015 12:00:00 am
Smart Cities, Smart Cities project,  Smart Cities investment, india Smart Cities project, Ministry of Urban Development, Smart Cities, Smart Cities mission,  Smart City mission, urban smart city, AMRUT missions, smart city states, smart city development, india news, nation news The state and local body’s share of funding is to be generated either through its own resources or through loans from domestic or external sources.

The Ministry of Urban Development (MoUD) is anticipating private investments worth at least Rs 4 lakh crore till 2020 in the 100 Smart Cities, which would be chosen by states by the end of this month. This accounts for 80 per cent of the estimated spending on the mission.

With the country’s urban infrastructure and services sector being thrown wide open for private investment for the first time, the mission has piqued the interest of several foreign governments and bilateral and multilateral agencies eager to have a share of the pie.

Countries that have so far offered to share technical know-how for the mission include France, which has evinced interest in Nagpur and Puducherry, United States, which is interested in Ajmer, Vizag and Allahabad, and China, Sweden and Germany, which have volunteered help but are yet to zero in on specific cities. Spain’s Barcelona Regional Agency has expressed interest in exchanging technology with the Delhi.


Singapore, too, has shown interest. “The Building and Construction Authority of Singapore is looking at platforms for our companies to explore opportunities to participate in India’s Smart Cities initiative,” said Koh Lin Ji, Group Director (International Development) of the authority that regulates and develops Singapore’s construction sector.

The list of organisations and multilateral agencies that have offered technical assistance include the World Bank, the UK government-owned Department for International Development, Asian Development Bank, German government’s KfW development bank, Japan International Cooperation Agency, the US Trade and Development Agency, United Nations Industrial Development Organisation and United Nations Human Settlements Programme.

Officials said that some of these international lending agencies have also offered financial assistance through loans.

The union government’s Smart Cities initiative involves efficient provision of infrastructure and services, urban mobility and governance, mainly through use of digital technology. Only 20 per cent of the total funding for the recently-launched mission is expected to come from central and state governments, with each putting in Rs 48,000 crore.

The state and local body’s share of funding is to be generated either through its own resources or through loans from domestic or external sources.

“The private sector will be allowed to get returns on investment by levying user charges on people for providing improved services. For instance, if they minimise distribution losses and ensure uninterrupted water supply, they will be allowed to recover water charges from users. The same goes for electricity distribution, planning new mass transit modes, constructing ring roads in a city or installing and managing CCTV cameras in public areas for ensuring safety and security,” said an MoUD official.

Private sector companies and financial institutions can also be equity partners in the Special Purpose Vehicle that will be formed to create the smart cities, provided the state government and local body are majority stakeholders.

The international governments and organisations will function as hand-holding agencies, one of the two means for state governments to obtain technical assistance for developing smart cities.

Another medium is by hiring one of the 50 consulting firms that have been recently empanelled by the MoUD. The list includes PricewaterhouseCoopers, McKinsey & Company, Lea Associates and Bosch consultants.

“By July 30, the list of 100 smart cities will be ready and the cities will be given four months to come up with their specific plan. After this, technical assistance will be provided which, besides sharing of knowledge, includes help in figuring out the private investment and financing sources,” said officials.

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