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April 8, 2017
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents


Globally, the notion of smart cities is not new. The smart city concept was introduced in the late 1990s.   The European Commission during this period supported the initiatives like ‘Euro cities’.   There are multiple ideas, definitions and approaches to smart cities. An analysis of international approaches and the underlying semantics related to smart cities reveals that the concept has only evolved partially. This includes non-clarity in definition, indicators and measures, and standardization of critical aspects. There is no ‘one size fits all’ model for smart cities that can be replicated in India.

Transformation to Smart City

Cities are engines of growth for the economy of every nation, including India. India’s population lives in urban areas to the extent of 31% of total population.  The urban population contributes 63% of India’s GDP (Census 2011). With increasing urbanization, urban areas are expected to house 40% of India’s population and contribute 75% of India’s GDP by 2030. This requires comprehensive development of physical, institutional, social and economic infrastructure. All are important in improving the quality of life and attracting people and investments to the City, setting in motion a virtuous cycle of growth and development. Development of Smart Cities is a step in that direction.   This transformation from a traditional city to a ‘smart city’ does not just happen. Success depends on the quality of the decisions that are made and the way these decisions are executed.

Why Smart city needed?

By the year 2030, 60% of the population is expected to live in cities resulting in heavy strain in energy, transportation, water, building and public places.  There is an increasing need for the smart city which is both efficient, sustainable and can generate economic prosperity and social well being.

Definition – Smart City

There is no specific definition for ‘smart city’.  The objective of Smart cities mission is to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions.

ITU defines a smart sustainable city as an innovative city that uses information and communication technologies (ICTs) and other means to improve quality of life, efficiency of urban operation and services, and competitiveness, while ensuring that it meets the needs of present and future generations with respect to economic, social and environmental aspects.

smart city is an urban development vision to integrate multiple information and communication technology (ICT) and Internet (IoT) solutions in a secure fashion to manage a city's assets – the city's assets include, but are not limited to, local departments' information systems, schools, libraries, transportation systems, hospitals, power plants, water supply networks, waste management, law enforcement, and other community services. The goal of building a smart city is to improve quality of life by using urban informatics and technology to improve the efficiency of services and meet residents' needs. ICT allows city officials to interact directly with the community and the city infrastructure and to monitor what is happening in the city, how the city is evolving, and how to enable a better quality of life. Through the use of sensors integrated with real-time monitoring systems, data are collected from citizens and devices.

Smart City concept

  • Smart Citizen;
  • Smart Governance and Smart education;
  • Smart health care;
  • Smart Building;
  • Smart mobility;
  • Smart infrastructure;
  • Smart Technology;
  • Smart Energy.

The core infrastructure elements in a smart city would include-

  • adequate water supply;
  • assured electricity supply;
  • sanitation, including solid waste management;
  • efficient urban mobility and public transport;
  • affordable housing, especially for the poor;
  • robust IT connectivity and digitalization;
  • good governance, especially e-Governance and citizen participation;
  • sustainable environment;
  • safety and security of citizens, particularly women, children and the elderly; and
  • health and education.

Smart city features

  • Promoting mixed land use in area-based developments;
  • Housing and inclusiveness;
  • Creating walkable localities;
  • Preserving and developing open spaces;
  • Promoting a variety of transport options;
  • Making governance citizen-friendly and cost effective;
  • Giving an identity to the city


The strategic components of area-based development in the Smart Cities Mission are as detailed below-

  • Retrofitting will introduce planning in an existing built-up area to achieve smart city objectives, along with other objectives, to make the existing area more efficient and livable;
  • Redevelopment will effect a replacement of the existing built-up environment and enable co-creation of a new layout with enhanced infrastructure using mixed land use and increased density;
  • Greenfield development will introduce most of the Smart Solutions in a previously vacant area (more than 250 acres) using innovative planning, plan financing and plan implementation tools (e.g. land pooling/ land reconstitution) with provision for affordable housing, especially for the poor.
  • Greenfield developments could be located either within the limits of the ULB or within the limits of the local Urban Development Authority (UDA).
  • Pan-city development envisages application of selected Smart Solutions to the existing city-wide infrastructure. Application of Smart Solutions will involve the use of technology, information and data to make infrastructure and services better.

