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This article was written by Sparsh Mehra, a student of NUJS.

India is fastest developing economy is in the world, with the complexity is like infrastructure networks which are changing drastically. People are trying to change your life and the shifting from rural areas to urban areas. In this paper I will discuss about the Smart City mission which was launched by Prime Minister Narendra Modi in 2015. I will furthur discuss the smart solutions and Strategies for making a city smart. There are two stages for making a city smart which will be discussed in this paper. Then I will further discuss about the cities like Puducherry and other cities which have been involved in the smart cities projects As Maharashtra government signed an agreement with the Canada to implement lion for the infrastructure I will further discuss about this agreement and the agreement which was find between Japan and India in making Chennai, Ahmedabad and Varanasi smart cities. Further I will discuss about the financing of the smart cities and issues related to the plan for implementation ending with the conclusion.

I.                   INTRODUCTION

In the year 1949, the United Nations determined that the World Town Planning Day would be commemorated every 8th November, in order to acknowledge and promote the role of planning in creating sustainable communities. On that very date, the world rural population surpassed the world urban population. However, the 21st century is becoming known as the century of cities. According to the United Nations, already in July 2007, the urban population surpassed the rural population in the world. Moreover, this proportion is expected to increase dramatically in the coming years to the point that by 2050, almost 70% of the world population will be living in the cities and India is no exception. Currently, 31% of the Indian population stays in the cities and contributes about 65% to the national GDP (World Bank Data).[1]

Without a doubt, the increase in Urbanization exerts immense pressure on the existing infrastructure, food supplies, water supplies, traffic management, waste disposal systems, sustainability and on the overall quality of life. There has to be a simultaneous development in the technological frontier of the cities in order to accommodate the agglomerations.[2] Hence, it is imperative for the government to introduce technology and build smarter solutions to solve these problems. With this increasing urbanization and load on cities, the government has realised the need for cities that can cope with the challenges of urban living and also be magnets for investment. Thus, the idea of “smart cities” came into formulation.

Now the question is what is SMART CITY? – The concept of smart cities originated at the time when the entire world was facing one of the most worst economic crises. In 2008, IBM (International Banking Machines Corporation), American multinational technology company, began to work on a “smarter cities” concept. There are some successful smart cities in other countries such as Amsterdam, Barcelona, and Stockholm etc. There is no universally accepted definition of a smart city and it may mean different things to different people. The concept of a smart city can vary from people to people, city to city and country to country.[3] Basically, the concept of smart cities is to use digital technology to make a city more efficient and sustainable. The term encompasses a vision of an urban space that is ecologically friendly, technologically integrated and meticulously planned, with a particular reliance on the use of information technology to improve efficiency.[4]

According to Frost and Sullivan (2003), smart cities include smart Governance and smart education, smart healthcare, smart building, smart mobility, smart infrastructure, smart technology, smart energy and smart citizen.

The concept of smart cities in India, under the vision of Prime Minister, Narendra Modi is a little broader. The smart cities in India are expected to attract investments, building cities that work well especially for business and developing new technologies for communication. Prime Minister Modi’s vision “Digital India” has a plan to build 100 smart cities across the country. Digital India envisages making India a leader in digitally delivering services in health, education, banking sectors.[5] On 5th November, 2014, India and Russia signed agreement to set up a Smart City on the Delhi-Mumbai Industrial Corridor (DMIC). The agreement was signed by Deputy Prime Minister of Russia Dmitry Rogozin and External Affairs Minister Sushma Swaraj during the 20th session of Scientific, Technological and Cultural Cooperation (IRIGC-TEC). Russian company AFK Sistema will help in establishing the smart city in India. On 25th January, 2015, India and United States (US)  signed three Memoranda of Understandings (MoUs) on smart cities. These MoUs were signed by the representatives of United States Trade and Development Agency (USTAD) and the respective Chief Secretaries of State Governments of Uttar Pradesh, Rajasthan and Andhra Pradesh in the presence of Union Urban Development Minister M. Venkaiah Naidu. These MoUs seeks to give a boost to Union government’s flagship smart cities scheme, by building smart cities in Vishakapatnam (Andhra Pradesh), Ajmer (Rajasthan) and Allahabad (Uttar Pradesh). US will help respective state to conduct feasibility studies, finding investors, ways to use the best technology and formulating the plan for building three smart cities. While, respective state Governments will provide resources like technical information and data related to smart cities plannings; staff, logistical and travel support and budgetary resources.

