Mapping expenditure: 80% Smart City funds for just 2.7% of city area

Already developed pockets in selected cities will be first to benefit.

Written by Shalini Nair | New Delhi/pune | Updated: June 14, 2017 7:39 am
Smart City project, Smart City funds, small Smart City project, Smart City mission, developed pockets, Ministry of Urban Development, Rajiv Gauba, ABD, Pan-city solutions, city development, indian express news, india news Baner is part of the Smart City zone in Pune. Express photo

Eighty per cent of the proposed central government investment in its flagship Smart City mission will flow to well-developed pockets that account for only 2.7 per cent of the cumulative area of cities identified under the initiative, according to data obtained and analysed by The Indian Express.

With the government set to release the final list of the remaining 40 Smart Cities this month to mark the mission’s two-year milestone, data on the 59 cities selected show that what is being created on ground, at least in the first phase, will be small, isolated islands of development. Read | Smart City project: We start small so that it can be replicated, says govt

Data obtained from the Ministry of Urban Development show that of the total Rs 1.31 lakh crore proposed to be spent on the 59 cities from 2015 to 2020, Rs 1.05 lakh crore will be spent on what is called the Area Based Development (ABD) component. This refers to pockets in the selected cities that will be made ‘smart’ with a combination of IT and infrastructure projects such as WiFi hotspots, sensor-based public lighting, redesign of streets, zones promoting start-ups and multi-modal transit points.

The proposed expenditure on the mission’s other component — pan-city projects, or those that cover entire cities — is only Rs 26,141 crore. Besides, the total area of these pockets covered under ABD in the 59 cities is 246 sq km, which is just 2.7 per cent of the total area of these urban local bodies — 9,065 sq km, according to Census 2011.

Consider this:

# In Pune, ranked the second best Smart City contender and from where Prime Minister Narendra Modi flagged off the projects last year, Rs 2,196 crore of the estimated Rs 2,870 crore, or 76 per cent, will be channelised into the development of a 3.6 sq km area in the Aundh-Baner-Balewadi pocket, which comprises a little more than one per cent of the city’s 276 sq km.

# In the No.1 mission city of Bhubaneswar, 90 per cent of the Rs 4,537 crore Smart City funds are proposed to be spent on the Bhubaneswar Town Centre District, a commercial business district that accounts for less than three per cent of the city’s area.

# In the other three cities in the top five, Jaipur, Surat and Kochi, more than 65 per cent of the funds are proposed to be spent on ABD.

# Other cities such as Jabalpur, Visakhapatnam and Indore propose to spend more than 90 per cent of their funds on less than two percent of their city area.


Over the five-year mission period, the Central government will give Rs 500 crore to each Smart City while the state and local body will pool in an equivalent amount with the rest of the money coming from private firms and other sources. However, the mission’s guidelines prohibit capital expenditure on infrastructure on a pan-city basis and allow it only in case of the ABD component.

Under the pan-city component, cities can only look at the application of technology to one particular aspect of the infrastructure. The rules ensure that cities put in much of the money in areas that are already developed so as to create “demonstrable projects” instead of investing on city-wide infrastructure.

The Indian Express analysed the plan for Pune where the proportion of the urban population on which a majority of the expenditure will be made under ABD is 40,000, which is one per cent of the city’s estimated population of 40 lakh.

Here, the once peripheral Baner-Balewadi, which caters to the spillover from the IT segment that has been settling in nearby Aundh since the 1990s, has witnessed an exponential real estate growth from the time it hosted the 2008 Commonwealth Youth Games.

Under the ABD, Aundh-Baner-Balewadi is proposed to get a redesign of a few streets, bicycle lanes, 100 electric buses, express airport service, 3.5 km riverfront development, Bus Rapid Transport and zones promoting start-ups.

Besides, a multi-modal transit hub would be created in Balewadi by a private developer who would be allowed to monetise part of the public land for commercial complexes, hotels and multiplexes. It will also have Information and Communications Technology (ICT) projects such as ‘smart’ electricity grids and the laying of fibre optics worth Rs 146 crore.

The residual Rs 670 crore for the pan-city component will be spent entirely on ICT and Internet of Things (IOT) projects. It would include a Rs 150-crore IT connectivity project for a Command and Control Centre, 200 WiFi hotspots, sensors for monitoring environment and visibility, and public announcement systems.

“The IT infrastructure and services for pan-city would be provided through a consortium of L&T, Google, IBM and RailTel. Citizens will be able to access free WiFi services for the first half hour or up to 50 MB of data. The operators would earn their revenue either through user charge or advertising,” said an official from the Pune Municipal Corporation (PMC).

In addition to the Rs 2,870 crore estimated Smart City spending, of which Rs 1,000 crore would come through budgetary provisions made by the Centre, state and urban local body, funds would be generated through private involvement. The returns would be recovered through revenue sharing models which would also involve higher user charges or monetisation of public land.

On Tuesday, Union Urban Development Minister M Venkaiah Naidu announced that PMC would be listed this month on the Bombay Stock Exchange as a precursor to floating municipal bonds as one of the means to finance the Smart City mission.

“The Smart City mission is not meant for city improvement but caters to the interests of real estate and technology players. A majority of Smart City projects are targeted at people who can pay additional revenue to private players and the local government. This is one of the reasons for choosing the Aundh-Baner-Balewadi belt, which has residential complexes for those with a higher disposable income,” said Anupam Saraph, a visiting professor of Systems Science at Pune University and an Aundh resident.

