Intelligent Transportation Systems

My views..

100 Smart Cities and 500 Rejuvenated Cities

100 Smart Cities and 500 Rejuvenated Cities

Appearing at http://smartindiancities.com/newsdetail.aspx?newsid=225

The cabinet approval for central funding for the 100 Smart Cities and the 500 Rejuvenated Cities is like nector (AMRUT) for the economy of this country as well as providing a growth engine for the global economy.

To put the magnitude of impact that this decision has, it is important to keep the macro perspective in place. The total cost of upgradation and renewal of 500 cities is estimated to be roughly around USD 5 trillion. However, this amount will not get spent or consumed within one or two years. This initiative and the related expenditure, will be executed over atleast a twenty year horizon. However, what is critical is to start of the process and to create upgraded cities that have a demonstration effect.

Therefore, the roughly USD 16 billion committed for the initial central government spend is an important first step towards unlocking the larger, longer term economic activity of upgrading and building smart cities/ rejuvenated cities. Moreover, the initiative will trigger a virtuous cycle of efficiencies being unleashed in the economy due to the building of efficient cities and if this is combined with the Make In India initiative, then the multiplier effect of the spend in building these cities is also captured within the Indian economy, thus propelling the country to an even faster growth rate. If the initiative stays on track and gains the expected momentum, it would lead to an explosive growth in the Indian economy.

What is more heartening to note is that this initiative will also provide the much needed growth impetus to the global economy. Vast amounts of steel, cement, electronics, furnishings, electrical equipment, sewage plants etc will be required to build these cities. Not all of this will be available in India in the short term. Thus, some of these requirements will be imported from the world over, triggering growth in the global economy.

However, what is important to be noted is that it would be unfair to expect that the bulk of the funding required will come from the Government. This is not going to happen simply because the government does not have the required funds. Thus, what is expected is that the initial government funding will trigger private participation in the funding of further development of cities. Large scale Public-Private Partnership would presumably be the larger source of funding for the 100 smart cities and the 500 rejuvenated cities. And the economic growth that is expected to be triggered, will also help in providing the funding required to build the rest of the cities.

It is obvious that this cabinet decision is historic for not just the growth of the economy but also will have a deep impact on how we live and work, improving our Ease of Living.