Smart Cities

LOK SABHA SECRETARIAT

PARLIAMENT LIBRARY AND REFERENCE, RESEARCH, DOCUMENTATION AND INFORMATION SERVICE (LARRDIS)

MEMBERS REFERENCE SERVICE

REFERENCE NOTE . No.28 /RN/Ref./November/2014

For the use of Members of Parliament Not for Publication

SMART CITIES

.------------------------------------------------------------------------------------------------------- The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of the information as it is based on the sources indicated at the end/in the text. This Service does not accept any responsibility for the accuracy or veracity of the information or views contained in the note/collection.

SMART CITIES

1. BACKGROUND

As the global population continues to grow at a steady pace, more and more people are moving to cities every single day. Experts predict the worlds urban population will double by 2050 which means were adding the equivalent of seven New Delhi Cities to the planet every single year1.

(i) Urbanization Trends

Urbanization accompanies economic development. As countries move from being primarily agrarian economies to industrial and service sectors, they also urbanize. This is because urban areas provide the agglomerations that the industrial and service sectors need. This trend of urbanization continues to take place as seen in the following figure:-

(ii) Urban Gross Domestic Product (GDP)

In fact, 90 percent of the worlds urban population growth will take place in developing countries, with India taking a significant share of that. Urban areas also contribute a higher share of the GDP. The share of the GDP from urban areas in India has been growing, as seen in the following figure2:-

1 http://indiansmartcities.in/site/index.aspx 2 India. Ministry of Urban Development, Draft Concept Note on Smart City Scheme, p.1

3

(iii) GDP Vs Energy Consumption

Urban population contributes over 60 percent of Indias GDP and will contribute 70 percent of the national GDP in the next 15 years. It is for this reason that cities are referred to as the engines of economic growth and ensuring that they function as efficient engines is critical to our economic development. This trend of urbanization that is seen in India over the last few decades will continue for some more time. The global experience is that a countrys urbanization upto a 30 percent level is relatively slow but the pace of urbanization speeds up thereafter, till it reaches about 60-65 percent . With an urban population of 31 percent, India is at a point of transition where the pace of urbanization will speed up. It is for this reason that we need to plan our urban areas well and cannot wait any longer to do so. The relatively low base allows us to plan our urbanization strategy in the right direction by taking advantage of the latest developments in technology. Moreover, it also offers us an opportunity to create a conducive environment for creation of employment opportunities and economic activities while improving the quality of life. It allows an opportunity to learn from good practices and mistakes made elsewhere.

Countries have taken different paths to development as seen from the income Vs energy consumption graph as given in the following figure:-

It is in this context that the Government of India has decided to develop 100 Smart Cities in the country. Accordingly, in his Budget Speech of July, 2014, the Finance Minister, Shri Arun Jaitley stated as follows:

As the fruits of development reach an increasingly large number of people, the pace of migration from the rural areas to the cities is increasing. A neo middle class is emerging which has the aspiration of better living standards. Unless, new cities are developed to accommodate the burgeoning number of people, the existing cities would soon become unlivable. The Prime Minister has a vision of developing one hundred Smart Cities, as satellite towns of larger cities and by modernising the existing mid-sized cities3.

3 Ibid. p.2

4 2. DEFINITION OF SMART CITIES

People migrate to cities primarily for employment. To support their happy and comfortable living, they also need good quality housing, cost efficient physical and social infrastructure such as water, sanitation, electricity, clean air, education, health care, security, entertainment, etc. Industries also locate in cities because there are agglomeration economies that provide easy access to labour and other factors of production. In this context, Smart Cities are those that are able to attract investments. Good infrastructure, simple and transparent online processes that make it easy to establish an enterprise and run it efficiently are important features of an investor friendly city.

Different organizations have used different definitions for Smart Cities, some of these definitions are explained as under:-

The UK Department of Business, Innovation and Skills considers smart cities a process rather than as a static outcome, in which increased citizen engagement, hard infrastructure, social capital and digital technologies make cities more livable, resilient and better able to respond to challenges.