II.               SMART CITY MISSION

On June, 2015, the prime minister of India, Narendra Modi launched Smart Cities Awas Yojna Mission(CSM), a Centrally Sponsored Scheme as a  part of Urban Rejuvenation. The smart city mission of Government of India focuses on promoting the cities that provide core institutional, physical, social and economic infrastructure; provide decent quality of life to city dwellers; sustainable environment and smart solutions. The mission will cover 100 cities and its duration is five years (FY 2015-16 to FY 2019-20). The Government plans to develop 100 Smart cities distributed among the states and union territories on the basis of an equitable criteria. The formula gives equal weight age (50:50) to urban population of the state / UT and the number of statutory towns in the state / UT.

The Core infrastructure features of Smart City Mission would include adequate water supply; assured electricity supply; sanitation, including solid waste management; efficient urban mobility and public transport; affordable housing, especially for the poor; robust IT connectivity and digitalization; good governance, especially e-governance and citizen participation; sustainable environment; safety and security of citizens, particularly women, children and the elderly; and health and education. Some of its other features are mixed use of land, transit oriented development (TOD i.e. developing commercial and residential plots in the same area to reduce use of vehicles or to increase the use of public transport,  last mile connectivity through  para transport (autos, disabled friendly vehicles etc.), pedestrian / cyclist friendly design of streets, preservation of open spaces and ecological balances, green buildings which reduce energy consumption, mobile and e-governance etc.[6]


The smart solutions under the mission refer to use of technology in such a way that it leads Smart outcomes. Some examples of smart solutions are as follows:

. E-Governance and citizen services: This includes public information and grievance Redressal; Electronic Service Delivery; Citizen Engagement; Citizens as City’s eyes and ears; Video crime monitoring etc.

. Waste Management:  This includes waste to energy and fuel; waste to compost; treatment of waste water; Recycling etc.

. Water Management:  Smart meters and management; Leakage identification; prevention and maintenance; water quality monitoring.

. Energy Management: Smart meters and management; renewable source of energy; green buildings.

. Urban Mobility: Smart parking; intelligent traffic management; integrated multi-model transport.

. Others: Telemedicine; Incubation / trade facilitation centres; skill development centres.


The Smart City Mission tries to create smart cities in some ways: through retrofitting; redevelopment; Greenfield development plus a Pan-city initiative in which Smart Solutions are applied covering larger parts of the city. Below are given the descriptions of the three models of area- based smart city development:

  • Retrofitting (City Improvement):- it will introduce planning in an existing built-up area to achieve smart city objectives, along with other objectives to make the existing area more efficient and liveable. In retrofitting, an area consisting of more than 500 acres will be identified by the city in consultation with citizens. Depending on the existing level of infrastructure services in the area and the vision of the residents, the cities will prepare a strategy to become smart. Since existing structures are largely to remain intact in this model, it is expected that more intensive infrastructure service levels and a large number of smart applications will be packed into the retrofitted smart city.[7] This strategy may also be completed in a shorter time frame, leading to its replication in another part of city. Example – Connaught Place in Delhi, Bhendi Bazar in Mumbai.
  • Redevelopment (City Renewal):- reconstruction of already built-up area of more than 50 acres that is not amenable for any interventions. Example- Kidwai Nagar in Delhi.
  • Greenfield Development (City Extension):- new areas (Greenfield) will be developed around cities spanning more than 250 acres in order to accommodate the expanding population in urban areas. Example – land pooling / land reconstitution in Outer Delhi, GIFT city in Gujarat.
  • Pan-city:- pan-city components could be interventions like intelligent transport solutions (say traffic management using mobile apps to help people to divert to less congested roads, allowing ambulances and other emergency vehicles to control the traffic signals) that benefit all residents by reducing commuting time. Pan-city is an additional feature to be provided alongside proposals for retrofitting or redevelopment or green field development.