System integrator

In order to fulfill the conditions prescribed by the Guidelines, Smart Command & Control Centers should have the following elements-

  • City back bone net work;
  • City Wi-Fi;
  • City surveillance;
  • Smart street lighting;
  • ICT enabled solid waste management;
  • Smart traffic;
  • Smart parking;
  • Environmental sensors;
  • City Bus Intelligent Transport System;
  • Smart Governance and citizen services.

Top 10 smart cities in the world

  • Vienna;
  • Toronto;
  • Paris;
  • New York;
  • London;
  • Tokyo;
  • Berlin;
  • Copenhagen;
  • Hong Kong;
  • Barcelona.

Smart City in India

 The concept of private cities is gradually gaining acceptance in India.  India’s economy is expanding rapidly. By 2030 it is expected to have grown by five times, buoyed largely by the country’s urban centers. During the same period, the country’s labor force is expected to grow by 270 million workers, with urban jobs accounting for 70% of that growth. Today, India is less than 30 per cent urban and the quality of life in its cities is chronically low. However, with 2/3rds of GDP already generated in India’s cities and rural to urban migration patterns accelerating, the country faces a critical challenge: managing this rapid urbanization in a way that enhances the livability of India’s urban spaces.

Smart Cities Awas Yojna Mission was launched by Prime Minister Narendra Modi in June 2015. A total of Rs.980 billion (US$15 billion) has been approved by the Indian Cabinet for development of 100 smart cities and rejuvenation of 500 others. Rs.48,000 crore (US$7.1 billion) for the Smart Cities mission and a total funding of ₹50,000 crore (US$7.4 billion) for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) has been approved by the Cabinet.

Smart Cities Mission

Smart Cities Mission, in India, is an urban renewal and retrofitting program by the Government with a mission to develop 100 cities (the target has been revised to 109 cities) all over the country making them citizen friendly and sustainable. The Union Ministry of Urban Development is responsible for implementing the mission in collaboration with the state governments of the respective cities.

Smart Cities Mission is an opportunity-

  • to create an efficient urban management system;
  • to enhance the capacity of urban institutions;
  • to push a decentralization agenda;
  • to reduce conflicts in the urban environment;
  • to create enabling conditions for inclusive and equitable urbanization.


The Mission will cover 100 cities and its duration will be five years (FY2015-16 to FY2019-20).  Now it has been revised to 109 cities.  The Mission may be continued thereafter in the light of an evaluation to be done by the Ministry of Urban Development (MoUD) and incorporating the learnings into the Mission.

Number of cities allocated to States based on urban Population and number of statutory towns

Sl. No.

State/Union Territory

Number of cities


Andaman & Nicobar Islands



Andhra Pradesh



Arunachal Pradesh















Daman & Diu



Dadra & Nagar Haveli















Himachal Pradesh



Jammu & Kashmir















Madhya Pradesh

































Tamil Nadu









Uttar Pradesh






West Bengal


Grand Total


Source: Smart City – Mission statement and guidelines – Ministry of Urban Development

Status of a Smart city

The implementation of the Mission at the City level will be done by a Special Purpose Vehicle (SPV) created for the purpose. The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. Each Smart City will have a SPV which will be headed by a full time CEO and have nominees of Central Government, State Government and ULB on its Board. The States/ULBs shall ensure that, (a) a dedicated and substantial revenue stream is made available to the SPV so as to make itself sustainable and could evolve its own credit worthiness for raising additional resources from the market and (b) Government contribution for Smart City is used only to create infrastructure that has public benefit outcomes. The execution of projects may be done through joint ventures, Subsidiaries, public-private partnership (PPP), turnkey contracts, etc. suitably dovetailed with Revenue streams.

The City level SPV will be established as a Limited Company under the Companies Act, 2013 and will be promoted by the State/UT and the ULB jointly, both having 50:50 equity shareholding. This shareholding pattern has to be maintained at all times. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the State/UT and the ULB share are equal to each other, and the State/UT and ULB together have majority shareholding and control of the SPV (e.g. State/UT:ULB:Private sector shareholding can be in the ratio 40:40:20 or 30:30:40. Ratios such as 35:45:20 or 40:30:30 are not permitted since State/UT and ULB shares are not equal. Ratios such as 20:20:60 are also not permitted since the State/UT and the ULB together do not have majority shareholding). In addition to equity, the State/UT can provide its contribution to the Smart Cities Mission as grant to fulfill the State Government responsibility for ensuring availability of funds for the mission and for ensuring the financial sustainability of the SPV.

