SMART CITIES: WHERE DOES THE FINANCIAL VIABILITY LIE?

‘Smart’ as an adjective or as a noun isn’t really the question anymore as the growing narratives around it seem to impose the latter part of speech almost overwhelmingly. This could a political strategy wrought by policy makers, IT honchos, urban planners amongst others to make a vision as expansive as it could be exclusionary. The exclusionary component only precipitates the divide in-between the inclusionary, thus swelling the former even denser. Turning from this generic stance about the notion of ‘Smart’, it is imperative to look at a juggernaut that is swamping the political, the policy makers, the architects-cum-urban planners, the financiers, and most crucially the urban dwellers belonging to a myriad of social and economic strata. While a few look at this as an opportunity in revamping of the urbane, for the majority, it is turning out to be a silent battle to eke out a future amidst uncertainty. In a nutshell, the viability of such ambitions depend on clear-sightedness, which seems to be filling up the void via the ersatz.

challenges-to-achieve-smart-cities-goal

Though, one thing that needs to be clarified here is the use of ‘smart’ is quite clearly similar to the use of ‘post’ in some theories, where it is not the temporal factor that is accounted for, but, rather an integrative one, a coalition of temporal and spatial aspects. Many a times, intentions such as these constructed as a need, and the difference between with the necessity is subtle. Smart Cities were conceived precisely because of such rationales, rather than as cahoots of impending neo-colonization conspiracies. There is a urban drift, and this dense diaspora is allegedly associated with pollution, resource crunch, dwindling infrastructure resulting in a stagflation of economic growth. So, instead of having kiosks that are decentralised, the idea is to have a control that is central addressing such constraining conditions. With a central control, inputs and outputs find monitoring in-housed through networking solutions. What’s more, this is more of an e-governance schema. But, digging deep, this e-governance could go for a tailspin because of two burning issues, viz. is it achievable, and how long would one look into the future as far as the handling and carrying capacity of data is concerned over these network solutions, since the load might exponentially rise without falling under any mathematical formulae, and could easily collapse the grid supporting this or these network(s). Strangely enough, this hypothesising takes on political robes, and starts thinking of technology as its enemy no. 1. There is no resolution to this constructed bitterness, unless one accommodates one into the other, whichever way that could be. The doctrines of Ludditism is the cadence of the dirge for the ‘Leftists’ today. The reality, irreality or surreality of smart cities are a corrosion of conformity of ideals spoken from the loudspeakers of ‘Left’, merely grounded on violations of basic human rights, and refusing to flip the coin to rationally transforming the wrongs into the rights.

While these discourses aren’t far and between, what needs a meritorious analysis of it is the finance industry and allied instruments. Now that the Government of India has scored a century of planned smart cities, their becoming dystopia and centres of social apathy and apartheid is gaining momentum on one side of the camp due to a host of issues, one amongst which is finances raised to see their materiality. In the immediate aftermath of Modi’s election, the BJP Government announced Rs. 70.6 billion for 100 smart cities, which shrank in the following year to Rs. 1.4 billion. But, aside from what has been allocated, the project is not run by the Government, as it is an integrative approach between the Government, State Government/Urban Local Bodies catalysed through a Special Purpose Vehicle (SPV). For understanding smart cities, it is obligatory to understand the viability of these SPVs through their architecture and governance. These SPVs are invested with responsibilities to plan, appraise, approve, releasing funds, implement, and evaluate development projects within the ambit of smart cities. According to the Union Government, every smart city will be headed by a full-time CEO, and will have nomination from the central and state government in addition to members from the elected ULBs on its Board. Who the CEO isn’t clearly defined, but if experts are to be believed, these might be from the corporate world. Another justification lending credence to this possibility is the proclivity of the Government to go in for Public-Private Partnerships (PPPs). The states and ULBs would ensure that a substantial and a dedicated revenue stream is made available to the SPV. Once this is accomplished, the SPV would have to become self-sustainable by inculcating practices of its own credit worthiness, which would be realised by its mechanisms of raising resources from the market. It needs to re-emphasised here that the role of the Union Government as far as allocation is concerned is in the form of a tied grant through creating infrastructure for the larger benefit of the people. This role, though lacks clarity, unless juxtaposed with the agenda that the Central Government has set out to achieve, which is through PPPs, JVs subsidiaries and turnkey contracts.

If one were to look at the architecture of SPV holdings, things get a bit muddled in that not only is the SPV a limited company registered under the Companies Act 2013, the promotion of SPV would lie chiefly with the state/union territory and elected ULB on a 50:50 equity holding. The state/UT and ULB have full onus to call upon private players as part of the equity, but with the stringent condition that the share of state/UT and ULB would always remain equal and upon addition be in majority of 50%. So, with permutations and combinations, it is deduced that the maximum share a private player can have will be 48% with the state/UT and ULB having 26% each. Initially, to ensure a minimum capital base for the SPV, the paid up capital of the SPV should be such that the ULB’s share is at least equal to Rs. 100 crore with an option to increase it to the full amount of the first instalment provided by the Government of India, which stands at Rs. 194 crore for each smart city. With a matching capital of Rs. 100 crore provided for by the ULB, the total initial paid-up capital for the SPV would rise to Rs. 200 crore. but, if one are to consider the GoI contribution of Rs 194 crore, then the total capital initially for the SPV would be Rs 394 crore. This paragraph commenced saying the finances are muddled, but on the contrary this arrangement looks pretty logical, right? There is more than meets the eye here, since a major component is the equity shareholding, and from here on things begin to get complex. This is also the stage where SPV gets down to fulfilling its responsibilities and where the role of elected representatives of the people, either at the state/UT level or at the ULB level appears to get hazy. Why is this so? The Board of the SPV, despite having these elected representatives has in no certain ways any clarity on the decisions of those represented making a strong mark when the SPV gets to apply its responsibilities. SPVs, now armed with finances can take on board consultative expertise from the market, thus taking on the role befitting their installation in the first place, i.e. going along the privatisation of services in tune with the market-oriented neoliberal policies. Probably, the only saving grace in such a scenario would be a list of such consultative experts drafted by the Ministry of Urban Development, which itself might be riding the highs of neoliberalism in accordance with the Government’s stance at the centre. Such an arrangement is essentially dressing up the Special Economic Zones in new clothes sewn with tax exemptions, duties and stringent labour laws in bringing forth the most dangerous aspect of smart cities, viz. privatised governance.

Whatever be the template of these smart cities, social apathy would be built into it, where only kinds of inhabitants would walk free, economically productive consumers and economically productive producers.

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