December 14, 2019
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Are 100 New Smart Cities Smart Policy?

It is both grandiosely ambitious as well as deeply inadequate. The government needs an urban agenda that is more wide-ranging, inclusive, innovative and sustainable

Are 100 New Smart Cities Smart Policy?
Are 100 New Smart Cities Smart Policy?

Narendra Modi is a leader with an urban vision. He transformed Ahmedabad with an award-winning bus transit system and the redevelopment of the Sabarmati waterfront . His most ambitious urban projects are two planned smart cities, the “Gujarat International Finance Tec-City”, coming up on the outskirts of Ahmedabad, and Dholera, an industrial hub on the Delhi-Mumbai corridor. Embodying Modi’s bold and forward-looking brand of governance, these projects helped raise his popularity amongst India’s predominantly young, aspiring and fast-growing urban population. As Prime Minister, Modi brings the vision of urban modernity he implemented in Gujarat to the rest of India. When Chinese Premier Xi Jinping visited India, Prime Minister Modi received him in Ahmedabad, not New Delhi, hosting a state dinner on the Sabarmatic riverfront plaza to showcase his achievements and his plans for India’s future. With investment and expertise from China, as well as Japan, Singapore and the US, Modi’s administration intends to build a hundred new smart cities in India.

Smart cities use digital technology to make urban systems more efficient, cost-effective and environmentally sustainable. Sensors embedded in buildings and infrastructure networks can help cities incorporate renewable energy such as solar power, or save energy by turning streetlights on only when a road is in use. Sensors, smart cards and digital cameras feed real-time data into integrated management systems, and better data and analytic technologies can inform decision-making and improve urban management. The smart city infrastructures and management systems used in the new cities in Gujarat, provided by global firms like IBM, Cisco and Bechtel, are expensive. In the long term, proponents argue, efficiency gains and energy savings make them well worth the investment. In most cases, it is simpler and cheaper to build such cities anew than to upgrade older settlements. But with the two new cities in Gujarat yet to prove viable, is building a hundred more sound urban policy?

India’s cities drive economic growth, but fail to provide a satisfactory quality of life to most of their residents. The urban middle-classes have seen their incomes grow, but contend with erratic water and power and hazardous levels of pollution. Roads are congested and unsafe and parks and public spaces are few. India now has the world’s highest number of traffic fatalities, overwhelmingly pedestrians and cyclists. Urban poverty levels are rising even as rural poverty declines, and inequality is manifestly stark in India’s major cities. In such a context, the appeal of a grand plan to change the face of Indian urbanization by building twenty-first century cities is clear.

China is an inspiration for Modi, in its larger push for modernization through urbanization, as well as the development models adopted by cities such as Tianjin, globally acclaimed for its state-of-the-art “Eco-city.” For rapidly urbanizing countries like India and China, smart cities are an opportunity to harness urban growth to sustainable development. Investing in top-of the-line infrastructure is a means to leapfrog the development ladder, jettisoning older, inefficient and unsustainable systems and avoiding the costs of retrofitting. World-class smart cities, moreover, provide a conducive milieu for the global capital and talent India and China wish to attract as they move into leading sectors such as information technology, finance and advanced manufacturing. Cities across China have therefore replicated the Tianjin model, and the Chinese government has selected 193 local governments for smart city projects. If China can do it, why can’t India? A forceful, pro-growth leader like Modi, with an urban political base, might be what India needs to transform its urbanization narrative.

Modi’s ambitious plan, has, without doubt, changed the discourse around Indian cities, generating excitement amongst business leaders and upwardly-mobile middle-classes tired of living in “third-world” environments. Whether the shift in narrative prompted by the smart city program will translate into desired outcomes is, however, debatable. Differences in land regimes, urban employment patterns and city government capacity suggest that India will struggle to follow China’s model. Even if realized, it is unlikely that the new smart cities will do much to alleviate India’s urban ills or secure broad-based economic opportunities and improvements in living standards for the majority.


Land in China is owned by the state. Acquiring land to build and expand cities in China is thus a very different matter than in India. Municipal governments in China use land revenues to fund urban development, boosting GDP growth through infrastructure building and construction. This strategy has led to its own problems—environmental destruction, an over-reliance on land development for municipal revenue, the forced displacement of rural households, and growth driven by state investment and construction. China’s “ghost cities”, with well-planned roads, parks and tower blocks, but empty of people, are now famous.