Process of selection of smart city involves two stages i.e.; Stage-1 and Stage-2. Stage -1 involves short listing of cities by the states / Union Territories (UTs) and Stage -2 involves The Challenge round for selection. Only the capable cities are to be chosen under the Smart Cities Mission through a two stage competition.

The 1st Stage of City Challenge Competition is intra-state in which, each State and Union Territory scores all their cities based on a set of criteria like Existing Service Levels (25 points), Institutional Systems and Capacities (15 points), Self-financing (30 points), Past track record (30 points) and nominates the top scorers as per the indicated number of potential smart cities for participation in Stage-2 of City Challenge Competition. Each of the  100 potential smart cities, nominated by all the States and UTs based on Stage-1 criteria have to  prepare Smart City Plans which would  be rigorously evaluated in the Stage-2 of the competition for prioritizing cities for financing. In the first round of 2nd Stage, 20 top scorers will be chosen for financing.[8] The remaining cities would be asked to make up the deficiencies identified by the Apex Committee in the Ministry of Urban Development for participation in the next rounds of competition. The second stage of the competition is a very crucial stage.

 The Stage-2 criteria for evaluation of Smart City Plans are as below:


  1. Credibility of implementation: This encompasses improvement in operational efficiency over the last three years from 2015 as reflected in average time taken to give building plan approvals, increase in property tax assessment and collection, collection of user charges for water, improvement in power supply, easing og traffic congestion, online accessing of statutory documents through adoption of IT etc.
  2. City Vision and Strategy: As reflected in the degree of correlation with the needs and aspirations of the residents, use of ICT to improve public service delivery, impact on core economic activity and inclusiveness.


  1. Impact of proposal: To what extent the proposal is inclusive in terms of benefits to the poor and disadvantaged, Extent of employment generation, Articulation of quantifiable outcomes based on citizen consultations, Impact of environment etc.
  2. Cost effectiveness of Smart City Plan: Application of smart solutions for doing more with less of resources, Alternatives considered to enhance cost effectiveness of the proposal, firming up of resources required from various sources, Provision for Operation and Maintenance Costs, IT interventions to improve public service delivery.
  3. Innovation and Scalability: Extent of adoption of best practices in consultation with citizens, Applicability of project to the entire city, Adoption of smart solutions and Pan-city development.
  4. Processes followed: Extent of citizen consultations, vulnerable sections like the differently-abled, children, elderly etc, ward committees and area sabhas and important citizen groups. Extent of use of social media and mobile governance during citizen consultations and Accommodation of contrary voices in the strategy and planning.[9]


On 23rd July, 2015, Puducherry city has emerged as the first nomination to be received by the Urban Development Ministry for a Smart City Mission. In this regard, Government of Union Territory of  Puducherry has nominated its capital city for inclusion in the Union Government’s flagship 100 Smart City Mission.[10] It also has forwarded the nomination along with all the forms and documents as required in the Stage-1 of ‘City Challenge’ competition. The nominations also include the details of evaluation of all the five urban local bodies (ULBs) namely Puducherry, Kariakal, Oulgarat, Mahe and Yanam.

The nomination was forwarded based on the recommendations of the High Powered Steering Committee (HPSC) constituted as per the guidelines of mission. It was headed by Chief Secretary of UT and had overseen the process of first stage intra-state competition.[11]

The facts about stage-1 evaluation criteria of Puducherry are as follows:-

  1. i) Puducherry having a population of 6.5 lakh has scored 75 of the possible 100 marks in stage-1 evaluation criteria.
  2. ii) Since 2011, Puducherry Municipal Corporation (PM) has achieved 18 per cent improvement in provision of household sanitary latrines.

iii) Internal revenue generation has continuously increased by 14 per cent over the past three periods of 2012-12 to 2014-15.

  1. iv) It has met 23 per cent of its capital expenditure from internal resources. It also has met about 80 per cent operation and maintenance cost of water supply through user charges.


