India has embarked on an ambitious urban development programme that envisages building smart cities and upgrading infrastructure of existing cities. After Prime Minister Narendra Modi unveiled the Smart Cities project, States have been competing to enrol as many cities under the scheme as possible.
In an exclusive interview to Bloomberg TV India, Urban Development Minister Venkaiah Naidu said the government will release the next list of 13-14 cities on May 22 or May 23 itself under the smart cities project.
I think it will have some salutary effect. The disruptive tactics of our opponents, particularly the Congress and Left, have been rejected. Negative politics have been negated. So I think they will understand the message. Second, numerically also our strength in the Rajya Sabha is going up. I hope they will all cooperate because the message is for development. I don’t think anybody will obstruct development in future.
The world is keenly watching India’s Smart Cities project, which will be a major stimulus to the economy. What is the progress on that?
State after State is asking for inclusion of more cities in the Smart Cities scheme. In the first phase, 20 cities have been finalised. DPRs have been approved. On June 25, we are going to start construction in those 20 cities. On May 22 or May 23, I am going to release another 13-14 cities’ names because the Smart City competition is over. Twenty-three States and cities which could not find place in the first list because of a variety of reasons…I gave them one more opportunity. That competition is also over.
The Department is in the final stage to finalise the names. They told me in a day or two they will give the list to me. That will take the total number of Smart City aspirants to 34 or 35.
Then international funding agencies are showing a lot interest. As many as 34 ambassadors met me and they are all showing interest saying that they want to invest. Myself and six ambassadors including US Ambassador, UK High Commissioner, Japanese Ambassador, Korean Ambassador, Germany’s Counsellor and Spain Ambassador…all six of them came together yesterday about finding opportunities in the smart cities. A lot of companies are interested because of the PPP model.
Now the good thing that has been brought out by the smart cities is there is awareness of the responsibility of the local bodies. They are now preparing smart plans, they are trying to compete with each other.
That is a good development. And then 500 cities are already going to come out with plans for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). In those cities, the priority areas are drinking water, sanitation, solid waste and water management. In 4,041 towns across the country, we are taking up Swachh Bharat as well as Housing for all programme.
So we are having a comprehensive view. But everything cannot be done simultaneously. You have to create certain examples. Cities cannot be constructed overnight — not even a part of the city. But a good beginning is being made.
So when I interview you next year, at the third anniversary, what can we expect on the urban development front?
You will see good progress.
You yourself know that real estate contributes very significantly to the GDP and when you inherited the government, the real estate sector was in a bad shape. One reason is the high interest rate regime. But you also see empty cells and half completed buildings across India. The Real Estate Regulation Bill has been enacted but a lot of people on the ground are saying that some mechanism has to be found out for buyers, especially the poor and those who have bought LIG housing. And on top of that the government is not able to release housing units. There is a big mess there. Have you had time to pay attention to that?
Because of that big mess, and understanding the reality of the situation, we pushed the Real Estate Development and Regulation Bill. It is a regulation, not strangulation. I want the cooperation of the private sectors in a way, because I know my limitations. When I say Housing For All by 2022, the target is two crore houses in urban areas and 4 crore is rural areas. It is a big task. Hence I want the cooperation of the private sector. The Finance Minister was kind enough to give and announce lot of concessions including 100 per cent FDI and tax rebates. I have come out with a scheme where there will be interest subvention of 6.5 per cent.
Today you are getting house loan at around 9 per cent or so. If 6.5 per cent interest subvention would be funded by me, what remains is very meagre interest burden. States can take care of it. So that way there will be a big push for the lower income group and affordable housing sector.
As far as the other area is concerned, there was a haphazard growth and there was speculation. The land prices have gone up like anything. That’s why the real estate has suffered on account of speculation and on account of lack of regulation. Then fly-by-night operators had a field day. People were disappointed. Now, everything has been taken care of. The Bill is passed. It has been notified on May 1. By the end of this month I am going to give final shape to the rules and then the rules also will be notified and communicated to the States. States have to implement and they have to appoint a regulator. All of this will take six months. And by six months everything will be in place. I have been cautioning the real estate people also to behave properly.
Otherwise toughest action will be taken against them. What you promise you deliver. I am not creating a new regulation at all.
We are seeing some of the biggest brands in the real estate quote negative orders and there is a lot of hue and cry. There is one more point on that. Some experts have suggested that stuck projects, which real estate companies do for a variety of reasons, are not taking off. Buyers do not have the capacity to put in more money and some sort of rescue mechanism needs to be created. The argument is that if you could do it for farmers, if you look at banks, is there a possibility that such a thought has ever been proposed to you for home buyers?
Nobody has been able to give any concrete idea. What should I do? We are trying to reduce the interest rates. The interest rate is coming down. As the economy improves, the interest rate will come down.
Second, as the regulation takes place, the credibility improves and then greater demand will also be created. Economy and regulation will create greater demand. Once the greater demand is created, these things will move. Other than that, I do not find any readymade solution to this problem. Some people without plan and without studying have gone for such a massive construction and they got stuck. So they have to come out with some solution. I am looking at it with an open mind.
If someone comes to me and gives me a concrete suggestion, I can consider it and discuss with the Finance Minister also.