Not smart enough

The urban areas of many developing countries are growing fast. For environmental as well as economic reasons, the idea of “smart cities” has taken hold in global debate. The underlying idea is to build adequate infrastructure and link it to digitised data processing in order to improve energy efficiency and reduce environmental impacts. The smart-cities approach is a good way to tackle the myriad of urbanisation challenges – from traffic congestion to waste management or health-care provisions (see D+C/E+Z focus section in e-Paper 2016/10 and print edition 2016/11-12).

India’s central government appreciates the idea and has accordingly launched the “Smart Cities Mission”. The goal is to develop 100 smart cities until 2020. The programme focuses on building infrastructure – including sanitation, water supply, affordable housing, mobility and other issues. It is expected to cost the equivalent of $ 30 billion.

Unfortunately, the term “smart” in the programme name merely refers to technology-based solutions that are expected to enhance service delivery and foster economic growth. The mission’s approach to governance, however, is not smart.

To date, 90 cities have been selected. The implementation of some projects has begun. When Prime Minister Narendra Modi launched the mission, he said that it would end the top-down approach that has marked urbanisation in India in the past. He promised people-centred development, with the local city leadership getting the say on how their city should grow.

That is not happening, however. The Smart Cities Mission has failed to empower municipal governments. The local authorities need autonomy and scope for decision-making if they are to do their job well. In India, urban governance is not organised well and overly complex. The institutional framework has three levels:

• The central government has a supervisory and facilitative role, and it supports policymaking.
• India’s 29 state governments have the primary role in urban governance. Typically, they bear the responsibility of providing basic amenities and services through state departments, state-level boards, statutory and non-statutory bodies at the city level and financial support in planning and implementing infrastructure projects. Many Indian states have huge populations, some even of more than 100 million people. Most people live in rural areas, so most state governments’ priority is not urban development.
• The municipal governments are responsible for the operation and maintenance of basic services and in some cases for the implementation of ad-hoc infrastructure projects. They are not empowered to prepare and implement comprehensive urban planning. They depend heavily on the state governments for funding and permissions.

In view of this scenario, the Smart Cities Mission would have done well to give the state governments incentives to boost the autonomy and capacities of the municipal level. Instead, the central government has chosen what probably looks like an easier path. The Mission is being implemented by “Special Purpose Vehicles” (SPVs). The SPVs are separate companies, and one SPV is being set up for every city involved in the programme.

Project planning and implementation will thus be done by appointed technocrats with only limited input by locally elected policymakers at best. In the worst cases, the local governments may not get any say at all.

The marginalisation of municipal authorities is unwise. Local councils are directly in touch with the people who elect them. They are familiar with the places they represent. Accordingly, the administrative staff who report to them tend to be better informed concerning local needs, grievances and hopes than their counterparts at the state and central levels.

Considerable powers

The SPVs have been given the authority to raise private funds on capital markets, collect taxes and surcharges, enter into joint ventures and take all decisions relating to the implementation of “Smart City Proposals”. They have been given considerable decision-making competence as well as operational independence. The SPVs are thus supplanting municipal authorities to a large extent.

The idea is to run a city efficiently the way managers run private-sector companies. It is distorted. Since politics is not about generating profits, there is no bottom line that might serve as a clear yardstick of success. Politics is about the common good. It is about balancing diverging interests and brokering compromise and – where possible – fostering consensus. In this regard, democracy is actually more efficient than corporate governance as it can ensure that all voices are heard, relevant grievances are dealt with and the likeness of disruptive conflict is reduced. Involving the local people may seem cumbersome at first glance. In the long run, it reduces problems and helps to educate constituents. In this sense, smart citizens are one result of smart governance.

On the upside, the Smart Cities Mission has several strong points:

• Its focus is primarily on infrastructure rather than technology. This makes sense as Indian cities’ infrastructure tends to be very poor and urgently needs to be improved.
• The cities that have been selected are not the big megacities like Mumbai, Delhi or Kolkata, but medium-sized cities. These are indeed the cities that matter most because they are growing particularly fast.
• These cities must now be designed to become tomorrow’s hubs of commerce and industry, providing livelihoods to fast-growing populations. Sensible action today will prevent future problems.

The irony of the matter, however, is that truly smart cities would require smart governance – and that can only be provided at the local level. In spite of Modi’s promise, the Smart Cities Mission reflects a top-down mentality. From the selection process to the implementation mechanism, the influence of the central government is quite eminent. Moreover, it would quite obviously be more efficient to create an institutional framework that allows existing entities of local governance perform well than to establish an additional layer of entities.

Efficiency – democracy – norms

The SPVs, from the way they are designed, seem to undermine the local democratic processes. They will have the power to raise taxes and charge user fees and enter into public-private partnerships in order to raise equity from the market. All these functions should have been delegated to the local governments. Indeed, this is what the decentralisation amendment act (74th Constitutional Amendment Act), passed in 1992, was intended to bring about. But even after 25 years, it must yet be implemented. The Smart Cities Mission in India could have brought about that change, or at the least, integrated the municipal governments within their structures for better implementation of projects. This could have paved the way for stronger city governments in the long run.

Alokananda Nath recently graduated from the Technical University, Berlin with a masters degree in urban management. This article is based on her master thesis.
alokananda.nath@gmail.com
alokananda.nath@gmail.com

TU Berlin is involved in the AGEP network of German postgraduate programmes focussing on  developing countries and emerging markets.

www.agep-info.de