On 27th August, 2015, Union Government has declared the names of 98 cities for its ambitious Smart Cities Project. These cities were selected by the respective. States and Union Territories on the parameters set by the union government. Of the total 98 cities, 13 were selected from Uttar Pradesh, 12 from Tamil Nadu, 10 from Maharashtra, 3 each from Bihar and Andhra Pradesh. These 98 cities has around 13 crore population and constitute around 35 per cent of urban population of India which will be covered under the mission. All other remaining states in India also have got one or two cities for the smart cities project except Jammu and Kashmir which has sought more time for selecting cities for the project. These selected cities will get two crore rupees each for the preparation of the smart city plan with the prime motive to enhance urban life with very practical and realistic approach.[12] Union Government has proposed to provide financial support of 48,000 crore rupees to this entire project. Of this amount, 200 crore rupees will be released during the first year. This project will also be implemented by states, union territories and urban local bodies as they have an important role to play in the implementation.

Here are the names of cities which are shortlisted by states or union territories:-

1.Andhra Pradesh- Vishakhapatnam, Tirupati, Kakinada

2.Bengal- New Town Kolkata, Bidhannagar, Durgapur, Haldia

3.Gujarat- Gandhinagar, Ahmedabad,Surat, Vadodara, Rajkot, Dahod

4.Madhya Pradesh- Bhopal,Indore,Gwalior,Jabalpur,Satna ,Ujjain, Sagar

5.Tamil Nadu- Coimbatore,Chennai,Madurai,Vellore,Tiruchirapalli,Erode,Dingigul, Thanjavur,Salem,Tiruppur,Thanjavur,Tirunelveli, Thoothukudi

6.Karnataka- Mangaluru,Belagavi,Shivamogga, Hubbali-Dharwad,Tumakuru,Davanagere

7.Kerala- Kochi

8.Telangana- Warangal, Karimnagar

9.Maharashtra- Greater Mumbai, Thane, Kalyan- Domviali, Pimpri- Chinchwad, Nashik, Amravati, Solapur, Nagpur, Pune, Aurangabad

  1. Uttar Pradesh- Meerut, Moradabad, Aligarh, Saharanpur, Bareilly,Jhansi, Kanpur,Allahabad, Lucknow, Varanasi, Ghaziabad,Rampur, Agra

11.Rajasthan- Jaipur,Ajmer,Udaipur,Kota

12.Punjab- Ludhiana,Amritsar,Jalandhar

13.Bihar- Muzzafarpur,Bhagalpur,Biharsharif

14.Haryana- Karnal, Faridabad

15.Assam- Guwahati

16.Odisha- Rourkela, Bhubaneswar

17.Himachal Pradesh- Dharamsala


19.Jammu And Kashmir- Srinagar,Jammu

20.Jharkhand- Ranchi

21.Sikkim- Namchi

22.Manipur- Imphal

23.Andaman And Nicobar Island- Port Blair

24.Arunachal Pradesh- Pasighat

25.Chattisgarh- Raipur,Bilaspur

26.Chandigarh- Chandigarh

27.Dadra And Nagar Haveli- Silvassa

28.Daman And Diu- Diu

29.Delhi- New Delhi

30.Goa- Panaji

31.Lakshadweep- Kavaratti

32.Meghalaya- Shilling

33.Mizoram- Aizwal

34.Nagaland- Kohima

35.Puducherry- Oulgaret

36.Tripura- Agartala


On December 15,2015, Rajasthan has become the first state in the country to submit smart city plans for three selected cities to Union Government. In this regard, state government has submitted smart city proposals of Udaipur, Kota, and Ajmer to Union Ministry of Union Development. Under the proposal, the investment outlays proposed by state government for developing these three cities are Kota 1,493 crore rupees, Ajmer 1,300 crore rupees and Udaipur 1,221 crore rupees respectively.[13]

State Government is also forwarding Smart City proposal for Jaipur city with an investment proposed 2,403 crore rupees prior to December 15, 2015 deadline. Overall Rajasthan has proposed a total investment of 6,457 crore rupees for five years for developing these four cities as smart cities.[14]


The union ministry of urban development has shortlisted 20 cities from 11 states and Delhi union territory in the list of first batch of smart cities mission on 29th January, 2016. These shortlisted cities were selected from smart city challenge competition in which 97 cities and towns had participated from 23 states and UTs. Among the shortlisted 20 smart cities, 3 are from Madhya Pradesh, 2 each are from Maharashtra, Rajasthan, Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh and 1 each from Odisha, Kerala, Delhi (UT), Assam and Punjab.