The British Standards Institute defines it as the effective integration of physical, digital and human systems in the built environment to deliver sustainable, prosperous and inclusive future of its citizens. Smart Cities are those which have smart (intelligent) physical, social, institutional

and economic infrastructure. It is expected that such a Smart City will generate options for a common man to pursue his/her livelihood and interests meaningfully. In this context: Competitiveness refers to a citys ability to create employment opportunities,

attract investments and people. The ease of being able to do business and the quality of life it offers determines its competitiveness.

Sustainability includes social sustainability, environmental sustainability and financial sustainability.

Quality of Life includes safety and security, inclusiveness, entertainment, ease of seeking and obtaining public services, cost efficient healthcare, quality education, and opportunities for participation in governance4.

3. PILLARS OF A SMART CITY

Essentially, its Institutional Infrastructure (including Governance), Physical Infrastructure and Social Infrastructure constitute the three pillars on which a city rests. The center of attention for each of these pillars is the citizen. In other words a Smart City works towards ensuring the best for all its people, regardless of social status, age, income levels, gender, etc.

The details regarding the essential pillars required for smart cities are given in5 Annexure-I.

4 Ibid. pp.3-4 & 23 5 Ibid. p.4

5

4. INSTRUMENTS OF SMART CITIES

There are several instruments that facilitate the development of a Smart City. These are:

Use of Clean Technologies

As per the WHO report, Indian cities are amongst the most polluted in the world, creating severe health hazards. The trend needs to be reversed by promoting the use of clean technologies that harness renewable materials and energy sources and have a lower smaller environmental footprint. In smart cities buildings, transport and infrastructure should be energy efficient and environmentally benign. Use of Information and Communication Technology (ICT)

The extensive use of ICT is a must and only this can ensure information exchange and quick communication. Most services will need to be ICT enabled, and this often helps reduce the need for travel. The ability to shop on-line or book tickets online or converse online are very powerful ways of reducing the need for travel, thereby reducing congestion, pollutants and energy use. Participation of the Private Sector

Public Private Partnership (PPP) allows Government to tap on to the private sectors capacity to innovate. Greater involvement of the private sector in the delivery of services is another instrument as it enables higher levels of efficiency (this should be the prime motive for using the private sector rather than just tapping financial resources). Citizen participation

Citizen consultation and a transparent system by which citizens can rate different services is yet another instrument for improving performance. Making these ratings openly available for public scrutiny creates a powerful incentive for improved performance and a disincentive for poor performance.

Smart Governance

The existing Government setup in the Urban Local Bodies (ULBs) is rather fragmented with each department working in silos. The result of this is lack of coordination which is reflected in the form of poor services to the citizens. Therefore, for cities to become smart, it is essential that the governance structure is also smart. Therefore, ULBs would need to make effective use of ICTs in public administration to connect and coordinate between various departments. This combined with organizational change and new skills would improve public services and strengthen support to public. This will mean the ability to seek and obtain services in real time

6 through online systems and with rigorous service level agreements with the service providers6. 5. IDENTIFICATION OF THE SMART CITIES

In order to modernize our cities and make them internationally competitive, the Government has decided to support the development of 100 Smart Cities in the country. In this context, one has to recognize the federal structure of the country as well. Moreover, it has been the experience world over that developing greenfield cities have seldom been successful as a city can grow on a sustainable basis only if there are opportunities for economic activity, entertainment, education, healthcare and a wide range of such services. However, some new cities need to be developed in the Hills and Coastal areas. In view of this cities with a 1 4 million population would seem to be the most appropriate. Besides, satellites to larger cities would also make very good candidates.

Accordingly, the current thinking is that 100 cities to be developed as Smart Cities may be chosen from amongst the following: One satellite city of each of the cities with a population of 4 million people or

more(9 cities) All the cities in the population range of 1 4 million people (44 cities) All State/Union Territories Capitals, even if they have a population of less than

one million (17 cities) Cities of tourist and religious importance (10 cities)

Cities in the 0.5 to 1.0 million population range ( 20 cities) In Delhi, it is being proposed that Delhi Development Authority will develop a new

smart city through the land pooling scheme as a demonstrative city and the New Delhi Municipal Corporation area may also be considered for demonstrating all the components of Smart Cities7.

