The Smart Cities Project is an ambitious project under which 100 cities in India, approved by the Union

cabinet will undergo radical transformation in order to meet the needs of the growing urban population
in India in an efficient and effective manner; in a ‘smart’ way.

The project has already started with 20 cities out of 98 shortlisted for the project being approved by the
Centre. These cities will be the first to receive funding for the gradual transformation into a 'smart city'.
The list of 20 cities is given below.

Source: The Hindu

WHY SMART CITIES?

The current urban population of India is 31% of the total population of the country which contributes
over 60% of India’s GDP. It is projected that in the next 15 years, it will contribute nearly 75% of the
GDP. Referred to as “engines of economic growth” for this reason, it is imperative that the cities
‘function’ like an efficient ‘engine’ for economic development.

The timing of the project is based on global experience that a country’s urbanisation speeds up after it
reaches a certain threshold urban population (30%) till it reaches about 60 – 65%. With 31% urban
population, India is at transition where the pace of urbanisation will speed up. Before things speed up,
the Smart Cities Project intends to use latest developments in technology especially in Information and
Communications Technology (ICT) to guide and plan urbanisation in the ‘right’ direction.

WHAT IS A SMART CITY?

Smart City can have multiple definitions based on its functions and capabilities. Taking into accounts
some of the prominent definitions by renowned institutes and organisations, Smart Cities are defined as
“cities which have smart (intelligent) physical, social, institutional and economic infrastructure while
ensuring centrality of citizens in a social environment”.
Smart Cities are expected to generate options for all inhabitants to pursue their livelihoods and interests
meaningfully. Certain important aspects of a smart city includes:

Competitiveness – ability to generate employment opportunities, attract investments and an enabling

environment for business.

Sustainability – social, environment and financial sustainability.

Quality of Life – safety and security, inclusiveness, efficient public services, cheap healthcare, education
and opportunities for participation in governance.

PILLARS OF A SMART CITY

Four infrastructures have been identified as pillars of a smart city. They are:

1. Institutional Infrastructure – refers to governance, planning and management of a city.

There is a need to involve citizens in the decision-making process in order for them to feel a sense of
ownership of the city. Having citizens in the decision-making process is critical for Smart Cities in order
to deliver high quality governance.

A comprehensive approach to the development of smart city is essential. For this, there should be
greater institutional integration of silos. A smart city is one where multiple systems works in harmony
and reinforces the usefulness of the other.

2. Physical Infrastructure – refers to a city’s stock of cost efficient and intelligent physical infrastructure.
It includes:

Urban Mobility
The smart transport system emphasizes walking, cycling and public transport as primary means for
mobility with personal motor vehicles being actively discouraged. However, underpasses, elevated
roads, additional rail networks will be put in urgently wherever required. Emphasis will be given on
cycling as it is one of the most efficient and environmentally sustainable mode for commuting in cities.

Importance will also be given on a good freight movement; to be able to move goods from production
centres to consumption centres at low cost and high speed.

Utility Services

Reliable, adequate and high quality services are critical in a smart city and it should be the right of every
citizen to get these facilities on demand 24x7. The main utilities are:

Water Supply

It has been estimated that access to water increases the productive working hours of urban poor and
the poor women in general by 1.5 to 2 hours. Smart cities should have adequate availability of piped
water supply that also meets benchmarks of water quality, pressure etc. across the city. Installing
sensors in water supply system that measure water consumption, water levels and flow rates on real
time basis will not only help in identifying and localize leaks, but also assist to optimize energy
consumption in the network.

Sanitation

Cities should have a City Wide Sanitation Plan for all parts of the city. The Plan is expected to be based
on the concept of Decentralised Sewerage and Solid Waste Management System.

Each and every household should have a toilet so that no citizen need to defecate in the open. There is
also the need for 100% recycling in the sanitation system. Idea is that not even a drop of water should
go out of the local area.

Solid Waste Management

Waste Management is the “generation, prevention, characterization, monitoring, treatment, handling,
reuse and residual disposition of solid wastes”. The following strategies needs to be adopted to bring
about a much cleaner, smart, a healthier environment and a better quality of life in a smart city:

Segregation of recyclable and non-recyclable waste as well as wet and dry waste.

Appropriate technology for the treatment of waste at decentralised locations.

Encourage use of products based on recycling of solid waste.