20 shortlisted smart cities (rank wise) are:

. Bhubaneswar, Odisha

. Pune, Maharashtra

. Jaipur, Rajasthan

. Surat, Gujarat

. Kochi, Kerala

. Ahmedabad, Gujarat

. Jabalpur, Madhya Pradesh

. Visakhapatnam, Andhra Pradesh

. Solapur, Maharashtra

. Davangere, Karnataka

. Indore, Madhya Pradesh

. New Delhi Municipal Corporation

. Coimbatore, Tamil Nadu

. Kakinada, Andhra Pradesh

. Belagavi, Karnataka

. Udaipur, Rajasthan

. Guwahati, Assam

. Chennai, Tamil Nadu

. Ludhiana, Punjab

. Bhopal, Madhya Pradesh


The Union Ministry of Urban Development has shortlisted 13 cities from 13 states / UTs in the list of second batch of smart cities mission on 24th may, 2016. These cities were shortlisted based on scores obtained in Fast Track competition conducted for 23 cities from as many states and union territories. This competition list was topped by Lucknow in Uttar Pradesh and was followed by Warangal in Telangana and Dharmasala in Himachal Pradesh.[15] In the Fast Track competition 23 cities had participated from which these 13 cities were selected. These 23 cities were having the highest ranking and had failed to get representation in the first round of competition held in January 2016.

13 shortlisted smart cities (rank wise) are:

. Lucknow (Uttar Pradesh)

. Warangal (Telangana)

. Dharmasala (Himachal Pradesh)

. Chandigarh (UT of Chandigarh)

. Raipur (Chattisgarh)

. New Town Kolkata (West Bengal)

. Bhagalpur (Bihar)

. Panaji (Goa)

. Port Blair ( UT of Andaman & Nicobar Islands)

. Imphal (Manipur)

. Ranchi (Jharkhand)

. Agartala (Tripura)

. Faridabad (Haryana)


 The union ministry of urban development has shortlisted 27 cities from 12 states in the list of third batch of smart cities mission. These cities were shortlisted based on scores obtained in the latest round of the smart city challenge competition in which total 63 cities had participated. This competition list was topped by Amritsar in Punjab.[16] With five cities, Maharashtra has the highest number of cities in the list. The list also includes four cities each from Tamil Nadu and Karnataka, three cities from Uttar Pradesh and two each from Rajasthan and Punjab. Nagaland and Sikkim with one city each for the first time have made it to the list. Earlier in the first batch announced in January 2016, 20 cities had made into the list. In the second batch, 13 cities were selected. With declaration of third batch, total 60 cities have been chosen for the Smart Cities Mission.

27 shortlisted smart cities (rank wise) are:

. Amritsar (Punjab)

. Kalyan-Dombivili (Maharashtra)

. Ujjain (Madhya Pradesh)

. Tirupati (Andhra Pradesh)

. Nagpur (Maharashtra)

. Mangalore (Karnataka)

. Vellore (Tamil Nadu)

. Thane (Maharashtra)

. Gwalior (Madhya Pradesh)

. Agra (Uttar Pradesh)

. Nashik (Maharashtra)

. Rourkela (Odisha)

. Kanpur (Uttar Pradesh)

. Madurai (Tamil Nadu)

. Tumakuru (Karnataka)

. Kota (Rajasthan)

. Thanjavur (Tamil Nadu)

. Namchi (Sikkim)

. Jalandhar (Punjab)

. Shivamogga (Karnataka)

. Salem (Tamil Nadu)

. Ajmer (Rajasthan)

. Varanasi (Uttar Pradesh)

. Kohima (Nagaland)

. Hubbali-Dharwad (Karnataka)

. Aurangabad (Maharashtra)

. Vadodara (Gujarat)


On 8th march, 2016, Germany has decided to partner with India’s smart city programme and will help developing Kochi (Kerala), Bhubaneswar (Odisha) and Coimbatore (Tamil Nadu) as smart cities. It was announced by State Secretary in Germany’s Ministry for Environment, Nature Conservation, Building and Nuclear Safety, Gunther Adler in New Delhi at the second meeting of the Indo-German Working Group on Urban Development.[17] These three cities are among the top 20 cities selected by Urban Development Ministry which are to be developed as smart cities. This decision was taken under after Union Government had invited Germany to be a partner in its Smart Cities Programme in 2015. Earlier Germany had set up a six-member joint committee with India to identify the cities which it could develop as smart cities. The joint committee had 2 representatives of Union Urban Development Ministry, 1 from the Union Ministry of Housing and Urban Poverty Alleviation, and 3 from Germany. Germany is India’s second largest bilateral donor after Japan with a record commitment of 1.5 billion Euros agreed in the year 2015.[18]


