1. Governance
August 13, 2014updated 16 Jul 2021 11:47am

India’s new government is spending £700m on new smart cities

By Siddharth Bannerjee

With 857m people still living in its countryside, India is currently home to the largest rural population in the world. But that is, gradually, changing. At the moment, less than a third of India’s population live in an urban area; by the middle of the century, the UN projects, it’ll be more than half.

India’s new government is belatedly responding to this trend. In his maiden budget speech on 15th July, newly appointed finance minister Arun Jaitley allocated INR 70.6bn (nearly £700m) of public money to create India’s first 100 “smart cities”. As housing and urban development minister Venkaiah Naidu explained to a post-budget news conference, the government’s vision is of a smart urban space where “the focus will be on education, entertainment, employment and environment management”.

The new cities won’t actually be cities at all. Rather, they’ll be mid-sized, “peri-urban” satellite towns, intended to take some of the population pressure off the overcrowded metropolises. All the same, the new policy implies three big shifts in the way Indian cities function.

Firstly, the smart cities’ layout will be meticulously planned – in contrast to a history in which most Indian cities have grown organically with little central planning. Next, the planners will focus on an environmentally friendly design, intended to minimise waste and carbon emissions. That’s likely to mean a heavy emphasis on green public transport.

But the most ambitious change is technological. All the cities’ various systems – transport, electricity, water et al. – will be integrated into a smart hub. That way, they can be centrally controlled for maximum efficiency.

Percentage of the population living in urban areas in selected emerging markets. India has been relatively been slow to urbanise. Data source: UN projections.

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The smart cities policy was just one of a raft of proposals intended to clean up India’s cities and kick its cooling economy back into high gear. The government’s plan also includes £5bn of investments in highways and other key infrastructure, and £50.5m to improve e-governance and get broadband out to the villages. It also includes moves to reduce capital requirements and make credit more easily available, so as to encourage both foreign and domestic investment in sectors such as real estate.

Jaitley’s “budget for the cities” marked a very clear shift from previous efforts, which have generally prioritised the needs of the rural population. But the migrant job seeker, who left their village to try their luck in the big city, is becoming a staple of the Indian population. They’re also a key cohort in the aspirational ‘neo middle class’ which helped the BJP and its leader Narendra Modi win a large mandate in the recent 2014 Indian elections.

So politically, as well as personally, the smart cities initiative is a pet-project for Prime Minister Modi; significantly, it was one of the manifesto policies prioritized for the government’s first 100 days.

The first step in making this happen will be to set up public-private partnerships with the likes of HP, Cisco and IBM, to create the necessary IT infrastructure. This is a clearly a huge opportunity for those companies, which value the potential market at over £300 million. But it might be one for the public too.

As it stands, India’s myriad bureaucratic department each control one and only one facet of citizens’ lives. But according to Rakesh Kaul, a director of PwC India, these new smart networks will offer “smart policing, smart metering, smart sanitation, adaptive traffic, solid waste management, and (better) healthcare”, all through a single sign-on.

And this could make life much, much easier. Left your air con or lights on at home when you dashed off to work this morning? Simply use an app to turn them off remotely. Compare and contrast healthcare providers on your phone as you ferry between cities on a bullet train. Log-on and pay your traffic fine without having to pony up a bribe. The possibilities seem limitless.

But there are two barriers that need to be addressed before this can become a reality. For one, the money on offer is not actually very much. It works out to approximately £7m for each smart city: seed funding, to be topped up by future governments and through private sector investment.

The bigger issue is how to make this ‘smartification’ of daily life available to those not fortunate enough to have access to a smart phone, the internet, or even electricity. India’s smart phone market grew by a phenomenal 186% in the year to the first quarter of 2014 – but overall penetration still stands at just 10% nationwide. These new smart cities may end up as little more than exclusive enclaves for the financially well-off and technologically savvy, rather than the model inclusive communities being advertised.       

This isn’t the first attempt by an Indian government to sort out India’s sprawling, traffic-clogged and increasingly unlivable cities. Previous efforts, such as the Jawaharlal Nehru National Urban Renewal Mission and the Restructured Accelerated Power Development and Reforms Program, haven’t come off. At issue here isn’t a dearth of ideas, but India’s ability to execute them in the face of a vast and sluggish bureaucracy, corrupt politicians and self-serving corporate leaders.

By combining cutting-edge technology with business competence, however, smart cities may finally be able to change things. It’s an idea whose time has come.

Siddharth Bannerjee is a graduate of LSE’s Department of Social Policy. He works on governance reform initiatives, especially ones involving the use of innovative technology and open source data.

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