6. CONDITIONS PRECEDENT

The selected cities will have to strive towards attaining specified benchmarks in a range of services. In addition, they will need to undertake the following through a tripartite Memorandum of Understnading between the Central Government, State Governments, and the Urban Local Bodies:

Have an existing master plan that is valid for atleast the next 10 years or one that is likely to be approved shortly and have such a validity

Have digitized spatial maps Issue all clearances for projects in a collegiate manner using online processes and in a time bound manner

Electronic/Online delivery of all public services, so that visits to the local offices are rendered gradually redundant.

Free right of way for laying optic fibre networks, water supply lines, sewerage systems, draining systems and other utilities.

Create a platform for effectively communicate with the citizens and keep them abreast of various activities and plans of the city.

6 Ibid. pp.14-15 7 Ibid. pp.15-16

7

Adopt tariff structures that are affordable for the poor and yet minimize waste. In doing so the State/Cities could use their own resources to bridge the gap between the revenue and expenses.

Create open data platforms that are regularly updated.

Make all information and decisions taken available in the public domain

Set up a regulatory body for all utility services such as water supply etc. so that a level playing field is made available to the private sector and tariffs are set in a manner that balances financial sustainability with quality8.

7. FINANCING OF SMART CITIES

The High Power Expert Committee (HPEC) on Investment Estimates in Urban Infrastructure has assessed a Per Capita Investment Cost (PCIC) of Rs. 43,386 for a 20 year period. Their estimates cover water supply, sewerage, sanitation and transportation related infrastructure. Using an average figure of 1.0 million people in each of the 100 smart cities, the total estimate of investment requirements for the services covered by HPEC comes to Rs.7.0 lakh crores over 20 years (with an annual escalation of 10percent from 2009-10 to 2014-15). This translates into an annual requirement of Rs.35,000 crores. However these estimates need to be analyzed for the purpose of funding by the Central Government. Moreover, it is expected that most of the infrastructure will be taken up either as complete private investment or through Public Private Partnerships. The contributions from the Government of India and the States/ULBs will be largely by way of Viability Gap Support (VGF).

Therefore, a large part of the financing for Smart Cities will have to come from the Private sector with the States/Cities and the Central Government only supplementing that effort9. 8. NATURE AND EXTENT OF CENTRAL GOVERNMENT SUPPORT

The Central Governments support will be in three forms:

(i) Financial support Huge investments will be needed. Therefore, innovative methods of raising

revenues will have to be developed by the States and Cities, taking into account some of the possibilities outlined earlier. These efforts will be supplemented by the Central Government through the Ministry of Urban Development and other Ministries responsible for different sectors, such as Health, Education, Power, Transport, IT, Communications, etc., by way of allocations specifically for the development of Smart Cities.

(ii) Policy support and legal backing

It is recognized that urban development is a State Subject under the Constitution of India. Yet the Central Government can play an important supporting role in facilitating appropriate policies that provide a framework for urbanization. While we have a National

8 Ibid. pp.16-17 9 Ibid. p.17

8 Urban Transport Policy, we dont have a national urban policy. It would be appropriate for the Urban Transport Policy to also fall within the framework on a National Urbanization Policy.

(iii) Capacity Building

Developing 100 Smart Cities across the country will need a large number of professionally trained manpower and several decision support systems to be in place. Thus, there is a need for a large capacity building programme that encompasses training, education, contextual research, knowledge exchange and a rich database10. 9. APPROVAL PROCESS

The States would be required to submit proposals for approval of the respective Satellite Cities, Cities of Tourist and religious importance as well as Cities in the 0.21.0 million population range, These proposals would be reviewed by a Committee that will be serviced by a regional multidisciplinary Programme Management Unit (PMU) and then approved by the Central Government, supported by the national PMU11.

The details regarding the implementation framework for smart cities are given at Annexure-II.