In India, in contrast, state acquisition of land has always been a long drawn-out, contentious and politically-charged process, even under the colonial-era Land Acquisition Act of 1894, which gave the state sweeping powers to take private land. The new Land law, enacted by the previous UPA government, requires consent from seventy percent of households whose land is requisitioned. It sets higher compensation levels and institutes a social impact assessment as well as an environmental one. While these are fairly standard procedures, even in China, opponents of the new law argue that it creates further barriers for industrial and urban development. The current administration will likely amend consent requirements and make exemptions for key projects, but because rural landholdings in India are small and fragmented, land records are poor, and court proceedings are slow-moving, changing these details is unlikely to dramatically transform the landscape. India undoubtedly needs better urban infrastructure and more liveable cities, but disregarding environmental and social considerations is poor urban planning, shortsighted and counter-productive. It will exacerbate the very problems of environmental degradation, lack of economic opportunity and unresponsive government that smart cities are supposed to resolve. The question then arises whether a land-intensive urban policy—that of building new greenfield cities, is advisable in India. Tianjin Eco-city, it should be noted, is constructed on a cleaned-up industrial waste site, while Dholera, designed to be “six times bigger than Shanghai,” is coming up on arable farmland. It is now facing opposition from local farmers.

Urban Employment

Why are rural landowners in places like Dholera reluctant to give up their plots of land, often small and unproductive? Indian farmers may hold onto their land as security because their employment prospects in the new cities are dim, concentrated in low-wage and insecure informal work. India’s modern service and manufacturing sectors employ a miniscule proportion of the population—the majority of urban residents are employed in low-wage services and informal manufacturing. At the bottom-end, the wage advantage workers in urban areas have over rural has disappeared, while living costs are much higher. Gujarat’s record on manufacturing employment and wages under Modi is not stellar. Industrial growth has been capital rather than labour intensive, and like elsewhere in India, over 90 percent of the urban workforce is informal. China’s urban and economic growth, in contrast to India, was founded on labour-intensive manufacturing, and delivered broad-based increases in real wages and living standards. In both India and China, young people from rural areas are moving to cities—usually those close to home—seeking economic opportunities. If they are poor and unskilled, China’s cities offer better opportunities for economic advancement through manufacturing jobs.

Will building new cities change the dynamic? Modi’s smart city plan is, commendably, linked to expanding manufacturing jobs. Newer and better urban infrastructure, in theory, will attract investment and jobs, but the principle of “if you build it, they will come,” in India as well as elsewhere in the world, has produced more white elephants than thriving cities. Policies to “balance” urban growth away from major cities to new growth poles, prevalent in India in the 1960s and 70s, rarely worked. More recent Indian efforts to build industrial parks, less complex and ambitious projects than new cities, have resulted in few successes. More often, according to a World Bank study, “they generate negative spillovers, provide handouts, sit empty, or simply do not get built.” Malaysia’s Multimedia Super Corridor, which prefigured the “smart city” visions of India’s leaders, did get built, laying out a red carpet of modern infrastructure and hi-tech facilities befitting a city intended to be Asia’s “Silicon Valley.” Fifteen years later, its centerpiece, Cyberjaya Knowledge City, is a commuter suburb for Kuala Lumpur, home to more government offices than technology firms. Successful cities, as urbanist Ed Glaeser points out, are about people, rather than buildings and roads.

India’s information technology hubs, Hyderabad and Bangalore, emerged for a variety of reasons including diaspora networks, the presence of elite educational institutions, a concentration of highly-educated workers and state support. These features are not easily replicable, nor reducible to the “world-class” infrastructure and amenities of their IT campuses. The popular maxim that India lacks the “hardware”, or infrastructure, of a modern urban economy, but has the “software”—an educated workforce—is fallacious. Less than 30 percent of Indian workers are educated above the primary-level, compared with 65 percent in China. India faces a dire shortage of high-skilled and medium-skilled workers—the sorts of workers that firms in the new smart cities will seek. The 50 million or so unskilled workers that will join the work force over the coming decade, on the other hand, are, according to a McKinsey global labour report, “surplus” to the requirements of Indian economy. They face poor employment prospects and an urban future of poverty and insecurity, unless policy-makers take measures to expand labour-intensive manufacturing, and improve conditions in the informal economy. Strengthening basic infrastructure and social services across urban regions will be critical. But in resource-constrained India, the utility of a hundred custom-built cities with digitized built environments is questionable.

City Government

Could the new policy lead to beneficial competition between Indian states, producing high levels of urban and economic growth, as in China, and potential innovation? For such an outcome, the central government needs to more cogently articulate its policy objectives and metrics. At present, it is unclear what the government’s goals are beyond building a hundred new smart cities. This sounds like a refreshingly straightforward agenda, till you start thinking about what it entails. What are the smart cities intended to achieve? Why does India need “smart” cities, rather than sustainable, liveable, or productive cities? Who are they intended for, and who will plan, build and govern them?

