Decoding Smart Cities

The smart cities conceived by the government should not end up as an exercise in incrementalism but be a roadmap of radical transformation in the way cities are conceived, designed and managed.

The release of the concept paper on Smart Cities by the Ministry of Urban Development serves as a pointer to the possible direction of Indian urban planning and development. It introduces certain clarity in the proposed shape and structure of these smart cities. Yet, its logical culmination would lie in the ability to navigate the twin challenges: one, the legislative labyrinth that is part of the Nehru-Gandhi legacy, and two, the conventional wisdom of cities driving people and not vice versa.

The concept note can be summed up as follows.

1. It acknowledges the primacy of incentives over enforcement.
2. Smart cities enhance quality of life through development of physical, social and institutional infrastructure.
3. The concept note quantifies the minimum benchmarks across parameters ranging from transport to public health to spatial planning to water supply to electricity and a host of other utilities/ public services to qualify as a smart city.
4. It frames reference points for various objectives for the smart cities.
5. Though hazy, broad contours of possible financial architecture for these cities is visible

The contemporary urban panorama is an evolution of an 18^th century convenience. Yet, a perceptible slowdown is visible in terms of population growth across many cities. Mega cities harbour less than five per cent of the world’s population, an indication that large cities do not dominate the global demographic landscape to the extent that had been predicted.

Correlations between urban transformation and economic, social, political and cultural change remain inconclusive. Some large and rapidly growing cities have been well-managed and serviced, while some of the worst physical conditions have beset small towns.

It is not size but the dramatic makeover of the urban economic structure and functions that has projected the city to the centre of economic, social and cultural attraction. Cities have come to occupy the strategic intersections in the global economic space. From manufacturing or mining hubs or port cities ranging from Detroit to Liverpool, or knowledge bases from Bangalore to Silicon Valley (a conglomeration of several towns in the San Francisco Bay Area), cities have symbolized dreams, wealth and aspirations. Being a source of proximity to centres of power and policy, their ability to mobilize physical, financial and human capital, is unprecedented. Yet cities, often marred by chaos, conflicts, inequities, imbalances, socio-economic-demographic tensions suffer frequently from dysfunctional local administration.

If smart cities are a solution, certain pointers need to emanate.

Do not Create Satellites for Mega Cities: Go to the Hinterland

Satellite towns basically attempt decongesting the central business districts (CBD) of large cities through relocation to the suburbs. This may alleviate but not eliminate agglomeration diseconomies. The gap between large and mid-sized cities is likely to widen which politically, socially and economically can prove counterproductive. Thus, prudence demands that smart cities be located near mid-sized cities or even be constructed on new sites.

Cities like Hubli, Indore, Solapur, Kolhapur, Tirunelveli, Silchar, Jodhpur, Gorakhpur and so on can be ideal for percolation of economic hubs. Relatively low land and labour costs might encourage manufacturing hubs and even services based on cost arbitrage to relocate to these cities. These strategic spaces in generating agglomeration economies harmonize well with the nucleus of ‘Make In India’. Economic prosperity needs to trickle down from Mumbai, Delhi, Bangalore, Hyderabad, etc to mid and bottom layers of the pyramid.

Incentives-based Governance needs Overhaul of Existing Legislations

Without doubt, neo-socialist rights-driven experiments in urban planning and legislation have deterred radical change. Though the 74th Constitutional Amendment conferred statutory status on the local bodies, legislative domain resides in the exclusive jurisdiction of the states. Like other legislations, this too is enforcement-driven.

If individual preferences are sought to be aligned to the collective good through incentives, a different mindset is vital similar to experiences drawn from the Samras Gram Yojana in Gujarat under which, when a village chooses a sarpanch by consensus, it received monetary rewards and encouragement from the state government. If new benchmarks have to be established, smart cities need to be liberated from the 74^th Amendment.  A new legislative framework with functional autonomy might be necessary.

Develop Sub-National Capital Markets

Many urban bodies lack the institutional capability to develop commercially viable infrastructure projects, mobilize resources for the projects and implement them. Besides, payback period is long and uncertain in essential services. Revenues through user charges may not be uniform through the year. Dependence on central and state government grants is the norm than an exception. There is a strong case for creating mechanism for borrowing by the sub-national governments which currently is on a case-by-case basis. A formal structure for sub-national capital markets including provision for foreign borrowings can lead to better urban management.  Fiscal discipline can be strengthened by effective central supervision, tax decentralization, robust accounting reporting and disclosure norms and performance-linked grants.

Let Market-driven Producer and Consumer Choice Thrive

Public services in smart cities should remain unsubsidized. User charges should create self-sustaining utilities. Going forward, possibility of consumers switching services (even for natural monopolies) need to be explored to eliminate possible vendor lock-in. Citizens should have the choice of choosing from a range of utilities. Legal frameworks relating to urban infrastructure development and land market act as hindrances rather than facilitators for urban reforms. The concept paper does recognize these constraints, yet is vague on how it proposes to eliminate these constraints like Floor Area Requirement (FAR), Floor Space Index (FSI), zoning laws, free land markets etc.

Demand-driven Urbanization

Planned cities present a paradox. Cities need host of support services, thus a need for providers of low-end services. A spillover is reflected in the mushrooming of slums, chawls and a host of low to mid-end housing and business neighbourhoods. These clusters/ghettoes normally are the first halt for migrants. Disturbing as it may seem, this does characterize the first steps in the pyramid towards higher standards of living.

Anecdotes of migrants striking it big lure other prospective migrants. While few may succeed, yet it is significant to propel migration by others and have paved the path of prosperity across societies, economies and cities. Smart cities should facilitate that. A certain chaos or disorder might result, but it also helps avoid decay and stagnation. It is neither the population nor the affluence but the socio-economic behavioural systems and the informal networks which determine the strength and resilience of the city. These networks—organic or otherwise—bring fresh air and nourish innovation in the culture, diversity, economic vitality, and politics of increasingly lively urban areas. Cities should be structured as a hyperarchy and not a hierarchy.

The idea of smart cities epitomizes both an opportunity and a challenge to revitalize and reinvent Indian cities. It orchestrates well with both ‘Swachh Bharat’ and ‘Make in India’. Moreover, it conveys a shift from socialist status quo of doles, patronage and paternalism to a territory ruled by self respect, aspirations and incentives. The success will depend on how far people become the centre of smart city planning, development and nourishment. It should not end up as an exercise in incrementalism but be a roadmap of radical transformation in the way cities are conceived, designed and managed.

Positive pointers notwithstanding, the concept paper still represents a work in progress with lot of ground yet to be covered.