Indian Cities: Need for going beyond Smart Cities

http://egov.eletsonline.com/2014/11/indian-cities-need-for-going-beyond-smart-cities/


Posted by: Elets News Network (ENN)
Posted on: November 3, 2014
Posted in: News

Given the pent up demand for living a better quality of life, it won’t be surprising to witness new cities in India getting swamped by migrants, for which the country need to have better planning, believes Jaijit Bhattacharya, Government Transformation Expert and Partner, KPMG

When cities such as Singapore were built, labour was brought in from neighbouring countries such as Malaysia, Indonesia and from Bangladesh. Once the construction work got over, the labour went back from where they came. The outcome was a clean, manageable city with a current population of 5.5 million.

When cities in China were being built, the labour came from the hinterland and once the cities got built, the labour had to leave the city as per the Hukou system, which only permits certified residents to have access to the city facilities. This ensures that the mass urban migration is controlled and the cities are manageable.

However, when the proposed Smart Cities in India get developed, Indian cities will not have any mechanism to prevent mass migration from swamping the city and ultimately destroying them. We have seen this happen in the past where in cities like Kolkata were swamped by migrations, especially during the 1943 famine. Given the pent up demand for better quality cities arising from an aspiration for better quality of life, it is easy to see why new cities will soon get swamped by migrants.

Hence, any planning of a new city in India will require consideration of issues such as Massive Urban Migration (MUM) that requires infrastructure creation in an unprecedented scale for a transient phenomenon. Such infrastructure include city social infrastructure such as migrant worker hostels, women’s hostels, infrastructure for the elderly, crèches and their accompanying regulatory framework and governmental institution formulations. The presence of this kind of infrastructure will allow greater unlocking of the economic potential of key segments of the population such as migrant workers, women and young workers who have dependent elders.

The expected MUM will be of a scale that has not been witnessed ever in the history of humankind and in the absence of city’s upgrading to become Next Generation Cities, will lead to significant curtailment of economic growth and considerable human misery. From an Indian perspective, pressing issues such as social infrastructure, religious infrastructure, regulatory frameworks for technology enabled safety, technology enabled security, energy provisioning etc are of very high importance when designing the Next Generation Cities.

Therefore, it is necessary to gear up the city for issues such as religious infrastructure, disaster management, energy consumption monitoring and other issues related to large scale infusion of a diverse population. Again, in the absence of preparedness, one can expect social problems leading to loss of economic productivity.

In order to support the smooth functioning of a Next Generation City, it is essential to have Urban Analytics that will help in all the above city management issues and help provide personalized governance to the city’s businesses and people.

Issues such as social infrastructure, religious infrastructure, regulatory frameworks for technology enabled safety, technology enabled security, energy provisioning etc are of very high importance when designing the Next Generation Cities in India

In addition, there are certain basic aspects of city planning that is driven by the nature of industry that the city would like to support. So, if a city has to support innovation industries or say IT/ITES industry, it needs to have the infrastructure that would attract the set of people who contribute to the creation of such industries. In the case of IT/ITES, the city would need to cater to young people and their lifestyle and expectations. That would mean the infrastructure planning has to be radically different so that the right talent gets attracted which in turn would pull the IT/ITES industry to the city. Overall, cities need open community spaces which are generally lacking in Indian cities. These spaces contribute to the emotional connect of the people to the city, which helps in individuals investing into the city which in turn leads to higher economic activity.

Thus, a mere technology enablement of the Indian cities would not suffice for the creation of Next Generation in Cities. We would need to overhaul the administrative structure, bring in additional regulatory frameworks and incorporate certain principles of city planning that are unique to India and to perhaps some other fast growing economies.

Views on the Budgetary provisions for Cities upgraded

http://articles.economictimes.indiatimes.com/2014-07-10/news/51300601_1_smart-cities-kpmg-provisions

Budgetary provisions for smart cities was need of the hour: Jaijit Bhattacharya, KPMG

ECONOMICTIMES.COM Jul 10, 2014, 01.28PM IST

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(“We welcome the initiative…)

Finance Minister Arun Jaitley in his maiden budget speech said the government will aim to spend Rs 7060 crore for 100 smart cities. This is expected to give direction to Prime Minister Narendra Modi's vision of building multiple smart cities in India.
"We welcome the initiative which is the need of the hour for the Indian economy," said Jaijit Bhattacharya, Partner, infrastructure and Government Services, KPMG.
Elaborating on this he said that cities are growth enablers and current Indian cities are choking with the economic growth in India.