Maharashtra Government on 9th November, 2016, signed an agreement with Canada to implement a joint action plan on urban infrastructure development in the state. The Canada-Maharashtra action plan seeks to introduce companies, solutions and financing from North American country for urban development and implementation of state-led infrastructure projects. The plan envisages supporting Indo-Canadian partnerships including private sector companies, universities and colleges to speed up project implementation promote economic development and contribute to rising standards of living in the state.[19]


Japan has decided to assist India with the development of Chennai, Ahmadabad and Varanasi as smart cities on 5th January, 2017. So far, leading countries have come forward to be associated with development of 15 smart cities. These include: United Kindom- Pune, Amaravati and Indore, United States- Visakhapatnam, Ajmer and Allahabad, France- Chandigarh, Puducherry and Nagpur and Germany- Bhubaneswar, Coimbattore and Kochi.


After the first round of short listing of cities by the states resulting in a selection of  98 cities for the Smart City Mission, and the remaining two in Jammu and Kashmir and Uttar Pradesh being contended, the second stage of evaluating the Smart City Proposals was being conducted with the support of the Bloomberg Foundation, knowledge partner for the Ministry of Urban Development (MoUD) for the mission.[20]

After the selection of first 20 smart cities at the end of January, the next step is to set up a Special Purpose Vehicle (SPV) and execute their Smart City Proposals (SCPs). These proposals comprise of detailed project reports (DPRs), layout plans, tender preparation, prospective vendor lists, financial modelling reports etc. SPVs must be registered under the Companies Act, 2013 to ensure timely, cost-effective and efficient execution of smart city projects with operational freedom.[21] They will ensure that the qualities of the outcomes of these smart city projects are benchmarked against global standards. SPVs shall have 50:50 equity that will be held by the states and respective urban local bodies. Private equity is also allowed but the management control will rest with the Governments only. Each smart city will have a SPV which is headed by a full time CEO and SPV has nominees of Central Government, State Government and ULB ie; Urban Local Bodies. However, these projects are to be executed through joint ventures, PPP (Public-Private Partnership) contracts, and other subsidiaries. The SPV is supposed to plan, approve and sanction projects, release funds, execute projects, overview the activities, mobilize resources, review quality control, collect taxes, enter into further contracts and delivery agreements, implement, manage and monitor the Smart City Development Projects.


Madhya Pradesh and Rajasthan Government have set up Special Purpose Vehicles (SPV) for the implementation of Smart City Plants on 20th February, 2016.SPVs have been set up for five cities- Jabalpur, Indore and Bhopal in Madhya Pradesh and Jaipur and Udaipur in Rajasthan. These cities are among the first batch of 20 winners of Smart City Challenge Competition held by the Union Ministry of Urban Development. The Ministry will release 200 crore rupees for each of the 20 selected cities only after SPVs are set up.[22]


 The Smart City Mission being a Centrally Sponsored Scheme, the Government of India  has committed  financial support of INR 48,000 crores for the Smart City Project ie; each smart city to be funded INR 100 crores per year for the 5 years. An equal matching amount is to be contributed jointly by the State and Urban Local Governments. Typically, the Government has been the sole financier of infrastructure projects and has been responsible for implementation, operations and maintenance of these projects as they require large scale investment, long gestation period and high initial capital. However, the Government solely will not be able to satisfy the rising funding requirements. Thus it has taken various steps to attract private participation and other means of funding.[23] These are Public Private Partnerships (PPP), commercial bank’s lending, take out financing, infrastructure financing institutions, external commercial borrowing, and foreign direct investments. To stimulate public investment in infrastructure, a special purpose vehicle- India Infrastructure Finance Company Limited (IIFCL) has been set up. Commercial bank financing supplemented with government financial back up in the form of viability gap funding, soft loans, revenue shortfall loans and funding from multilateral and bilateral financing institutions, funds from FFC (Fourteenth Finance Commission) recommendations, funds from Institutions such as EXIM Bank, SFC (State Finance Corporations), IDBI, IRFC (Indian Railway Finance Corporation), IIFCL provides significant liquidity to the infrastructure financing market. Many countries also have shown in developing Indian Smart Cities.[24]

