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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Not for Publication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The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication.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
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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
2

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

(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

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 in 5
Annexure-I.
4
5

Ibid. pp.3-4 & 23


Ibid. p.4

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
7

Ibid. pp.14-15
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
9

Ibid. pp.16-17
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
11

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

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
Quality of Life

Physical
infrastructure

Power

Water Supply

Social
Infrastructure

Institutional
Infrastructure

Education

Speedy Service
Delivery

Healthcare

Enforcement

Solid Waste
Management

Sewerage

Multimod
al
Transport
Cyber
Connectio
n
Connectiv
ity
(Roads,
Airports,
Railways)
Housing

Disaster
Managem
ent

Security
Entertainm
ent(Parks &
Greens,
Music,
Culture and
heritage,
sports,
tourist
sports)

Inclusive
Planning
(SC/ST,
Bckward
incentive
s)?

Taxation

Institutional
Finance/Banking
Transparency
and
Accountability

Skill development
Building
Homes

Environmental
sustainability
People's
participation in
decision making
ICT based service
delivery

Citizen advisory
committee

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

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
LUXEMBOURG
AARHUS
TURKU
AALBORG
ODENSE
TAMPERE
OULU
EINDHOVEN
LINZ
SALZBURG
MONTPELLIER
INNSBRUCK
GRAZ
NIJMEGEN
GRONINGEN
GENT
LJUBLJANA
MAASTRICHT
JOENKOEPING
BRUGGE
ENSCHEDE
GOETTINGEN
UMEAA
REGENSBURG
DIJON
NANCY
TRIER
CLERMONTFERRAND
POITIERS
MARIBOR
CORK
ERFURT
MAGDEBURG
KIEL
ZAGREB
CARDIFF
LEICESTER
PORTSMOUTH
ABERDEEN
TARTU
PAMPLONA
PLZEN
VALLADOLID
USTI NAD
LABEM
TRENTO

Smart
Economy

Smart
People

Smart
Governance

Smart
Mobility

Smart
Environment

Smart
Living

1
4
16
17
15
29
25
6
5
27
30
28
18
24
14
19
8
26
36
23
31
11
39
9
38
41
21
33

2
1
8
4
3
7
6
13
25
30
23
35
32
14
9
16
11
18
10
20
17
34
5
40
29
31
44
33

13
6
2
4
5
1
3
18
11
8
33
9
12
14
15
31
43
17
7
29
16
20
10
27
22
23
19
26

6
9
21
11
5
27
28
2
14
15
24
8
17
3
20
7
31
1
34
18
4
12
36
19
26
25
10
29

25
20
11
26
50
12
14
39
28
29
1
40
3
51
37
48
3
43
22
44
35
15
46
38
9
10
18
7

48
49
2
32
47
45
34
13
3
7
10
40
22
43
44
54

37
21
26
47
50
45
24
39
42
38
28
15
48
49
53
51

28
37
25
21
35
48
32
44
49
47
42
30
39
61
34
55

33
40
45
13
22
16
39
38
32
35
42
47
51
30
54
23

8
2
66
21
17
23
36
60
64
63
67
49
32
54
24
55

15
32
21
45
39
38
42
30
40
43
35
60
41
28
46
36

29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44

20

57

24

65

30

48

45

6
12
9
11
17
8
19
18
7
1
16
3
1
24
13
4
29
14
26 19
2
23
31
10
22
25
20
33
27

Total

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

COIMBRA
NITRA
RZESZOW
TRIESTE
OVIEDO
ANCONA
PERUGIA
BIALYSTOK
KOSICE
TIMISOARA
BANSKA
BYSTRICA
BYDGOSZCZ
PATRAI
KAUNAS
LARISA
GYOR
SZCZECIN
SIBIU
KIELCE
PECS
LIEPAJA
MISKOLC
CRAIOVA
PLEVEN
RUSE

52
62
69
12
37
35
42
67
66
50
70

63
46
19
61
55
59
54
22
43
64
41

54
51
53
40
38
36
41
59
50
64
52

49
52
41
67
44
68
66
56
48
62
53

16
19
56
45
68
34
42
47
53
4
58

37
44
50
57
34
49
51
55
52
59
47

46
47
48
49
50
51
52
53
54
55
56

68
59
55
61
46
65
57
63
56
60
58
64
51
53

27
58
36
60
68
52
65
56
62
12
67
66
70
69

57
46
66
45
62
58
60
56
65
63
67
68
69
70

46
60
55
63
37
43
64
57
58
61
50
70
69
59

52
5
27
6
41
59
13
62
65
61
70
33
57
69

61
67
65
66
63
56
62
54
53
70
58
64
69
68

57
58
59
60
61
62
63
64
65
66
67
68
69
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

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