Memoirs of a Policy Warrior

 

 

Views on the new norms for long term borrowings by banks for funding infrastructure and low cost housing

Time to turn the tap off

http://www.businessworld.in/news/corporate/time-to-turn-the-tap-off/1434986/page-2.html

PPP intervention in water supply and management can happen at various points of the supply-chain using multiple mechanisms.

PPP mechanisms in water are  relatively recent an the PPP initiatives in Johannesburg and Nepal are considered to be success stories whereas the initiative of providing success linked payments to water utility employees in Kampala in Uganda also is considered to be a success story.

There are a complex set of issues that constrains us from charging a competitive rate for water. The issues range from absence of a culture to pay for water to inability to pay for lifeline water which then pushes the argument of charging for water being against the tenets of welfare state. Overall, it’s a issue of political leadership to push through the necessary reforms that would ensure a sustainable supply of water.

Given that upgradation of water supply systems is a capital intensive initiative, and the fact that a majority of existing public sector organizations that are responsible for water supply have become fossilized, bringing in private participation would help in attracting the required capital as well as bringing in the state of art water supply management perspectives. Clearly, privatization is definitely a feasible option. However, the option has to be exercised on a case to case basis. It is not a panacea for this sector.

Sarvajal is an excellent for-profit initiative. Since it is for profit, it is scalable and financially sustainable. The only issue is that in many of the cases, the funding organizations use CSR funding for provding the water solutions from Sarvajal. Perhaps with introduction of section 135 in the New Companies act, there would be a greater availability of CSR funding that would see sarvajal being adopted in a larger number of communities.

Private sector can be attracted to this sector by making the sector financially viable. Financial viability can be brought in by either (a) increasing the water charges or (b) providing viability gap funding for once time capital or (c) providing viability gap funding for operations or a combination of the above three. Given that water is a sensitive issue, any mechanism adopted, has to be crafted with care and due diligence, with active participation of relevant stakeholders and also perhaps by including the stakeholders in the final solution by making them co-responsible for the water supply.

Views on Budget 2014

http://indiatoday.intoday.in/story/union-budget-2014-2015-india-inc-key-reforms-higher-growth/1/370709.html

http://www.mydigitalfc.com/news/nda-unveils-social-agenda-sans-upa%E2%80%99s-political-gas-304

http://articles.economictimes.indiatimes.com/2014-07-10/news/51301154_1_reits-real-estate-sector-smart-cities

http://www.thehindubusinessline.com/economy/budget/achche-din-coming-for-neomiddle-class-smart-cities/article6197956.ece

http://auto.economictimes.indiatimes.com/news/industry/steel-sector-is-upbeat-on-budget-proposal-to-develop-100-smart-cities/38202441

We welcome the initiative which is the need of the hour for the Indian economy. Cities are the growth enablers and current Indian cities are choking with the economic growth in India. It is heartening to note that budgetary provisions have been made for modern next generation cities

The allocation of Rs 4000 crore and promises to make easier FDI flow in this sector along with additional tax incentives and cheaper credits for Low cost housing for EWS and weaker section is not only the need of the sector but the economy

The focus on senior citizens through pension schemes is welcome. Other specific initiatives such as kisan vikas patras and rural housing schemes will help build the foundations of a stronger rural society

Views on Economic Survey 2014

http://articles.economictimes.indiatimes.com/2014-07-09/news/51247881_1_economic-survey-urgent-steps-indian-economy

http://indiatoday.intoday.in/story/economic-survey-growth-recovery-union-budget-arun-jaitley/1/370526.html

"Besides correcting some of the subsidy interventions that have distorted the labour market and have contributed to inflation, the government may well consider urgent steps to facilitate investments that would lead to job creation and infrastructure creation at a rapid rate, easing out the fiscal and monetary pressures in the medium term.

Interpreting the survey, which is a general report on the state of the Indian economy, Jaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG in India has said that it is clear that the economy is going through challenges, which are translating into fiscal and monetary constraints

"Besides correcting some of the subsidy interventions that has distorted the labour market and has contributed to inflation, the government may well consider urgent steps to facilitate investments that would lead to job creation and infrastructure creation at a rapid rate, easing out the fiscal and monetary pressures in the medium term," Bhattacharya said

Views on Rail Budget 2014

http://www.moneycontrol.com/news/economy/rail-budget-2014-financial-headroom-to-enable-modernisation-kpmg_1121948.html

http://economictimes.indiatimes.com/industry/transportation/railways/railway-budget-has-something-for-all-stakeholders-without-being-populist-jaijit-bhattacharya-kpmg/articleshow/38014135.cms

