The R1 lakh crore project just cleared by the government, for both smart cities as well as rejuvenating existing ones, seems very impressive, but doesn’t even scratch the surface in terms of what India’s urbanisation drive needs. In 2011, to put things in perspective, the Isher Ahluwalia committee had estimated urban India needed an investment of R39.2 lakh crore (at 2009-10 prices) over 20 years plus another R19.9 lakh crore in terms of expenditure for operations and maintenance. Indeed, of the R1 lakh crore, half is for ‘smart cities’ and that seems a lot until you look at the number of cities involved—at 100 smart cities, that’s a mere R100 crore a year for 5 years. Since the government will never be able to fund India’s cities, what is really needed is a city-state of mind, a state of governance where genuine powers are transferred to cities, so that city chiefs have the power to raise funds from municipal bonds and to transfer large tracts of land to private firms in return for them building valuable infrastructure, from apartment complexes to schools and metros to airports.

That, in fact, is what the DMICDC city model is all about. While the partner states are to procure the land, DMICDC’s plan is to construct the trunk infrastructure, and once this causes the value of land around it to rise, use these funds to build up the rest of the city. The DMICDC effort, however well planned it is, is just a small fraction of what urban India needs. So, unless genuine powers are transferred to cities, no major transformation can take place—as long as the Maharashtra chief minister has to plan for Mumbai, Mumbai will always get the short end of the stick since, as compared to Mumbai, there are a lot more votes to be got in the rest of Maharashtra. It is due to this, that 4,861 out of India’s 5,161 cities/towns don’t have even a partial sewerage network and less than a fifth of the urban road network are covered by storm water drains.

Of the two programmes announced by the Cabinet, the renamed JNNURM—it is now to be called Atal Mission for Rejuvenation and Urban Transformation, or AMRUT—is more relevant since it is aimed at getting cities to do serious reforms in areas like energy and water, sewerage and so on. Indeed, if urban bodies are to issue bonds, these are not going to be viable unless some way is found to begin charging users for services; and unless more serious efforts are made towards raising, primarily, property taxes, government subsidies through viability-gap funding can’t be funded either. You only have to look at the mess made with Delhi’s electricity sector by various governments, from the Sheila Dikshit one to the Arvind Kejriwal one, to understand how serious the problem is. In 2011, when the first review was done of the JNNURM, it was found that just 8 cities were charging enough to cover even the O&M costs of supplying water. How AMRUT plans to fix this fundamental weakness is not clear.

http://www.financialexpress.com/article/economy/editorial-even-dumb-cities-will-do/68384/