Metropolitan regions in India, unlike most other countries, lack autonomous governments with the power to shape their own affairs. They are controlled by provincial administrations, and managed by a patchwork of state, city and municipal government bodies, public and private corporations and village panchayats. For smart systems to substantively improve planning, coordination and governance, they will need to have a centralized metropolitan governing structure in place, accountable to city residents.

Most so-called “smart city” or “new city” projects underway in India develop without municipal involvement, outside official city boundaries. Most are not new cities at all, but large commercial and residential developments or self-contained industrial enclaves adjacent to major cities. They are designed for industries that require an educated and skilled workforce, which is why they are located in close proximity to existing urban centres. As the planned enclave grows, so does the informal city outside its bounds, catering to construction labour, domestic workers, cleaners, drivers, delivery people, security guards and small-scale retailers, a pattern that has accompanied new city development in India since colonial times. This pattern of privatized, enclave urbanization undermines the potential of city governments to grow into effective, well-resourced and democratically-accountable institutions. Revenues from urban development are captured by provincial levels of government, while municipal and local authorities deal with the costs. If the smart cities built under the new policy continue this pattern, their potential to improve urban conditions is compromised.

Provincial governments in India, in charge of land and urban development policy, have an incentive to undertake lucrative and prestigious smart city projects without taking into consideration their feasibility or real costs, and often with little sense of what governing a city entails. Indian states from Telengana to Bihar are eager to participate in the smart city program. Some new cities will be real-estate boondoggles or vanity projects—state leaders are hankering to build cities that are ever taller, bigger, grander and more “world-class”, expensive pipe-dreams with little bearing on India’s acute urban challenges. This exercise diverts precious public resources that would be better spent improving existing urban settlements or providing public services and infrastructure in urbanized rural areas, which account for nearly 30 percent of India’s urban growth.

In China, unlike India, city and local governments play the key role in urban development. China is politically centralized, but administratively and fiscally far more decentralized than India. City governments have the tools and resources to plan and manage growth. They can annex surrounding rural areas, and use land revenues to fund urban development. This strategy has allowed China to urbanize rapidly, with infrastructure and services keeping pace with or preceding urban population growth, and without the slums that have historically accompanied periods of rapid urban and industrial growth. Local governments in China account for half of public expenditure and twenty-five percent of revenue.  [“Urban Governance and Development of Informality in China and India.” Acoca-Pigalle, Chattaraj and Wachter, Informal Real Estate Markets, forthcoming 2015. This figure is higher according to some measures.] In India, urban local bodies account for a third of public expenditure but just three percent of revenue. Property taxes, the main revenue base for municipal governments, make up just 0.44 percent of India’s tax revenues, strikingly lower than other emerging economies. Their share has remained stagnant over the past decade, a period with high levels of urban population and GDP growth.

City and local governments have the most direct impact on well-being and livelihoods, particularly that of the poor, but there is a glaring mismatch between their functions, and their finances and capabilities in India. The more dependent urban local bodies are on higher-level transfers, the more they underspend on basic public services and amenities. The trappings of a smart city—cyber highways, digital sensors, smart cards and computerized management systems—will remain just trappings, like the city development plans and environmental policies Indian cities regularly prepare but rarely implement, unless city governments have the incentives and resources to use them. For example, a “smart” data system might help city officials analyze where flooding is likely during the monsoons and anticipate related problems of water contamination, disease outbreaks and electrical fires. They could take steps to mitigate risks, reach out to affected communities and line up resources to respond quickly. But their incentives to take action, which localities to prioritize and which ones to disregard, have to do with politics. A city administration is more likely to be responsive if it is accountable to local citizens. And of course, if it has the data analysts, engineers, firefighters and fire-trucks, public health facilities and staff to execute its plan. Even India’s largest and wealthiest cities are under-resourced and under-equipped.

India is experiencing rapid urban growth in a context where municipal institutions are weak or non-existent. Hundreds of new towns emerged as a result of in-situ urbanization over the past decade, with the population, density and economy of urban settlements, but without municipal institutions capable of collecting taxes, planning urban development and delivering public services. Urbanization, historically, has been a time where public institutions are built and strengthened, from sanitation departments, to utilities, to regulatory institutions and social welfare services. China’s first phase of urbanization in the 1980s involved a similar process of in-situ rural urbanization to what we now see in India. Local state units, who played an important role in the village and township enterprises that sparked China’s growth, invested revenues in public infrastructure and community facilities, including roads, schools, markets and water supply systems. The fragility of civic institutions will have a serious impact on India’s ability to deliver broad-based improvements in wellbeing to its rapidly growing urban population. Public-private partnerships, the Modi government’s preferred model for smart city development and management, in order to serve the public interest as well as private interests, will require an effective and locally-accountable government partner. Private cities like Lavasa , proposed as a solution to India’s problems of poor urban management, will only cater to a small, affluent minority and there are inherent problems when a city is accountable to corporate shareholders rather than residents.

