Smart Cities Need Smart Governance: They Can’t Be Run Like Any Other Place

What makes a city smart? The answer does not lie in good infrastructure, eco-friendly rules, great energy-efficiency, adequate funding, good public transport, etc.

We need all of the above, but this can be achieved by throwing money at the problem in existing cities too. So here’s the smart answer: the fundamental attribute of a smart city is smart governance, where there is transparency, accountability and proper measurement of outlays and outcomes. Even more important, cities cannot be run like the rest of the country. They are special, and have to be treated as being special.

If we go by this definition of a smart city, India’s existing cities are really dumb.

Consider how our cities are run right now.

Cities have municipal elections regularly. But real power is with a municipal commissioner appointed by the state government. Mayors get elected, but they get to do little beyond cutting ribbons at the inaugurations of new buildings or judging school competitions. They have no real powers. So they are happy making money on civil contracts and sell the city’s interests down the nullah. Good governance means having an empowered city administration that is accountable to voters, and an executive CEO and bureaucracy who are accountable to the elected leaders.

Thanks to this fundamental lack of accountability, most cities have garbage on the streets, debris piled on roads, inadequate street lighting, poor policing, haphazard traffic regulation, polluted air, and water shortages.

Currently, there is only one city that has a reasonably accountable structure - Delhi. And its ‘mayor’ gets his powers by calling himself the Chief Minister. Yet, Arvind Kejriwal still thinks he has fewer powers than he needs. Cities need mayors with the powers of a Chief Minister in respect to the cities they run.

Your takeout: A smart city needs to be run like a city-state.

The second element of smart governance is to be clear over who doesn’t get to run cities. In India, most Chief Ministers are elected from rural constituencies, and they use their control of the urban development department to milk cities for private gains which they can then channel to their rural bases. And these are the conscientious ones.

The Karnataka Chief Minister, Siddaramaiah, has been elected from Varuna constituency in Mysuru; his party controls the Bruhat Bengaluru Mahanagara Palike (BBMP), and the city’s infrastructure is terrible. In Maharashtra, Devendra Fadnavis, the current CM, has been elected from an urban area (Nagpur) but almost all previous CMs came from rural constituencies. Little wonder that Mumbai suffers despite being the highest generator of tax revenues in the country.

Your takeout: You can’t ban CMs from being elected from wherever they choose, but you can constitutionally bar them from having too much say in how cities are run. City mayors should have the real powers.

The third point is about how to make cities well funded. Right now, cities earn their revenues from octroi, entry taxes, property taxes, vehicle registration, road tolls, parking fees, water charges, and so on.

Octroi and entry taxes are bad for commerce, so they should go. But property taxes tend to be low, and water tends to be subsidised, if not free. Vehicle taxes need to go up. More than anything else, cities need a greater share of taxes handed down to states from the centre. The 14th finance commission, which gave states a revenue bonanza, missed a trick when it did not devolve too much money to city governments. This has to be corrected. And fast.

Your takeout: Cities must have a greater share of central/state revenues, and also be empowered to raise new kinds of taxes (Garbage tax? Sewerage tax? Lighting tax?).

But if you want to really think ‘smart’ smart, you have to learn from the distant past. If we accept the reality that India is going to be increasingly urban, cities have to be drivers of growth in the economy. The idea we need to adopt from the past is that of “charter-cities”.

In the 12th century, Henry the Lion conquered Lubeck on the northern coast of Germany. Before his entry, the city was crime-infested, but Henry made Lubeck the “richest town in northern Europe,” says Tim Harford, in his book Adapt.

How did he do it? Henry the Lion decided that cities could not be run like private fiefs. He allowed Lubeck to be run by a different set of rules from the rest of his domain. Says Harford: “Would-be citizens were offered a charter of ‘most honourable civic rights’, feudal rulers were kicked out and replaced with a local council, an independent mint guaranteed sound money, excessive taxes were prohibited and a free-trade area was arranged from which Lubeck’s traders could reach cities like Munster, Magdeburg, Nuremberg, and even Vienna…Henry then put out the word across northern Europe that commercially-savvy immigrants would be welcomed with open arms.”

Net result, Lubeck became the Singapore of its time.

Your ultimate takeout: Successful cities can become great growth drivers if they are treated differently. The great cities of today, the Shanghais, Dubais, Hongkongs and Dalians, are successful because they are given huge independence and functional autonomy like Henry the Lion’s “charter-cities”.

Smart cities have to become charter-cities to be really smart.