 National Investment and Infrastructure Fund (NIIF) is a fund created by the Government of India for enhancing infrastructure financing in the country. Smart Cities could be funded by mobilizing these funds for infrastructure development. The initial authorized corpus of NIIF would be Rs. 20,000 crores which may be raised from time to time , as decided by Ministry of Finance. Another option for raising funds is the indirect  financing ie; raising money through financial intermediaries such as Banks, Venture Capitalists and insurance companies etc who act as a facilitator. A number of State Governments have successfully set up financial intermediates (such as Tamil Nadu, Gujarat, Orissa, Punjab, Maharashtra, Karnataka, Madhya Pradesh and Bihar which can be tapped for support  and other states may consider some similar set up in their respective States. There is a need to develop a vibrant bond market, which includes corporate and municipal bond. Municipal bonds issued by urban local bodies could be explored as an important source of financing the requirement of urban infrastructure development. The municipal bond market needs to be developed by providing a robust regulatory framework and possible, tax free status. Tax free municipal bonds will provide huge financial support through with ULB’s with poor financial health can raise funds and mitigate the risk among participating ULB’s. An option for financing infrastructure projects is the infrastructure debt fund.[25] The World Bank along with other financial institutions and state owned infrastructure banks play a significant role by financing the smart cities. Also, user fees allow cities to impose fees to cover the cost associated with funding supporting infrastructure. Funding for the smart cities can also be done by implementing the TIF (Tax Increment Financing), commonly used as a subsidy for redevelopment, infrastructure and other community development projects. Alternative Central Government schemes such as AMRUT (Atal Mission for Rejuvenation and Urban Transformation), National Heritage City Development and Augmentation Yojana (HRIDAY), Swachh Bharat Mission etc also play a major role in infrastructure financing in India. Apart from these, funds would also be required for developing affordable housing, 24×7 electricity, ICT services, education, cost-efficient health services, recreation and sport facilities.


Indian cities are in a rut. Urban population explosion needs of modern comfort and inspirational pressure have turned them into unmanageable monsters. India is currently the world second most populous nation with nearly 17.5% of global population and according to the United Nations, it is estimated that India will overtake China to become the world’s most populous nation by 2022. As per estimates, about 25-30 people will migrate every minute to major Indian cities from rural areas in search of better livelihood and better lifestyles. With this momentum, about 843 million people are expected to live in urban areas by 2050. To accommodate this massive urbanization, India needs to find smarter ways to manage complexities, reduce expenses, increase efficiency and improve the quality of life. With this context, Prime Minister Modi had announced his vision to set up 100 smart cities across the country. There are several issues like  funding issues, legal issues, the socio-economic and political issues like corruption, red tapism, procrastination in order to develop smart cities.[26]



Building smart cities need huge fund. It is estimated that INR 7 lack crore will be required to build 100 smart cities for the next 20 years.  The Central and State governments are not in a position to shell out the entire requirements. As the financial condition of many states and local governments is weak, they have been asked to explore other funding sources. Private sector participation is needed in order for public sector entities to leverage access to private sector financing. This need to raise funds will open market opportunities to domestic and foreign investors interested in public-private partnerships in many sectors, including IT infrastructure, energy management, environmental sustainability , GIS (Geographical Information System) mapping, engineering and sanitation.


In 2015, the Central Government announced plans to develop 100 smart cities over the next five years, with an outlay of Rs 1 lakh crore.[27] However, the mission statement and guidelines from the ministry of urban development are silent on the legal framework to regulate and manage these. Town planning and legal experts are in favour of tweaking and strengthening the current municipal and state laws. Smart laws are needed to implement smart cities project effectively and efficiently. There is a need of reforms in law in the following areas:

1)  Cyber Security- With improved use of IT in government services, protecting the data from cyber-attacks would be important. Smart cities need stricter data protection and privacy laws to safeguard citizen from cyber-attacks and unauthorized use of data. Smart cities have to ensure that they comply with the National Cyber Security Policy, 2013.