The initial paid up share capital is ₹ 200 crores.  Urban Local Body share – ₹ 100 crores and state shares ₹ 100 crores. 

Thus the smart city will not be the local authority.  It is a company under the control of the Municipality concerned.  The taxing authority is vested in the Municipality which creates the smart city. 

Madurai city (example)

The Tamil Nadu Government granted its permission for the establishment of Special Purpose Vehicle for Vellore, Salem, Thanjavur and Madurai vide its Notification No. GO (MS) 174, dated 01.12.2016.

Madurai Smart City Limited was incorporated under Section 7(2) of the Companies Act, 2013 on 02.02.2017 by Central Registration Center.  The company is limited by shares.  The CIN of the company is U74999TN2017SGC114323.    The Corporate office is situated at ‘Madurai Corporation, Arignar Anna Maligai,  Alagar Koil Main Road, Tallakulam, Madurai – 625 002, Tamil Nadu’.

Board of Directors

The Board of Directors will have representatives of Central Government, State Government, ULB and Independent Directors, in addition to the CEO and Functional Directors. Additional Directors (such as representative of parastatal) may be taken on the Board, as considered necessary. The Company and shareholders will voluntarily comply with the provision of the Companies Act 2013 with respect to induction of independent directors.

Below, are given the broad terms of appointment and role of the SPV Board-

  • The Chairperson of the SPV will be the Divisional Commissioner/Collector/Municipal Commissioner/Chief Executive of the Urban Development Authority as decided by the State Government;
  • The representative of the Central Government will be a Director on the Board of the SPC and will be appointed by Ministry of Urban Development;

Chief Executive Officer

The Chief Executive Officer will be appointed with the approval of Ministry of Urban Development.  The Chief Executive Officer will be appointed for a fixed term of three years.   He will be removed only with the prior approval of Ministry of Urban Development.  The functions of the Chief Executive Officer include-

  • Overseeing and managing the general conduct of the day-to-day operations of the SPV subject to the supervision and control of the Board;
  • Entering into contracts or arrangements for and on behalf of the company in all matters withinthe ordinary course of the company’s business;
  • To formulate and submit to the Board of Directors for approval a Human Resource Policy that will lay down procedures for creation of staff positions, qualifications of staff, recruitment procedures , compensation and termination procedures;
  • Recruitment and removal of the senior management of the company and the creation of new positions in accordance with the company’s approved budget and the recruitment or increase of employees in accordance with the Human Resource Policy laid down by the Board;
  • Supervising the work of all employees and managers of the company and the determination of their duties, responsibilities and authority;

Independent directors

The independent directors will be selected from the data bank(s) maintained by the Ministry of Corporate Affairs and preference will be given to those who have served as independent directors in the Board of Companies fulfilling Clause 49 of the listing agreement of Securities Exchange and Board of India.

Functions and responsibilities of SPV

The functions and responsibilities of SPV as provided in the guidelines are as detailed below-

  • To approve and sanction the projects including their technical appraisal;
  • To execute the Smart City Proposal with complete operational freedom;
  • To take measures to comply with the requirements of Ministry of Urban Development with respect to the implementation of the Smart Cities program;
  • To mobilize resources within timelines and take measures necessary for the mobilization of resources;
  • To approve and act upon the reports of a third party Review and Monitoring Agency;
  • To overview capacity building activities;
  • To develop and benefit from inter-linkages of academic institutions and organizations;
  • To undertake review of activities of the Mission including budget, implementation of projects and preparation of SCP and co-ordination with other missions/schemes and activities of various ministries;
  • To monitor and review quality control related matters and act upon issues arising thereof;
  • To incorporate joint ventures and subsidiaries and enter into Public Private Partnerships as may be required for the implementation of the Smart Cities Program;
  • To enter contracts, partnerships and service delivery arrangements as may be required for the implementation of the Smart Cities Mission;
  • To determine and collect user charges as authorized by the ULB;
  • To collect taxes, surcharges etc., as authorized by the ULB

The above provisions will be included in the Articles of Association of the SPV.

The Smart Cities Mission requires smart people who actively participate in governance and reforms. Citizen involvement is much more than a ceremonial participation in governance. Smart people involve themselves in the definition of the Smart City, decisions on deploying Smart Solutions, implementing reforms, doing more with less and oversight during implementing and designing post-project structures in order to make the Smart City developments sustainable. The participation of smart people will be enabled by the SPV through increasing use of ICT, especially mobile-based tools.

