Brookings India organised a roundtable discussion on Smart Cities on 1 February 2016 at Claridges Hotel, New Delhi. The objective of the discussion was to bring together various stakeholders related to the smart city development of Ajmer, Allahabad and Visakhapatnam. Participants included Minister of State for Urban Development Babul Supriyo, officers from the Ministry of Urban Development, state urban development departments, members of the local city administration, prominent researchers and policy analyst. The discussion was focused around the urbanisation programmes undertaken by the Prime Minister Narendra Modi-led government.

The Smart Cities project is a collaborative venture between Brookings India and the Metropolitan Policy Program at the Brookings Institution, Washington D.C. The motivation for the project has been the Modi-Obama declaration to develop the cities of Ajmer, Allahabad and Visakhapatnam into smart cities. Our aim is to produce blueprints for the three cities, highlighting the sustainable economic engines of growth, local governance challenges and internationally comparable best practices regarding the area-based urbanisation approach of smart cities.

Dr. Shamika Ravi, Fellow, Development Economics at Brookings India, defined the following five critical areas of interest for the roundtable discussion:

1. Economic engines of growth for Ajmer, Allahabad, Vishakhapatnam
2. Infrastructure and investment gaps for harnessing these engines
3. Governance reforms required
4. Resilience and disaster preparedness
5. Global best practices and international comparisons

Dr. Robert Puentes, Senior Fellow, Metropolitan Policy Program, the Brookings Institution, shared his global experience of smart cities-led model of urbanisation.

The concept of smart cities gained prominence a long time ago but has largely been a top-down approach driven by corporate agendas. Technological deployment could not be very successful due to lack of supporting governance and regulatory reforms. Local level participation and bottom-up approach is crucial for the success of the Smart Cities Initiative in India.

The roundtable commenced with an open discussion among the participants.

Some of the key points discussed were:

Definition of a smart city

• We are still grappling with the definition of smart cities in India;
• Uniqueness of each city is to be preserved and this should be integral to the definition;
• Resource sustainability and environmental preservations must be synonym to the smartness of cities;
• Inclusivity not only across the income classes but also among the age groups is essential for the sustained development of smart cities.

Integrating larger economy around smart cities

• Geographical placement of each smart city is critical for integration of larger economy e.g. Visakhapatnam has potential to be $4.5 trillion economy and investments will be automatic if the overall institutional framework is designed effectively. Visakhapatnam may be a bridge for Southeast Asian economies, and the Chennai-Kolkata industrial corridor etc.
• The Smart Cities Initiative envisions strengthening economic growth but data suggests that large cities are not growing sufficiently and there is significant decline in the rural-urban migration.
• NSS data suggested employment in manufacturing went down and CSO data suggests that the growth in urban manufacturing has been slower than rural manufacturing and consequently, rural per capita growth has been faster.
• Economies of scale and economies of scope are essential for the concentration of manufacturing in metros but if cost escalates then dispersion of industries is natural.
• There is significant spillover of large cities on their peripheries and this is supported by easier land availability, easier labour and environmental restriction in peripheries of cities. Thus, larger area-based intervention is a must for sustained economic engines of growth.

Job creation

• Manufacturing may not be the employment generator in future due to technical innovations like 3D printing.
• Network economies like warehouses, supply chains, logistics etc. are going to generate jobs.

Special Purpose Vehicle (SPV)

• Governance and institutional reforms
  • Limited capacity of urban local bodies (ULBs) in India is consistent with international experience and is not unique. Institutional mechanisms are required to empower city administrations to carry out the reforms. Currently, there is not much that ULBs can contribute in the implementation of the Smart City Initiative.
  • Decentralisation has come down till Town Halls but needs to percolate further. Likewise, integration of various development plans with the smart city master plan is essential. Cities need to pull themselves up and they need to put together larger plans in place.
  • Physical planning in terms of illegal land diversion is very crucial for the sustainability and resilience of cities.
  • ULBs to be able to capture the city economy and be financial viable as seen in Ahmedabad municipality which has around INR 1,000 crore as revenue surplus.
  • Management incapacity at local level may not be such a severe problem as witnessed during Kumbh mela arrangements in Allahabad.
• Role of political economy
  • Positive role of political entrepreneurship and civil society must for development and structural changes
  • Attitude of people and awareness among them must for acceptance and use of new technologies and trends.
• Fragmented approach of development
  • There are distributed responsibilities among ULBs, SPVs, state and central government. How would we evaluate the impact of the programme in future?
  • There is very little dialogue among the other complimentary programmes like Smart Grid mission, Digital India campaign etc. Need to shift from silo based to holistic development approach.