2) Resource Mobilization- In order to fund large infrastructure and operational cost, amendments are needed to existing laws on municipalities and municipal corporations like property tax, rent control, licenses, user charges.

3) Water Laws- rational pricing per unit cost, incentivizing efficient usage and minimizing wastage, making water a community resource (especially underground water)

4) Sanitation and Waste Disposal- Laws relating to waste segregation, waste disposal, green corridors, power generation from waste etc. (solid waste management rules 2016, Swacch Bharat Abhiyan)

5) Smart urban mobility solutions through reforming traffic rules- for example: easing licensing norms, greater accountability in maintenance of roads, pavements, traffic lights; enhanced fines, restrictions on movement of heavy duty vehicles, vehicle rationings like odd-even etc.

6) Smart policing solutions- recognition to community policing initiatives in the legal terms, smart security grid for monitoring crimes, coordination of emergency services like fire, ambulance etc.

7) Empowering SPVs to make decisions in a time bound manner; separation of ownership, regulation and service provisions to bring in greater accountability, transparency and sustainability in operations.

8) Service deliver is also needed to be modified to include e-governance, citizen participation, electronic method of delivery, grievance redressal (example- ADHAR bill providing base for e-service delivery).



In developed countries, a Smart City is one where existing infrastructure is augmented, monitored and controlled, leading to highly sustainable development. In the Indian context, the approach is different. Since many cities in India lack basic infrastructure, institutional frameworks and proper governance, a Smart City initiatives will first and foremost involve providing basic civic requirements and making the infrastructure robust and scalable.[28]

A city needs both physical as well as social infrastructure developments. Physical infrastructure should focus on three aspects: A) Improvement in public transport like metro rail, BRTS (Bus Rapid Transit System), LRT (Light Rail Transit), monorail etc. B) Improvements in infrastructure of other motor vehicles- ring roads, bypasses, elevated roads, improvement in the existing road ways. C) Improvements in infrastructure for walking, cycling and waterways.

Though social infrastructure, by definition, includes amenities such as healthcare, education and recreation, each of these have a direct bearing with sanitation and waste management. Sanitation is the foremost preventive healthcare measure that a smart city must adopt. A fully equipped hospital, yoga centres would be of no help if the citizens live in a dirty city and are regularly prone to air borne and water borne diseases caused due to ill managed solid and liquid waste. While it is important to have schools and extracurricular activity centres as a part of social infrastructure, it is very important for schools to include morals, good social habits and environment care as essential parts of a school curriculum in the formative years. Quality education of school and higher education, quality healthcare facilities and good entertainment facilities like sport facilities, cultural centres, open spaces and plazas are essential ingredients for quality life.


Introducing the concept of smart cities in India is a great idea but due to increasing poverty rate, lack of infrastructure and basic amenities, the cities might have to face a lot of challenges. Before initiating the project, the government should try to attend to the basic issues of the nation such as implementing a proper drainage system, providing good water, sanitation and health care facilities etc.

India’s Smart City Programme hopes to revolutionize city life and improve the quality of life for India’s urban population. Smart city would require smart economy, bright people, smart organization, smart communication, smart engineering, smart transit, fresh environment and bright living. Nevertheless, with mass migration leading to basic publications, like water shortages and overcrowding, the rate at which these cities will be developed will be the key. Several initiatives are being led by the Government of India to convert 100 cities into smart cities. The government is concentrating on encouraging Public Private Partnership (PPP) for successful implementation of the smart city project in India. Financial and IT services sectors are on the priority list of the government to garner investments from leading companies such as Cisco, Synoate, Knight Frank and AECOM India. The real challenge before the Government is to build inclusive smart cities for all its residents, regardless of whether they are rich or poor. These smart cities would concretize the dream of every Indian to live in an urban city. Not only there will be cleaner streets but also advanced public transport and other well managed infrastructural facilities. The big challenge will be to create self-sustaining cities, which create jobs, use resources wisely and also train people.


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[28] High Powered Expert Committee report on Indian Urban Infrastructure and Services, 29 Union Budget allocation for Urban Development 2015-16.

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