10. SMART CITIES: EU CONCEPT

Countries falling under European Union (EU) have been striving hard for a long time to develop various medium-sized cities into Smart Cities. On the basis of Final Report published in October 2007 by the Centre of Regional Science (SRF), Vienna University, Austria, there are several fields of activity in relation to the term Smart City: industry, education, participation, technical infrastructure and various soft factors. Finally one can identify the following six characteristics of Smart Cities:

Characteristics of a smart city

10 Ibid. pp.22-23 11 Ibid. pp.24-25

9

The above table illustrates the 6 characteristics and their assigned factors. Smart Economy includes factors all around economic competitiveness as innovation, entrepreneurship, trademarks, productivity and flexibility of the labour market as well as the integration in the (inter-)national market. Smart People is not only described by the level of qualification or education of the citizens but also by the quality of social interactions regarding integration and public life and the openness towards the outer world. Smart Governance comprises aspects of political participation, services for citizens as well as the functioning of the administration. Local and international accessibility are important aspects of Smart Mobility as well as the availability of information and communication technologies and modern and sustainable transport systems. Smart Environment is described by attractive natural conditions (climate, green space etc.), pollution, resource management and also by efforts towards environmental protection. Finally, Smart Living comprises various aspects of quality of life as culture, health, safety, housing, tourism etc12.

Raking of EU cities

In the final ranking Scandinavian cities and cities from the Benelux countries and Austria are ranked in the top group. Also Montpellier and Ljubljana achieve top ratings. The cities ranked lowest are mainly in the new EU-member states. The best rating in Smart Economy achieve Luxembourg, British, Irish and Danish cities as well as Eindhoven, Regensburg, Ljubljana and Linz. Smart People is led by Scandinavian cities as well as Dutch cities and Luxembourg. Again Scandinavian and also Austrian cities achieve a very good rating in Smart Governance. The Smart Environment is fairly different from the total rating. French, Slovenian and Greek cities as well as Timisoara achieve top ratings in this characteristic. The sixth characteristic, Smart Living, is led by Austrian, Belgian and two Finnish cities as well as Luxembourg and Umea13.

The details regarding the ranking and associated characteristics of European Medium-sized Cities are given at Annexure-III.

TOP TEN SMART CITIES

According to a study, ten Cities of the world have been categorized as Smart Cities on the basis of the factors like; Innovations, Sustainability, Use of Information Technology, Digital Governance, Quality of Life, Sanitation, Fast Delivery of Services, Efficient use of Resources, Energy Savings, Low-carbon Economy etc. Accordingly, the top ten Smart Cities of the World are Vienna, Toronto, Paris, New York, London, Tokyo, Berlin, Copenhagen, Hong Kong and Barcelona14.

There were many other strong candidates which are runners-up in this ranking,

including Amsterdam, Melbourne, Seattle, Sao Paulo, Stockholm and Vancouver.

12 Final Report on Smart Cities Ranking of European medium sized cities, Centre of Regional Science, Vienna University of Technology, Vienna, Austria, October 2007. p.10-12 13 Ibid. p.15 14 http://www.fastcoexist.com/1679127/the-top-10-smart-cities-on-the-planet

10

Conclusion

Various initiatives are being taken by the Government of India to convert 100 Cities into Smart Cities. The real challenge before the Government is to build inclusive smart cities for all its residents, irrespective of whether they are rich or poor. In a country like India, the process of making a city smart should be people centric. The idea should be to make cities work for the people.

In order to fulfill the vision of Prime Minister for Smart Cities, the Ministry of Finance has allocated Rs.7060 crores in the Union Budget for the year 2014-1515.

15 Budget Speech of the Finance Minister, Shri Arun Jaitley dated 10 July 2014, p.6

Annexure-I Pillars of Smart Cities

Source: India. Ministry of Urban Development, Draft Concept Note on Smart City Scheme, p.32

Quality of Life

Physical infrastructure

Power

Water Supply

Solid Waste Management

Sewerage

Multimodal

Transport

Cyber Connectio

n

Connectivity

(Roads, Airports,

Railways)

Housing

Disaster Managem

ent

Social Infrastructure

Education

Healthcare

Entertainment(Parks &

Greens, Music,

Culture and heritage, sports, tourist sports)

Inclusive Planning (SC/ST, Bckward incentive

s)?

Building Homes

Institutional Infrastructure

Speedy Service Delivery

Enforcement

Security

Taxation

Institutional Finance/Banking

Transparency and

Accountability

Skill development

Environmental sustainability

People's participation in

decision making

ICT based service delivery

Citizen advisory committee

Annexure-II

Implementation Framework

Source: India. Ministry of Urban Development, Draft Concept Note on Smart City Scheme, p.40.