Dr. Shamika Ravi made a presentation on “Smart Cities, Data & Analysis – Ajmer, Allahabad and Visakhapatnam”. The presentation discussed and compared the urban development initiatives like JNNURM, AMRUT, Smart Cities and presented data on social, economic and demographic indicators for Ajmer, Allahabad and Visakhapatnam.

Dr. Robert Puentes’ presentation on “Smart Cities: Overview and International Comparisons” discussed the global thinking on smart city development approach for urbanisation. Dr. Puentes also presented a brief summary of a statistical analysis to determine the internationally comparable cities for Ajmer, Allahabad and Visakhapatnam based on the social economic and demographic profiles of the three cities.  Key points highlighted were:

• Objective of the presentation is to understand the different governance models adopted across world.
• Enormous sums of investment have been made in the ambiguous notion of smart cities across the world. Generally, this approach has been corporate-driven top-down. But the hype about smart cities went off at the implementation stage.
• Deployment of technology is not the only intervention required. Integrated models of development coupled with governance and regulatory reforms are necessary.
• In India, focus has been to compare our expectations with well-qualified smart cities like New York, Singapore etc. but these are not the same kind of cities as those in India.
• Employed a statistical technique, cluster analysis to determine internationally comparable cities. Analysis reveals that Ajmer, Allahabad and Visakhapatnam are even poorer than the nine comparable cities, Medellin, Recife, Salvador, Fortaleza, Casablanca, Alexandria, Durban and Shantou.
• These nine are not the best in smart cities terms but still there is lot to learn from them.

Municipal officials from Allahabad and Ajmer made the following points:

• Initiatives of e-governance have been taken in Allahabad during the last 1 year. Governance reforms are the most important element for success of the smart city initiative.
• Uttar Pradesh has different structure of urban management – there is very clear segregation of Development Authority and Municipality in each of the metros.
• Responsibilities with municipalities are mostly sanitary and thus they have a very limited role in the implementation of this initiative.
• Allahabad municipality can levy house tax only at 10 to 15 percent as per rules but other municipalities like Hyderabad can levy such taxes from 25 to 59 percent. Differentiated rules are a reason for widely observed variations in capacities of municipalities.
• 74^th amendment has not been properly implemented. Only hand holding initiatives will not suffice without more financial powers and support.
• Ajmer submitted its smart city plan only for retrofitting of 1350 acre of area with an estimated cost of around INR 1,300 crore.
• Ajmer is central in Rajasthan but still no major trade has flourished. This is mainly due to poor transport and narrow roads
• Two nationally renowned tourist points are in Ajmer but still tourism does not flourish due to lack of complimentary infrastructure
• Power of taxation to SPV cannot be given without the approval of Rajasthan state cabinet.

Key takeaways from Shri Supriyo’s remarks:

• Need to accept and nurture the competitive spirit of new initiatives under taken by Modi government.
• Holistic approach might not work for every city. Need for custom-made solutions for local problems. Programmes may be planed be central government but they have to be implemented by local administration. Need not have paradigm shift but only minor alternations in the working for better results.
• Heavy concepts of urbanisation are presented but they cannot be pasted in our local conditions. We can still learn a lot from them and use the relevant interventions.
• Central government cannot airlift cities and put them in new context. His ministry is available for complementary hand holding and all the required support.
• Accept that 74^th amendment not implement in full spirit but this should be shared with state government. Revenue from property tax has been substantial until now but this is not sustainable in future.

Like other products of the Brookings Institution India Center, this report is intended to contribute to discussion and stimulate debate on important issues. Brookings India does not have any institutional views.