Storm Water Drainage

Lack of storm water drainage often leads to water logging every monsoon and outbreak of vector
diseases such as malaria, dengue and so on. Cities, therefore, need to adopt storm water management
approach. It will include preserving and maintaining the natural hydrological cycle, ground water
recharge and natural drainage system etc. Provisions for storm water to feed lakes and water bodies
would enable recycling of storm water. Appropriate use of technological interventions should be
adopted to improve the quality of water from storm water flows.

Electricity

As per the government statistics, nearly 94% of the households in urban areas have access to electricity;
however, the availability and quality of supply remains a concern. There should be an establishment of a
smart grid and its integration with the renewable resources to meet the demand such as solar and wind
energy.

An integrated billing system must be introduced for a variety of services such as electricity, water, gas,
internet, house tax etc.

Internet and Telephone

Since most services in a smart city will be offered online, a reliable internet backbone coupled with
100% coverage is required. There should be Fibre Optic connectivity to each home, Wi-Fi in all public
places and educational institutions. This would need a transparent and efficient system of providing
Right of Way by Municipal Authorities.

Land and Housing

Land in cities is at a premium and the existing FARs does not permit development of high rise buildings
which results in high cost of housing. To ensure housing for every citizen, the existing FARs and by-laws
needs immediate revision. This would also ensure that transit Oriented Development (TOD) is
implemented along the public transport corridors.

3. Social Infrastructure – refers to components essential for developing human and social capital such as
education, healthcare, entertainment, commons, sports, open spaces etc.

Emphasis should be given to healthcare which in India is dominated by the private sector, with 70% of
the total healthcare delivery market catered by private healthcare institutions.

In a smart city approach, in order to complement the skills, expertise and resources as well as to
confront the challenge of delivering quality healthcare to all regions and citizens, the PPP model is
sought as it is proving to be an effective mechanism.

In addition, service delivery through telemedicine, high and tertiary care, community insurance scheme
are other opportunities where the private sector can participate. The need of the hour is to develop a
Medi – City in every smart city with minimum land of 50 – 100 Acres.

4. Economic Infrastructure

Economic Stability

There should be no financial constraints to deliver quality services however, tariff structure must be
such that they area affordable for the poor and yet recovers cost at higher levels as use. Use of private
sector would be a good way of tapping efficiencies in delivery to reduce costs.

Incubators and Job Creation

Each smart city will house an incubator and it must have the capacity to incubate 1000 start – ups. They
shall create 1000 jobs per year. (1 million jobs created per year and 10 million jobs in 10 years across
100 smart cities)
 Financial Hubs

Smart cities should have a vibrant and functional financial hubs for the financial services industry. They
will be home to major banks and/or stock exchanges as well as other financial services.

INSTRUMENTS FOR SMART CITIES

Energy efficiency

In smart cities, conservation should be an important practice. Tariff structures should be such that
conservation has incentives. Good areas to focus energy efficiency measures would be the building
material used, the transport system, sewerage, water supply systems, street lighting, air conditioning
and energy consumption in buildings.

Smart Grid

A smart Grid is an electricity network that uses digital and other advanced technologies to monitor and
manage transport of electricity from all generation sources to meet the varying electricity demands of
end users. It coordinates the needs and capabilities of all generators, grid operators, end-users and
electricity market stakeholders to operate all parts of the system as efficiently as possible, minimizing
cost and environmental impacts while maximising system reliability, resilience and stability.

The Indian power system is now the fourth largest in the world, but per capita consumption of
electricity of only about one-fourth of the world average. This underscores the need to grow the power
system at a rapid pace for the next several decades. India needs a smart grid system in order to provide
access to the large number of population which still doesn’t have access to power.

India is also pursuing an aggressive renewable generation program. It has been discussed and decided
that for smart cities approximately 10% of the energy has to come from renewable sources.

Environmental Sustainability
Cities in India is among the most polluted in the world which has resulted in a high rate of air borne
diseases among its residents. In this context, smart cities needs to be properly planned and
environmentally sustainable. In smart cities, use of clean technologies that harness renewable materials
and energy sources would be promoted. Buildings, transport and infrastructure should be energy
efficient and environmentally benign.

Information and Communication Technology

There will be extensive use of ICT in smart cities. Most services need to be ICT enabled to reduce the
need for travel thereby reducing congestion, pollutants and energy use. It is important to note that ICT
is not the “end” but only the “means” to an “end”.

