Commerce Dashboard



Perspectives from India

Go Back

Ushering in the smart revolution

Ravi Capoor, Former CEO, IBEF

May 05, 2015 10:54

Economic growth across sectors and rising opportunities are driving an urbanisation boom across the country. A report by consultancy firm McKinsey & Company has predicted that this surge in urbanisation is expected to give rise to 15 additional metropolitan cities by 2025. The 69 metropolitan cities of India along with their hinterlands, are expected to contribute over 50 per cent of the country’s incremental GDP between 2012 and 2025. It is also projected that urban India will account for around 75 per cent of the country’s GDP in the next 15 years.

While the rapidly accelerating urbanisation of India presents a heartening portrayal of development, it also presents challenges of sustainability in the future, in terms of how cities manage the growth in population and the associated complexities and provide quality standards of living for their residents. The Government of India has initiated two visionary programmes to address this challenge in the coming years - the 100 Smart Cities project and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). Last week, the Union Cabinet approved funding of almost Rs 1 trillion for both these projects. While the Smart Cities project will get a funding of Rs 480 billion over a period of five years, AMRUT will be getting funds amounting to Rs 500 billion.

The Smart Cities program envisions building 100 smart cities in India, a commitment made by Prime Minister of India Mr Narendra Modi last year. It aims to ensure sustainable urbanisation in the country by taking the advantages of a low base and the latest information and communication (ICT) technologies. A smart city is defined as one that provides investment opportunities, employment opportunities and quality of life to their residents. The four pillars of smart cities are institutional infrastructure, physical infrastructure, social infrastructure and economic infrastructure. Some of the means that will enable India to make its cities smarter are energy efficiency through smart grids, Internet of Things, demand management, improving citizen access to information, taking targeted measures to reduce pollution, leveraging clean technologies, building world class health and education infrastructure, etc.

The cities to be assisted will be selected through a City Challenge Competition that will assess them for their abilities to fulfil the objectives of the programme. These cities will be provided funding of Rs 100 crore per year for a period of five years, while additional funds are mooted from states, urban local bodies and the private sector. In fact, the city’s ability to raise further funds and implement projects will be critical to its selection. A special purpose vehicle will be formed for each city. AMRUT will cover 500 additional cities, each with a population of over 1 lakh. These cities will be selected by the central government in consultation with state governments.

The smart cities initiative is witnessing a lot of interest from corporations like ZTEsoft (subsidiary of ZTE Corp), NEC India, Essel Group Cisco, IBM, 3M, EMC, GE, Honeywell, Otis, Timten and Louis Berger as well as countries across the globe including Japan, Singapore, US, Germany, Spain and EU. Due to the approach and commitment of various stakeholders to this project, India looks set to step into an era of smart urbanisation that will ensure a better quality of life to its rapidly urbanising population for years to come.