Saraph said the changes that are being made as part of the mission are “purely cosmetic” that glosses over the infrastructure gaps.

For instance, the ABD region selected for Pune has a measly four per cent open space. Even so, empty plots that could be turned into green lungs are being concretised under the “place-making project” at an average cost of Rs 1 crore each so as to have WiFi stations, e-learning centres, food and beverages operators, gazebos and reflexology walkways. A stated intent of the project is “creating opportunities for corporate digital marketing”.

Asked about the concentration of funds on small areas, Pune Municipal Commissioner Kunal Kumar said, “That is the perception, which is being created. Over and above public funding, what is being spent on ABD is being raised from that area itself. For instance, we will be developing the transit hub entirely through private participation. If you can create models that finance themselves through land monetisation or PPP, it becomes a replicable model for other areas.”

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  1. D
    Devendra Agarwal
    Jun 15, 2017 at 9:38 am
    The Smart City initial funding is seed capital to be utilised for huge investment requirements of Urban Cities. As the saying goes, we ought to have a cake, before we start sharing it. With this seed capital, our focus should be to fund economically sustainable projects for meeting gaps in infrastructure requirements of City and use the larger resources so recycled, for meeting the requirements of balance 97 of the area(I would call it City's infrastructure requirements). Also all ULB should be using Smart City SPV as catalyst for pooling their requirements and its funding possibilities, to have multiplier affect of the clean slate and funding provided by GoI for meeting their funding needs on the basis of users or beneficiary fee decided upfront. This needs understanding and development of mechanism required for pooling the requirements and their solutions on common platform.
    Reply
    1. T
      Tats
      Jun 14, 2017 at 6:02 pm
      Another promise of "Sabka Saath Sabka Vikas" falls flat on its face.
      Reply
      1. A
        Abdul Salam
        Jun 14, 2017 at 1:06 pm
        bjp has said that it will make allahabad a smart city. even after 3 yrs it is not selected for smart city. although they say that america will help to develop allahabad as smart city. for this purpose there have been hundred meeting of american team with indian team in allahabad doing only planning. net result big zero. even not in the list, then why selected to be developed by US? contradictions. BJP is flop. so much promise for allahabad but NET result zero. he promised that he will make allahabad university like oxford. today allahabad university is hotbed of politics. no research, no teaching. BJP TOOK 2 YEARS TO APPOINT VC OF ALLAHABAD UNIVERSITY. congress was much better. lot of development work was done By UPA in allahabad under JNNURM.
        Reply
        1. R
          Rajeev
          Jun 14, 2017 at 11:55 am
          Bhakta This is the biggest Bluff of Fekus Government. The City like of Mumbai which has so huge earning cant be made smart as of now because it easier saying than done when you have to manage situation in ground. To Build a Fly Over of 1/2 Km you need 250 Crores than imagine how with such a small amount a City can be made smart.Please identify ther reality India has been build over a years of dedicated works by many government and what ever we see today is also a result of very hard work. The current smart city Project can only give you a prefix of Smart.
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          1. C
            C Siddarth
            Jun 14, 2017 at 11:42 am
            Nobody wants to focus on the basic infrastructure which is absolutely dysfunctional in any Indian city. Poor roads, garbage disposal, sanitation:no toilets anywhere, no footpath to walk on, no focus on improving public transportation. But hey, provide wifi to the public and the city is suddenly smart?
            Reply
            1. S
              S ashok
              Jun 14, 2017 at 8:20 am
              Sometime back we had a frenzy of activity around Smart Grid, a buzzword in US that travelled to India as well. Now SMART cities. And we want to stop rural influx in cities. By building more facilities in cities that will attract more people like magnets. Facilities like malls, wide roads, wifi hot spots and other such cosmetic feel good goodies that will inflate our sense of achievement of having reached global parity around these cosmetic indicators. Underneath the sheen however tactics to improve the conditions of our divine rivers, our life giving ground water sources, flora and fauna that we have worshipped since the time of vedas, pedestrian friendly policies will be given a go by. After all we need to project our bahubali fantasy inspired super power status. Cosmetics, make believe VFX is more important than basic fundamentals.
              Reply
              1. I
                Imi
                Jun 14, 2017 at 7:58 am
                This area are already SMART , why spend on this area need to spend in Slum poor areas ......NAMO want to take credit for already developed areas in 2019.
                Reply
                1. C
                  C S
                  Jun 14, 2017 at 7:00 am
                  Smart City is yet another name for the Urban Renewal Scheme of the UPA. What the people want in any city are the basic amenities viz, pot-hole free roads, clear foot paths for pedestrians, sewerage treatment plants, solid waste segregation and disposal, protection of water bodies, providing adequate water supply and uninterrupted electricity, transportation etc. Bangalore is the IT capital of India, accounting for a third of IT/BPO exports from the country the city is affluent with a million high paid jobs. But it fails in every aspect of the basic requirements mentioned above roads full of pot holes no footpaths, tankers doing roaring business and ordinary citizens deprived of water electricity breakdowns at least six a day, the lakes foaming with detergents and sometime on fire, garbage all over the streets and STP plants seldom working. Without addressing these issues talking of wifi and hotspots and smart cities is futile.
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                    Aditya
                    Jun 14, 2017 at 10:57 am
                    The issues you have pointed out here are under the jurisdiction of the urban local bodies of Pune.
                    Reply
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