The smart city initiative would be a game changer in raising the standard of infrastructure in the cities in the country.

Mission monitoring

National level

State level

City level

National level – Apex Committee headed by Secretary;

State level – State Level High Powered Steering Committee – Chaired by Chief Secretary;

City level – Chief Executive Officer of the SPV is the convener of the Smart City Forum.

Impact of smart city in India

Positive impacts of Smart city concept

  • It will lower the pressure on current cities;
  • It will provide more job opportunities;
  • It will provide vibrant market for agro & industrial products;
  • It will play paramount effect in development of surrounding areas;
  • It will reduce inter-state migrations drastically;
  • It will provide better educational opportunities to surrounding rural areas;
  • It will support and incubate host state’s culture as well as socio-economic domains.

Negative impacts of Smart city concept

  • It will require land and may cost forests;
  • Disruption of the labor market;
  • More pressure on local hydrologic regimes;
  • Urban sprawl – a phenomenon that may lead to urbanization of otherwise surrounding legal areas;
  • So much infrastructure development will cause huge dust pollution;
  • We have limited fund so money for something new will be taken from existing sources;
  • Green India will eventually disappear, cities are easy to build but green cities are a myth.

Criticisms against Smart city

The following are the criticisms against Smart city –

  • A bias in strategic interest may lead to ignoring alternative avenues of promising urban development;
  • The focus of the concept of smart city may lead to an underestimation of the possible negative effects of the development of the new technological and networked infrastructures needed for a city to be smart;
  • As aglobalized business model is based on capital mobility, following a business-oriented model may result in a losing long term strategy: "The 'spatial fix' inevitably means that mobile capital can often 'write its own deals' to come to town, only to move on when it receives a better deal elsewhere. This is no less true for the smart city than it was for the industrial, [or] manufacturing city”;
  • The high level of big data collection and analytics has raised questions regarding surveillance in smart cities, particularly as it relates to predictive policing.


The challenges in regard to the transformation of existing cities to smart cities are as follows:

  • The Right Model for Smart Cities in India’s Socio-Political Context;
  • Social Acceptability, Liveability and Sustainability Concerns;
  • Convergence with Other Urban Sector Programmes;
  • Roadmap, Process and Scale of the Smart Cities Mission;
  • Funding Strategy for Smart Cities;
  • Programme Design, Operationalisation and Institutional Arrangements;
  • Capacity of Institutions to deliver Technology-centric Reforms;
  • Achieving the Good Governance Agenda.

Further challenges are as follows-

  • Training;
  • Staffing;
  • Budget;
  • Co-operation;
  • Co-ordination;
  • System capacity;
  • Knowledge management;
  • Predictive analytics.


In our quest to improve our cities, the concept of smart cities plays an important role. Smart cities are focused on providing improved Ease of Doing Business and ease of living. Thus, smart cities focus on enhancing safety, security, sustainability and energy efficiency, in addition to providing a host of services to its citizens and businesses, that help them become more efficient. Such a focus invariably leads to a higher adoption of IT and sensors in several aspects of the city such as transportation, water management, etc. However, is this enough for an Indian city? A smart Indian city needs to address additional requirements such as smarter distribution of energy, tracking the wear and tear of a flyover or a building that is on the verge of collapse, ensuring that the police station is able to receive emergency response requests from mobiles and is able respond to it, etc. This implies that governance in Indian smart cities also needs to change. What should be the procedural changes in the police station so as to be able to respond to emergencies in a time bound manner? How will a city manage massive urban migration? How will cities manage large worker population? How will a smart city ensure that a working mother is provided with safe crèche facilities with appropriate regulatory frameworks that would enable her to fully unlock her economic potential? Only when these issues are also addressed will we be able to achieve smart city in an Indian context.

What needs to be noted here is the active and prime moving role of the government here. Unless and until the government takes a keen interest in this, the procurement of large tracts of land and the development of a town, bearing in mind all the social requirements and making it inclusive will not just happen. Most states in India today have township policies. State governments, instead of themselves developing land, have now started encouraging the private real estate sector to come in and develop towns. More often than not, areas of conflict of interest would come about.



2.    Smart City – Mission statement and guidelines – Ministry of Urban Development






By: Mr. M. GOVINDARAJAN - April 8, 2017



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