PARTICIPATION OF PRIVATE SECTOR

The smart cities project will engage several professional agencies given the knowledge base that exists
in such agencies in designing smart cities and “hand holding” the city/ state government in coming up
with visionary plans.

CITIZEN PARTICIPATION

A smart city communicates well with its people and enlists their support in everything it is doing. A
system where citizen consultations can take place and a transparent mechanism by which they can rate
services is another instrument for improving performance.

SMART GOVERNANCE

ULBs/ parastatal would need to make effective use of ICTs in public administration to connect and
coordinate between various departments and not work in silos. This combined with organisational
change and new skills would improve public services and strengthen support to public.
IDENTIFYING SMART CITIES

It is proposed that 100 cities to be developed as Smart Cities may be chosen from amongst the
following:

One satellite city of each of the cities with a population of 4 million people or more (9 cities)

Most of the cities in the population range of 1 – 4 million people (about 35 out of 44 cities)

All State/UT Capitals, even if they have a population of less than one million (17 cities)

Cities of tourist, religious and economic importance not included in above (10 cities)

Cities in the 0.2 to 1.0 million population range ( 25 cities)

FINANCING SMART CITIES

It has been estimated by the High Power Expert Committee that the Smart Cities Project would require a
total investment of Rs. 7.0 lakh crores over 20 years, an annual requirement of 35000 crores.

It is expected that most of the infrastructure will be taken up either as complete private investments
through investments or through PPPs. Contribution from GoI, States, ULB and parastatal will be largely
by way of Viability Gap Support.

For Housing, education, health, commons, open spaces, sports and other facilities, cost-efficient efforts
from MOUD will be segmented by other Ministries, such as Housing and Urban Poverty Alleviation,
Health, Education, Power, Environment and Forests, Transport etc.

60% of the funds allocated for smart cities by the central government will be earmarked for investment
in infrastructure and 10% for e-governance initiatives. Remaining funds will be in the form of equity
contribution of the government in two integrated township projects (in partnership with a private
developer), as well as one Greenfield project and one redevelopment project.
It is expected that Rs 5000 crore investments may be required as initial investment for proposed 100
smart cities to prepare Citizen Reference Framework, CDP based on GIS/ Spatial mapping, Master Plans
to ensure successful implementation of the scheme.

Additional resources would need to be leveraged from both domestic and overseas investors. As an
option, the central government will explore the possibilities of establishing a Fund, which would blend
grant funds from Central Government, borrowings from multi-lateral and bi-lateral agencies and bonds
subscribed by national and state level land development agencies. States and Cities may also establish
such Funds at level also.

Other financing sources could include pooled Municipal Debt Obligation (PMDO) announced in the
budget, Real Estate Infrastructure Trusts (REITS), Infrastructure debt funds (IDFs), tax-free municipal
bonds, PPP etc.

OPERATIONAL PROCEDURES

Citizen Reference Framework (CRF)

CRF is a structured document which captures the aspirations and expectations of residents/ citizens of
the town/ city. It is necessary that a CRF is developed before the City Development Plan (CDP).

This is to be done by a professional agency or agencies. Such agencies, after intensive consultation and
interaction with the local people through personal contacts, social media and other methods, will come
up the CRF document. They will consult various citizens on the personal level; the professional level such
as artisan, traders, employees, entrepreneurs; civil society organisations, trade unions etc.

Smart City Development Plan (SCDP)

The SCDP would be developed based on the CRF. The preparation would be based on i) GIS Mapping, ii)
Spatial Mapping, iii) ICT Mapping and iv)Master Plan. It must also include the financial requirement of
the city and the source of funding.

Environment Sustainability Plan (ESP)

Each smart city would need to prepare an environment sustainability plan which will outline the plan
and ensuring inter alia adoption of energy efficient and green technologies and processes.

GOI would not only provide financial resources for the preparation of CRF, SCDP and ESP but also help
State Governments/ Urban Local Bodies by empanelling professional agencies centrally so that they
need not go through bidding processes at the individual levels.

NATURE AND EXTENT OF GOVERNMENT SUPPORT

The central government will be supporting the smart cities project in respective cities and states in three
forms:

Financial Support

To create funds for the project, cities and states need to come up with innovative methods of raising
revenues. These efforts will be supplemented by the central government through the MOUD and other
ministries responsible for different sectors such as Health, Education, Power, Transport etc by way of
allocation specifically for the development of smart cities.