 

http://www.hindustantimes.com/specials/coverage/unionbudget2014/railbudget2014/gowda-to-focus-on-fund-inflows-fiscal-stability-infrastructure-in-his-maiden-railway-budget/sp-article10-1237956.aspx

http://www.moneycontrol.com/news/economy/rail-budget-2014-financial-headroom-to-enable-modernisation-kpmg_1121948.html

 

http://www.moneycontrol.com/news/local-markets/live-market-updates-sensex-falls-over-600-pts-nifty-breaches-7600-bhel-slumps_1121922.html

 

http://www.firstpost.com/india/railway-budget-2014-well-thought-out-and-non-populist-says-kpmg-1608911.html

 

http://www.financialexpress.com/news/rail-budget-2014-well-thought-out-nonpopulist-says-kpmg/1267809

http://economictimes.indiatimes.com/industry/transportation/railways/rail-budget-2014-well-thought-out-non-populist-kpmg/articleshow/38013330.cms

 

http://www.business-standard.com/budget/article/kickstart-indian-railways-to-boost-economy-114070700340_1.html

http://www.business-standard.com/article/news-ians/growth-oriented-budget-for-railways-expected-curtain-raiser-114070700719_1.html

http://www.smartinvestor.in/market/read-251415-readdet-Kickstart_Indian_Railways_to_boost_economy.htm#.U7thGZSSySo

http://www.goodreturns.in/news/2014/07/07/growth-oriented-budget-for-railways-expected-curtain-raiser-277346.html

 

http://www.moneycontrol.com/news/local-markets/live-market-updates-sensex-slips-over-350-pts-post-railway-budget-hdfc-shines_1121922.html

 

http://zeenews.india.com/business/indian-budget-2014/growth-oriented-budget-for-railways-expected_103350.html

 

http://www.mid-day.com/articles/growth-oriented-budget-for-railways-expected/15430195

     

http://www.nagalandpost.com/TagRelatedNews.aspx?tagname=Growth%20oriented%20budget%20for%20railways&tag=VEFHMTAwMjY4OTM%3D

http://www.business-standard.com/budget/article/kickstart-indian-railways-to-boost-economy-114070700340_1.html

http://www.business-standard.com/article/news-ians/growth-oriented-budget-for-railways-expected-curtain-raiser-114070700719_1.html

http://www.smartinvestor.in/market/read-251415-readdet-Kickstart_Indian_Railways_to_boost_economy.htm#.U7thGZSSySo

http://www.goodreturns.in/news/2014/07/07/growth-oriented-budget-for-railways-expected-curtain-raiser-277346.html

Non-Ticketing Revenue Generation for Indian Railways

Indian Railways is in a desperate position to generate revenues. Besides the need to cover its operational costs and pension costs, the revenues are required for a large number of initiatives that are urgently required for the upgradation and modernization of Indian railways. These include safety measures, building of tracks and bridges, upgradation and modernization of signalling, investments into rolling stock, building stations and terminals, building dedicated freight corridors, high speed passenger train corridors, training and upgrading skills of human resources in railways and creating indigenous capacity for development.

Railways have always played a significant role in the development of any economy and have been particularly significant for the Indian economy. A recent study by KPMG on economic impact of the second phase of high speed railways in UK concludes that the project could potentially generate GBP 15 billion per year for the economy. The analysis was a critical input into policy making for rolling out High speed railways in UK. And thus, a strong railway network plays a significant role in strengthening and growth of the economy. As a corollary, a dilapidated railways is detrimental to any economy.

Hence it is imperative that Indian railways continues to invest into its upgradation and modernization in order for the Indian economy to grow.

However, a slow growth in revenues for the Indian railways while having a galloping increase in costs has left Indian railways constrained in making the necessary investments required to transform itself into a modern, reliable and safe railway system.

Railways has been focussing on ticketing as a primary source of revenue generation. However, if railways has a significant multiplier effect on the economy, it should be possible to generate revenue by monetizing the economic value that Indian Railways can generate. In fact, many railway systems globally, have a significant percentage of their revenues generated from non-ticketing sources.

Economic value is trapped in assets such as spaces, impact zones, monopolistic data and ability to create wealth by marrying tangible and non-tangible assets of the railways with capital, in a manner that no other organization is in a position to do.

One of the obvious mechanisms for monetizing the economic value unlocked by a railway system is to monetize the impact zones. Impact zones are areas which become accessible and hence open to commercial exploitation. It can include opening up areas that are non-arable for industries or even tourism.

However, significant revenues can be generated by the Indian railways by adopting a set of new trends in business models, operational models, financial models and technological models for achieving enhancing revenue generation.

Such models include increasing sales of other services and commodities to its captive passengers. Such offerings can stretch from in-coach sales of products to sale of insurances and even solicitation for sale of real estate etc.

