Reforms to Accelerate the Delivery of India’s Smart Cities

The Government of India recently announced that 20 cities will receive funding for the implementation of urban development projects in a quest to become “smart”. The private sector will play a pivotal role in implementing urban development projects in India. In this context, the World Economic Forum has launched a new report that recommends reforms that state and local governments should consider to accelerate the development of smart cities and rapidly move from the conceptualization stage to implementation.

The report, Reforms to Accelerate the Development of India’s Smart Cities, waswritten in collaboration with PwC and identifies the key challenges limiting private-sector participation in urban development projects. The report recommends institutional, business-environment and sector-specific reforms to enhance private-sector participation in inclusive development for urban India.

“While cities in India plan to embed technology in the delivery of urban infrastructure and services, they should also plan to bridge the demand-supply gap in the provision of core urban services such as water, waste management and sanitation. A holistic approach where equal importance is given to infrastructure, technology and governance is required to improve the quality of life in urban India,” said Alice Charles, Community Lead, Infrastructure and Urban Development Industry, World Economic Forum.

The report acknowledges that the Government of India has already introduced reforms, and the business environment has improved – as reflected in improvement in India’s ranking in the Global Competiveness Report released by the World Economic Forum. However, more needs to be done to propel India’s global standing, particularly in the areas of land acquisition, dispute resolution, permitting processes, information availability and procurement processes. The recently launched programmes provide a perfect opportunity to blend reforms with large-scale development initiatives.

Neel Ratan, Management Consulting Leader, PwC India, said: “The Government of India has commenced the reforms process. Now state governments, local government and newly constituted special-purpose vehicles will need to drive the reforms agenda forward by ensuring the permitting process is simplified and risk-sharing in public-private partnership is optimal. Collaboration among multiple administrative entities will be of utmost importance if smart-city projects have to be completed within budget, and implementation timelines have to be met.”

The report includes best practices from India and rest of the world to help guide state and local governments in undertaking the reforms process:

· Institutional reforms: The report recommends better collaboration and a unified command structure across multiple planning and administrative bodies within a city, and devolution of power to local government to determine and collect user charges and taxes in order to make local bodies financially independent.

· Business-environment reforms: The report provides a methodology for formulating public-private partnerships in urban development projects and details how other cities have adopted measures that reduce risk in public-private partnerships. Practical suggestions for improving the permitting process, land acquisition, procurement process and dispute resolution mechanisms are recommended to attract the private sector’s help in implementing India’s urban-rejuvenation initiatives.

· Sector-specific reforms: In relation to the physical infrastructure sector, reforms are recommended to establish independent regulators and empower them where they already exist, ensure metering and enforce collections (of user charges and taxes) from large defaulters.

“A tireless effort, from the public and private sector, will be required to achieve the Government of India’s very ambitious urban-development programmes. An environment where a trusting relationship exists between the private sector, public sector and citizens will go a long way towards rejuvenating cities in India,” said Ajit Gulabchand, Chairman and Managing Director of the Hindustan Construction Company.

In the coming decades, urbanization in India will increase rapidly, with the urban population set to reach 814 million by 2050. A congenial business environment will help to ensure adequate private-sector participation. India needs to develop world-class cities to compete at a global scale, and urban rejuvenation programmes coupled with fundamental reform will go a long way in helping India to develop globally competitive cities.