By Mr. Tanuj Shori, CEO & Co-founder, Square Yards
Smart Cities are increasingly becoming popular globally. Though so far Europe and North America have an upper hand in conceptualizing the idea; it is increasingly becoming popular in Asia Pacific as well with around 32 cities in the region already embracing technology enabled smarter approach towards sustainable development.
India and Smart Cities
Aligned with its long term growth objective, India is also aggressively emphasizing on making its ever burgeoning cities smarter. One of the 1st announcements, which the new government made after being sworn into power was to develop 100 Smart Cities across the nation- aimed at effective usage of resources and promotion of higher quality and standards of urban living.
A rising economy and a frequently urbanizing population coupled with an underdeveloped infrastructure and strained resources make India a perfect laboratory for the Smart City project – adoption of a robust technology and policy framework that can simultaneously drive modern cities towards higher growth trajectories and ensure judicious use of various resources.
Elements of Smart City
The envisaged projects will encompass a wide range of activities involving integrated townships, enhancement of physical infrastructure and logistics infrastructure, usage of state of the art information and communication technology to promote e-governance and better transparency, modernized waste management aimed at healthy and safe living, enhanced security facilities and affordable housing for every citizen. Not to mention developing of Special Economic Zones (SEZ) and business clusters to attract investment and simultaneously expand the retail and hospitality base to feed the surge in demand.
Though the range and scope of services would vary across the cities, but the common denominator in every project involves large scale integrated development, deployment of top class technologies along with the realization of superb civic infrastructure and higher living standards.
Challenges
Making cities the next engine of growth makes perfect sense in a nation where the urban population is expected to reach 600 million by 2030, registering roughly 5% annual growth. However, actualizing such mega project on a huge magnitude will come up with its own challenges.
Infrastructure and lack of civic amenities in the form of limited roadways, underdeveloped logisticssystems, power shortage and dearth of clean water will be major challenges in the transformation of Indian cities. It should be noted that India still faces a power shortage to the tune of 68,000 MW every day with over 300 million of the Indian populace without access to electricity. Likewise, due to poor water distribution systems, 45% of the water is lost in distribution with around 17 million of the population unable to access clean drinking water.
State of the art information technologies will definitely be one of the key catalyst to materialize the smart city plan. Nevertheless, the sheer magnitude of the plan necessitates relentless efforts in terms of identifying and implementation of the right technological approach- which calls for technologies to be consistently customized in tune to the location, resources and topology.
The challenge further amplifies with Indian cities still having abysmally low level of internet penetration- believed to be the nerve center of the entire project. For instance, Mumbai being the financial capital of India draws parallels with Shanghai, but has a broadband penetration of mere 8 percent.
Another bottleneck can emerge from power being split between center, state, municipal corporations and urban development agencies. Multiple sources of power can not only create lack of consensus and policy loopholes but also facilitate corruption.
Likewise, it is essential that individual dwellers of the city also showcase a collective commitment towards adopting the latest practices and keep the environment clean. Unfortunately sense of cleanliness and hygiene is very low among Indian citizens, when compared to global standards.
Intact Government Commitment
Cutting through the challenge, government has been continuously demonstrating its commitment towards the mega project. The initial announcements have been emboldened with government taking a string of decisions to expedite its efforts including creation of a holistic framework to select the cities and the commencement of research activities to identify the building standards.
Adopting a Private Public Partnership (PPP) model, the government will make a total investment of INR 48,000 crores (USD 7.5 billion) – 15-20% of the total intended funding. Correspondingly it is also emboldening measures to incentivize FDI in the realty sector. For instance, the cap for projects entitled for FDI has been reduced to 20,000 SQM from 50,000.
Interestingly, the very sources of the bottleneck can be instrumental in neutralizing them. For example, Indian city’s prevalent problem of underdeveloped infrastructure and civic amenities can be solved through an adoption of wide scale urban modernization plan enabled through Smart Cities. Likewise encouraging e-governance will help in neutralizing the side effects of prevalent corruption.
Long Term Benefits
Though the Smart City project definitely calls for massive investment and relentless efforts, in the longer run it is expected to yield great benefits. It will usher India into a new future enabled by glittering yet sustainable metropolises.
Similarly the endeavor will stimulate FDI inflows along with generation of large scale employment in construction, realty, IT, cement, steel and metal sectors etc. Likewise, the project is anticipated to generate revenue through surge in industrial, commercial and tourism activities.
The Smart City push can also be bonanza for the Indian real estate sector as it is expected to rejuvenate the overall sentiments in the Indian realty market, which has lately been slightly subdued due to higher supply and lower investment appetite.
It is anticipated that land prices will skyrocket in proposed Smart City locations due to the magnitude of proposed development, thereby stimulating higher investment.
For instance, in L-Zone located on outer skirts of New Delhi, prices which till recently were in the range of INR 5200 PSF have already started to rapidly escalate post the government’s approval of the land pooling policy. The prices are expected to reach INR 10,000 by the time of Land Transfer Certificates (LTC) will be obtained- which will be tentatively 2 years down the line.
The proposed Smart City project has all the ingredients of being a watershed moment for everyone involved such as the government, developers, investors and common citizens and can herald the beginning of a new India- smarter, stronger and sustainable.
