As Indian cities start work towards becoming ‘smart’, there is a yawning gap in electricity supply and mobile phone penetration—crucial to becoming smart—compared to global peers. In its report, Building Smart Cities in India, Brookings India has taken a hard look at three cities—Allahabad, Ajmer and Vishakapatnam—where the US is involved and stated that digital solutions alone will not deliver the results India hopes to achieve. It has made a series of policy recommendations to improve implementation. This includes creating customised solutions, getting urban local bodies to monetise their overall governance approach and elevate the financial standing to make urban areas attractive for future investment. It suggested creating a municipal bond market like in the US as a significant source of capital.
Doing this is important as over the next 15 years, over 200 million Indians will shift to cities, taking the country’s urban population to 40% from the current 31%. It is here that the role of Special Purpose Vehicles (SPVs) is critical, but for that to happen, their long-term role needs to be clearly defined. Each city needs to have an SPV with 50:50 shareholding between the state government and urban local bodies. It also points out that despite the 74th Constitutional Amendment Act being passed in 1992, progress on the 18 functions under the Twelfth Schedule regarding devolution of responsibilities, and governance across Indian cities remains uneven. Till now, 82% of legislative functions have been devolved.
This article first appeared in the Financial Express on November 30, 2016. Like other products of the Brookings Institution India Center, this article is intended to contribute to discussion and stimulate debate on important issues. The views are of the author(s). Brookings India does not have any institutional views.