Revenue can also be generated by exploiting non-tangible assets such as the data it generates, analytics of the data, diversifying into other data driven businesses that leverages Indian railways’ existing data and customer base and helping cargo customers optimize its logistics using the data under the possession of Indian railways.

Many of these revenue generating initiatives can potentially be taken up through a PPP mechanism, thus saving the Indian railways from even making the initial investments.

Needless to say, Indian railways also has a significant potential to cut costs and a any cost savings is also essentially revenue generated. It can also significantly optimize its passenger train operations and cargo train operations by using modern techniques including analytics and reduce energy costs by adopting energy saving practices.

In order for the Indian economy to continue to grow, it is an urgent calling for the Indian railways to generate revenues from non-ticketing sources in order to implement the initiatives necessary for its upgradation and modernization. Indian railways should consider roping in private investments into such initiatives through PPP mechanisms. These initiatives become even more important in the context that the Indian traveller is extremely price sensitive and is reluctant to pay a higher fare while any increase in cargo fare has an inflationary impact.

Personalized Governance

Governments have been typically department oriented. So much so that a tribal, pregnant, handicapped woman, who should get social benefits from at least four different departments, ended up getting benefits from no department at all.

This situation happens as it is near impossible for the targeted citizen to understand how government functions, how departments interact and how to approach the departments. Therefore, it is near impossible for the vulnerable sections of the society to actually receive the benefits that they are supposed to receive.

Under this context, how can we redesign the government to ensure that the government is citizen centric and provides personalized governance on a proactive basis. 

Non-Tax Fund Generation for Governments

Governments have been focussing on Tax as a primary source of fund generation. Because of the nature of taxation, there are severe issues in the two primary kind of taxes – the direct taxes and the indirect taxes. There has been many discussions on how indirect taxation distorts the economy and how direct taxation is discriminatory in nature as many are outside the purview of direct taxes.

However, as we move into an era of ever expanding demands on the government to deliver, the pressures for fund generation has been spiralling up. This has been accentuated by voters’ comparisons between the private sector’s ability to deliver personalized services to a large number of people versus the Government’s inability to do the same.

An interesting outcome of such a dynamics is the ability to transform the government from a primarily Tax Oriented Government (TOG) to a Service Oriented Government (SOA), and in the process, unlock very significant economic values that are trapped in various kinds of physical and non-physical assets that are owned by the government.

This is the journey towards the Next Generation Government (NGG).

Next Generation Governance is an evolutionary step towards a more efficient, inclusive and participative government through adoption of a set of new trends in business models, operational models, financial models and technological models for achieving Outcome based Governance

Economic value is trapped in assets such as spaces, impact zones, monopolistic data and ability to create wealth by marrying appropriate policy with capital, in a manner that private sector is not in a position to do. Unlocking the economic values through a combination of appropriate policies and development of a Service Oriented Administration will unlock the economic values of these Government owned assets, leading to creation of very significant non-Tax revenues.

A significant percentage of the GDP of an economy can be expanded by the unlocking of such tangible and non-tangible economic assets

SMAC Driven Policy Making

http://www.livemint.com/Politics/bebH4at07MCmsvcT8cr7WM/Government-to-give-egovernance-a-SMAC-push.html

The government is firming plans to set up departments that will govern the use of social, mobile, analytics and cloud (SMAC) technologies as part of its efforts to drive the next phase of e-governance.

The Government has  come up with a package of ideas, which together is called EGP (e-governance programme) 2.0, or e-kranti. The information technology (IT) ministry is working with the states and some ministries in the Union government to adopt a set of procedures to grapple with entire suite of SMAC technologies.

“The government is the repository of the biggest ever data. There have been 2.85 billion transactions—double the size of the Indian population—between the government and citizens since last year. This underscores the need for analytics.

Mobility too is important since about five million people are being reached daily both by the federal and state governments through mobile programmes, including those in healthcare and education.

The IT ministry is also working to develop new cloud-based delivery models. The government has created a policy for cloud in May last year. Government launched the first phase, creating the cloud environment in their datacentre based in Delhi, with about Rs100 crore invested in it.

India has been surprisingly adept at adopting technologies as they emerge. India is one of the leading countries in use of statistics by the government for policy making. However, the Government has evolved to a stage where they don’t need to depend solely on statistical data for decision making. Given the proliferation of e-governance and other large systems that may reside outside the government, such as banks and telecom companies, we have significant direct data. Using analytics on this data gives the ability to provide personalized governance as well as help us have analytics driven policymaking.

As an example, the government can check the number of tourists in a particular area by merely checking the visitors location registry of telecom companies. This data would be invaluable for disaster management.