Conclusion/ Way Forward

Despite the futuristic gloss of digital technology, the modern city of Indian leaders’ dreams remains in thrall to the 1950’s modernism of Corbusier and Robert Moses, a place of smooth-flowing traffic, inaccessible greenbelts and geometrically-arrayed tower blocks, scrubbed clean of the energy and chaos of city life. The attraction of this image is that it is the antithesis of daily urban experience in India, but that is also its weakness. Unlike the Middle-Eastern Gulf states, another region whose smart cities have inspired Indian policy-makers, India does not have a blank slate to start with, but a vital and protean urban reality.

The Modi administration has recently indicated that its smart city program will not just create new cities, but also overhaul existing urban settlements. This is a step in the right direction, but it requires a re-conceptualization of the very idea of a smart city and a more complex, locally-adapted and innovative set of interventions, focused not just on physical infrastructure but institutions, regulatory frameworks and local participation. What will it mean, for Kanpur, an industrial city of 2 million and proposed candidate for a smart city overhaul, to be a “smart city”? As an existing city, Kanpur is far more complex than a new technology park. It is not machine that needs fine-tuning, which is how many smart city advocates envision cities, but a place where much of economic life takes place under the radar of the state, social cleavages run deep and the political and economic interests of different groups conflict. The leather industry is its economic backbone, but its pollution is “killing the city.” Many residents gain access to public services like power and water informally, through theft and arbitrage, therefore collecting data for more efficient management is not a neutral exercise but one with political implications. Global investors will be understandably wary. Faced with such urban complexities, faith in the technological fix that smart cities offer may begin to fade, but the answer is not to let things continue as they are. A smart city is only as smart as its underlying model is a reasonably accurate representation of the urban system, so local buy-in and knowledge, and systematic research are key. CISCO and Singapore may not be most suitable providers of smart solutions for a city like Kanpur, but Modi can take inspiration from India’s Mars mission, undertaken successfully at a tenth of the cost of previous missions, using indigenous technology and expertise. Kanpur’s famous IIT technology institute could play an important role, engaging students to innovate ways to modernize the city’s leather industry and treat industrial waste and water contamination.

Hopefully, the government of India will more clearly detail its vision of a smart city in the Indian context in the policy document it is expected to issue soon. Singapore, a leading proponent of smart city planning and development, recently sought clarity on the Indian government’s concept of a smart city. While East Asian models centre on physical infrastructure and environmental management systems, European models emphasize soft infrastructures and the quality and mode of urban living. Rio, a winner at the World Smart City Expo in 2013, focused on governance, enhancing coordination between departments and improving crisis response. Within India and globally, there are examples of cities that have incorporated low-cost and ground-up smart technologies to improve public services, map informal systems and foster public participation. India should look not just to China and Singapore for inspiration, but to Latin American cities that have been a major source of urban innovation in recent years. Technical parameters should be driven by problems they address and how they will contribute to meeting the needs and aspirations of local citizens as well as potential investors. Employment generation, environmental and social criteria, governance and public participation should not just be window-dressing, but must be taken seriously. Unless they are, the hundred smart cities will be merely a hundred real-estate projects.

The plan to build a hundred new smart cities is both grandiosely ambitious as well as deeply inadequate. India’s urban population, by 2040, will be over 600 million. Amartya Sen describes India as a place where “islands of California” exist amidst a “sea of sub-Saharan Africa.” To mitigate, rather than entrench the inequities of urbanizing India, the government needs an urban agenda that is more wide-ranging, inclusive, innovative and sustainable than one centred on building new smart cities. There is a palpable desire for a better quality of life in Indian cities, and Modi is in a better position than any leader before him to take bold steps to help cities address deficiencies and realize opportunities. The centre must play a role in strengthening the financial, administrative and technical capacities of municipal governments, and encourage states to devolve powers, not just responsibilities, to the local level. The politically contentious question of metropolitan government for megacities like Mumbai should be debated. Modi has great personal popularity amongst India’s urban citizens. Just as he exhorts them to be sanitary and clean up litter, he should urge the affluent and middle-classes to pay their fair share of property taxes. The previous government’s signature Jawaharlal Nehru urban renewal mission (JNNURM), which addressed urban problems on several fronts with mixed success, was halted in favor of the smart city policy. But India needs a large-scale, comprehensive centrally-funded urban programme, and there are indications that the Modi administration will rename and revive the JNNURM. It should be carefully evaluated. The new government can learn as much from its failures as its successes.

Dr Shahana Chattaraj is Postdoctoral Research Fellow at Blavatnik School of Government, University of Oxford

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