Annexure-III

Ranking and associated characteristics of European medium-sized smart cities

City Smart Economy

Smart People

Smart Governance

Smart Mobility

Smart Environment

Smart Living

Total

LUXEMBOURG 1 2 13 6 25 6 1

AARHUS 4 1 6 9 20 12 2

TURKU 16 8 2 21 11 9 3

AALBORG 17 4 4 11 26 11 4

ODENSE 15 3 5 5 50 17 5

TAMPERE 29 7 1 27 12 8 6

OULU 25 6 3 28 14 19 7

EINDHOVEN 6 13 18 2 39 18 8

LINZ 5 25 11 14 28 7 9

SALZBURG 27 30 8 15 29 1 10

MONTPELLIER 30 23 33 24 1 16 11

INNSBRUCK 28 35 9 8 40 3 12

GRAZ 18 32 12 17 3 1 13

NIJMEGEN 24 14 14 3 51 24 14

GRONINGEN 14 9 15 20 37 13 15

GENT 19 16 31 7 48 4 16

LJUBLJANA 8 11 43 31 3 29 17

MAASTRICHT 26 18 17 1 43 14 18

JOENKOEPING 36 10 7 34 22 26 19 19

BRUGGE 23 20 29 18 44 2 20

ENSCHEDE 31 17 16 4 35 23 21

GOETTINGEN 11 34 20 12 15 31 22

UMEAA 39 5 10 36 46 10 23

REGENSBURG 9 40 27 19 38 22 24

DIJON 38 29 22 26 9 25 25

NANCY 41 31 23 25 10 20 26

TRIER 21 44 19 10 18 33 27

CLERMONT-FERRAND

33 33 26 29 7 27 28

POITIERS 48 37 28 33 8 15 29

MARIBOR 49 21 37 40 2 32 30

CORK 2 26 25 45 66 21 31

ERFURT 32 47 21 13 21 45 32

MAGDEBURG 47 50 35 22 17 39 33

KIEL 45 45 48 16 23 38 34

ZAGREB 34 24 32 39 36 42 35

CARDIFF 13 39 44 38 60 30 36

LEICESTER 3 42 49 32 64 40 37

PORTSMOUTH 7 38 47 35 63 43 38

ABERDEEN 10 28 42 42 67 35 39

TARTU 40 15 30 47 49 60 40

PAMPLONA 22 48 39 51 32 41 41

PLZEN 43 49 61 30 54 28 42

VALLADOLID 44 53 34 54 24 46 43

USTI NAD LABEM

54 51 55 23 55 36 44

TRENTO 20 57 24 65 30 48 45

COIMBRA 52 63 54 49 16 37 46

NITRA 62 46 51 52 19 44 47

RZESZOW 69 19 53 41 56 50 48

TRIESTE 12 61 40 67 45 57 49

OVIEDO 37 55 38 44 68 34 50

ANCONA 35 59 36 68 34 49 51

PERUGIA 42 54 41 66 42 51 52

BIALYSTOK 67 22 59 56 47 55 53

KOSICE 66 43 50 48 53 52 54

TIMISOARA 50 64 64 62 4 59 55

BANSKA BYSTRICA

70 41 52 53 58 47 56

BYDGOSZCZ 68 27 57 46 52 61 57

PATRAI 59 58 46 60 5 67 58

KAUNAS 55 36 66 55 27 65 59

LARISA 61 60 45 63 6 66 60

GYOR 46 68 62 37 41 63 61

SZCZECIN 65 52 58 43 59 56 62

SIBIU 57 65 60 64 13 62 63

KIELCE 63 56 56 57 62 54 64

PECS 56 62 65 58 65 53 65

LIEPAJA 60 12 63 61 61 70 66

MISKOLC 58 67 67 50 70 58 67

CRAIOVA 64 66 68 70 33 64 68

PLEVEN 51 70 69 69 57 69 69

RUSE 53 69 70 59 69 68 70 Source: Final Report on Smart Cities Ranking of European Medium-sized cities, by Center of

Regional Science, Vienna University of Technology, Vienna, Austria, October 2007, p.16