Make Indian cities liveable first; smartness will come later

AFTER months of preparations, the most ambitious attempt yet by India to change the face of its cities has started. The plan to have 98 "smart" cities would rely on corporate involvement in the management and partial financing of these cities, the use of information technology (IT) for connectivity and governance, and the help of several international agencies such as the World Bank and the Asian Development Bank and a number of foreign governments to provide technical support.

The Indian government plans to allocate about 480 billion rupees (S$10 billion) over the next five years for these cities, with a similar amount coming from the states or urban local bodies. This is expected to be less than a fifth of the resources required, the rest coming from multilateral agencies and companies.

An important innovation, if it takes off, is the use of mobile connectivity as an aid to information and governance. Most of the investment will be in the traditional city needs of water, sewerage, electricity, transport and housing. These require large investments that cannot be sidestepped. What the government hopes to put in is clearly insufficient (for instance, Mumbai's annual municipal budget is over 300 billion rupees). The cities have lost one important source of income - the octroi or goods entry tax - and will have to cope with increase in property taxes and service usage charges. They will also have to generate additional revenue for their expanded needs and may have to pledge the city's assets to raise loans. One danger is that if the urban bodies aren't able to service their loans, they would lose control over the city's assets.