News analysis

Roadblocks ahead for India's smart cities plan

Red tape, funding likely to be key challenges to modernising 20 cities

The Indian government has taken a decisive step forward by naming 20 cities that will be modernised, but funding and implementation remain key challenges, experts say.

On Thursday, the government revealed the first 20 of 97 cities that will get federal funding totalling around 500 billion rupees (S$10.5 billion) over five years for upgrading projects aimed at turning them into "smart cities".

Ranging from sprawling capitals like Delhi and Chennai to smaller ones like Kakinada in the south and Solapur in the West, they were chosen based on proposals they submitted to the federal government.

One of the cities, Coimbatore in the state of Tamil Nadu, plans to rejuvenate eight lakes, build living spaces across 374ha of land around them, and install a traffic monitoring system and LED street lights.

Delhi wants to upgrade amenities over 223ha of land in the city centre. But experts said implementation of the projects remains daunting in a country marked by red tape and authorities that range from municipal bodies to those running different services, apart from state and federal governments.

Officials often struggle just to keep electricity and water running, they note.

"In government, the main problem is getting multiple agencies to work together," said Mr Arindam Guha, a partner at Deloitte Touche Tohmatsu India, a consulting firm.

"Some of these (20) cities don't even have basic infrastructure, so that has to be augmented, like putting in water pipelines and sanitation connectivity. This takes maximum time and financial resources."

Apart from federal funds, the 20 cities will each get a matching amount from their respective state governments. They will cover shortfalls by various means, ranging from public-private partnerships to loans, user charges and borrowing from multilateral organisations.

The federal government will release 2 billion rupees for each of the 20 cities in the first year, observing how each city implements its project before releasing more.

Bhubaneswar, which topped the smart city challenge, has a project that would cost 45 billion rupees.

It plans to raise more money through debt financing, public-private partnership and internal resources.

India faces an infrastructure crisis, with the country's urban population estimated to grow from 31 per cent to 40 per cent by 2030 as people move to cities in search of better lives and jobs.Three of the 20 cities are in the World Health Organisation's list of top 20 most polluted cities in the world.

Though critics have slammed the government for moving slowly on the smart city project, others are pleased that the focus had shifted to urban India. Earlier governments had focused on rural areas.

Mr Jaijit Bhattacharya, a partner in infrastructure and government services in India's KPMG, said: "We are now looking at overhaul and transformation, that is what is different...

"If planning is done properly, funding issues will be resolved."

The government hopes that the successful creation of these smart cities will inspire other cities to pursue such upgrading on their own.

Said Urban Development Minister Venkaiah Naidu: "The implementation of the plans will demonstrate how integrated planning... and smart technologies can deliver a better quality of life."

A version of this article appeared in the print edition of The Straits Times on January 30, 2016, with the headline 'Roadblocks ahead for India's smart cities plan'. Print Edition | Subscribe