Policy Support and Legal Backing

There’s a need to come up with a national urban policy framework under which policies such as the
national urban transport policy framework will come. Such a policy would be crucial for guiding the
national government financial support to cities. Also existing legal frameworks and policies that regulate
the urban sector needs to be reviewed by state and urban local bodies.

Capacity Building

There is a need for a large capacity building program that encompasses training, education, research,
knowledge exchange and database. Developing smart cities will a need a large number of professionally
trained manpower and several decision support system.

The MOUD will take up a national program towards Capacity Building through a mother institution
which will be responsible for developing curriculum, standards, contacts and ensuring quality. Regional
institutes will ensure conduct of courses, adherence to standards and protocols etc. and Training
Institutes will be responsible for actual training and capacity building. It is envisaged that no new
institutions would be created, rather existing institutions would be strengthened.

The areas of training/ capacity building would primarily be Town Planning, Urban Mobility, Sanitation,
Water and Power Supply, Finance and accounting (including PPPs), ICT and Public participation etc.

1. Retrofitting existing legacy city infrastructure to make it smart: There are a number of latent issues to
consider when reviewing a smart city strategy. The most important is to determine the existing city’s
weak areas that need utmost consideration, e.g. 100-per-cent distribution of water supply and
sanitation. The integration of formerly isolated legacy systems to achieve citywide efficiencies can be a
significant challenge.

2. Financing smart cities: The High Power Expert Committee (HPEC) on Investment Estimates in Urban
Infrastructure has assessed a per-capita investment cost (PCIC) of Rs 43,386 for a 20-year period. Using
an average figure of 1 million people in each of the 100 smart cities, the total estimate of investment
requirements for the smart city comes to Rs 7 lakh crore over 20 years (with an annual escalation of 10
per cent from 2009-20 to 2014-15). This translates into an annual requirement of Rs 35,000 crore. One
needs to see how these projects will be financed as the majority of project need would move through
complete private investment or through PPPs (public-private partnership).

3. Availability of master plan or city development plan: Most of our cities don’t have master plans or a
city development plan, which is the key to smart city planning and implementation and encapsulates all
a city needs to improve and provide better opportunities to its citizens. Unfortunately 70-80 per cent of
Indian cities don’t have one.

4. Financial sustainability of ULBs: Most ULBs are not financially self-sustainable and tariff levels fixed by
the ULBs for providing services often do not mirror the cost of supplying the same. Even if additional
investments are recovered in a phased manner, inadequate cost recovery will lead to continued
financial losses.

5. Technical constraints of ULBs: Most ULBs have limited technical capacity to ensure timely and cost-
effective implementation and subsequent operations and maintenance owing to limited recruitment
over a number of years along with inability of the ULBs to attract best of talent at market competitive
compensation rates.

6. Three-tier governance: Successful implementation of smart city solutions needs effective horizontal
and vertical coordination between various institutions providing various municipal amenities as well as
effective coordination between central government (MoUD), state government and local government
agencies on various issues related to financing and sharing of best practices and service delivery
processes.

7. Providing clearances in a timely manner: For timely completion of the project, all clearances should
use online processes and be cleared in a time-bound manner. A regulatory body should be set up for all
utility services so that a level playing field is made available to the private sector and tariffs are set in a
manner that balances financial sustainability with quality.

8. Dealing with a multivendor environment: Another major challenge in the Indian smart city space is
that (usually) software infrastructure in cities contains components supplied by different vendors.
Hence, the ability to handle complex combinations of smart city solutions developed by multiple
technology vendors becomes very significant.

9. Capacity building programme: Building capacity for 100 smart cities is not an easy task and most
ambitious projects are delayed owing to lack of quality manpower, both at the centre and state levels. In
terms of funds, only around 5 per cent of the central allocation may be allocated for capacity building
programs that focus on training, contextual research, knowledge exchange and a rich database.
Investments in capacity building programs have a multiplier effect as they help in time-bound
completion of projects and in designing programs, developing faculty, building databases as well as
designing tool kits and decision support systems. As all these have a lag time, capacity building needs to
be strengthened right at the beginning.
10. Reliability of utility services: For any smart city in the world, the focus is on reliability of utility
services, whether it is electricity, water, telephone or broadband services. Smart cities should have
universal access to electricity 24×7; this is not possible with the existing supply and distribution system.
Cities need to shift towards renewable sources and focus on green buildings and green transport to
reduce the need for electricity.