If we were to look at the smart cities initiative five years hence, how would we gauge its success? Standard monitoring systems will look at the extent to which funds allocated were disbursed and utilized and the number of projects that were sanctioned and completed to evaluate its success in financial and physical terms. More in-depth evaluations will hopefully attempt to see how far the objective of creating ‘replicable models which can act as lighthouses for other aspiring cities’ has been achieved. I will stick my neck out and say there is little likelihood of replicable models of liveable cities that deliver satisfactory essential services and the bulk of their residents, emerging from this initiative. And why is that?
The Smart Cities program is, at its core, just another central scheme aimed at infrastructure creation with a fashionable smart edge. Despite some new flourishes such as the competitive challenge for selection of cities and the SPV for project implementation, it is destined to suffer the same fate as numerous past schemes of a similar nature. The now overshadowed flagship programme of the United Progressive Alliance—the Jawaharlal Nehru National Urban Renewal Mission (JNNURM)—began with the premise that urban renewal requires both funds for infrastructure creation and institutional reform to strengthen and empower cities. It attempted to deliver on both by making funds for the former conditional on action on the latter. In reality, it ended up in largely cosmetic adherence to reform even as the projected infrastructure creation lagged behind target. Even more important, the sustainability of this investment was questionable. In understanding the failure of JNNURM to meet its objective of creating self sustaining cities that deliver well functioning basic services, lies the answer to why the smart cities project is unlikely to deliver on its vaunted goal.
The dominant narrative in appraising JNNURM’s performance was that funds were insufficient, conditions for drawing on the funds excessive and capacity and funding at lower levels insufficient to show results. Smart Cities (and the more direct JNNURM’s successor, Atal Mission for Rejuvenation and Urban Transformation) have dealt with each of these constraints. Smart Cities alone will invest at least ₹ 1 trillion in 5 years, the conditions for securing funds are far more relaxed and the special purpose vehicle, or SPV, is an attempt to overcome the capacity shortfall. However, the failure of JNNURM is more deeply rooted. It lies in the centralizing tendency inherent in India’s development strategy and the message this conveys. The emphasis on financing and directing from above what should be done and on funding new schemes and projects at the expense of maintaining and operating what already exists, orients the behaviour of all stakeholders. Delivering on basic services is largely seen as the responsibility of higher tiers of government and there is little reward for maintaining existing systems (neglect and decay are more likely to attract funds). Even a laudatory goal like furthering responsibility and accountability at city level, through increased decentralization as a condition for release of funds, remains distant in practice, even as check boxes are ticked to reflect achievement.
This essential problem, the smart cities programme does not even attempt to grapple with. It continues to exacerbate the principal-agent problem inherent in all centrally-sponsored schemes (CSSs) which prescribe inputs and at best pay lip service to outcomes. Consequently the agents—states and cities—strive to show adherence to the central conditions to draw funds. In this, they are abetted by the spend pressure within central ministries where performance is assessed by the ability to disburse allocated budgets. The detailed guidelines continue to dictate the process. It is this process and specific projects sanctioned under the programme that will be the targets that will be monitored. Are cities or enclaves becoming more livable? This is a by-product, that may or may not be achieved but is certainly unlikely to be part of the monitoring system. The SPVs, may, in a best case scenario, deliver well on the number of projects completed but the sustainability of this asset creation—by impoverished cities forever looking to the state and centre for a bailout—will remain unaddressed.
CSSs cannot be wished away in our polity but they do need to shift gear. The 14th Finance Commission has greatly enhanced the availability of untied funds with states and local bodies. It is time CSSs are only used to reward better outcomes. In the urban sector, these funds should go to those states that can show improvement in the delivery of basic services measured through a credible process (not susceptible to gaming).
This can end up redoing the incentives of key stakeholders. As a consequence, their focus may shift from a cycle of asset creation, neglect and fresh investment to cost effective improvement of existing systems and carefully considered fresh investment for better delivery of basic services to all. The states are more likely to discover the virtues of empowering and capacitating cities in such a scenario than in the present business-as-usual situation.
The author is a civil servant.