Financial incentivizing will spur Smart Cities initiative growth

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In June 2015, Government of India has unveiled its magnanimous vision of converting 100 cities of India into smart cities through smart city mission. 90 cities have already been selected in 4 rounds, 10 more to go. Having said that the progress of these projects has not been as was expected. Many attribute the slow progress to traditional slow pace execution in India w.r.t. Infrastructure projects – as we have seen in the past. But the reality is more structural in nature than operational one. There needs to be an immediate attention to these structural issues.
While the Smart Mission guidelines have laid out core principles for Smart City projects, but it has not defined the benchmark standards for the 21 core services. Further, given that this project envisages not only high social impact, but also the significant public expenditure, we do not have any policy document that outlines basic standards of technology that needs to be followed for selection of technology for implementing such projects. Bureau of Standards, which have defined standards for multiple domains starting Industrial application technology to National building code has no such standards defined in Urban Planning or technology implementation in Smart Cities.

In the absence of such well-defined guidelines, the city planners, Smart City SPV technical teams and the Project consultants have been left to themselves to develop their own baselines and benchmarks. The original idea was that first 20 cities which were lighthouse project would prepare the benchmark for the cities to follow. But due to these structural issues, the lighthouse projects have taken a very long time to come up with the design. Further the technical design of projects widely varies between various lighthouse projects. While most the designs have been developed to address some the current burning issues which are more localized in nature, but it does not have a farsighted approach or scalable framework / technical architecture to solve the problem of the Indian Urban population in 2030 – which as per one estimate would be 40% of the total population and the same figure would grow to 60% in 2050.

Unlike the past strategic initiatives, there is a lack of thought in financially incentivizing of the firms participating in this space. Telecom and Information technology revolutions in India were facilitated by various financial incentives that were provided by the Government- starting from tax sops to easy availability of capital. There is a similar need for the government to incentivize the efforts in smart city projects. The firms involved in smart city projects would not only need easy availability of capital and tax benefits but also would need some of other benefits like- intermediate release of payments to keep the Working Capital requirements low, tax incentives use the cutting edge technology, thus bring down the overall cost of using high technology, financial incentives to complete the project as per schedule or in advance etc.
The telecommunication revolutions foundation was led by establishment of a central policy making body of DOT and key policy frameworks like New Telecom Policies. DOT today not only sets the standards of telecom technology adoption in India, but also through Preferential Market Access frameworks have led to the indigenization of cutting edge technology thus contributing towards Make In India initiatives. There is a need for a similar body for urban planning and development.
Hence Government would have to develop Institutional support structures and put in place policy frameworks to ensure that Smart city projects take off and transform the cities into Urban centers that will not only cater to the current needs but are scalable to support the demands of the future generations.

Authored by Saurav R. Lenka – Business Head, Q Infra Solutions, A Division of Quess Corp Limited

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