The PPP route to smart urban living

Small-scale infrastructure projects developed on public-private partnership (PPP) can expedite development of smart cities. Cities have limited resources and must engage the private sector to meet infrastructure and service needs. The private sector not only generates wealth and jobs, but also innovates and improves public delivery systems.

We cannot build world-class cities with public funds alone. PPPs facilitate economic growth on a scale and timeline that would be impossible without private capital.

It is not always necessary to develop big-ticket urban infrastructure projects that make smart cities. There are several small-scale urban infrastructure projects that can innovatively be implemented through PPP. They are economically viable and do not require any public investment. They do not have direct revenue streams but generate funds through improving efficiency and savings from system improvements.

The Smart City Mission, AMRUT and the Pradhan Mantri Awas Yojana (Urban) are required, not only to accommodate upsurge in the urban population but also to retain the economic competitiveness of our cities.

Analysis of Census data indicates that India will add nearly 100 million urban population every 10 years. While mega cities are saturated, tier II and III cities would witness the maximum growth.

The Smart City project aims at providing for 24-hour water and power supply, world-class transport, recreational facilities, e-governance and so on to 100 select cities. AMRUT seeks to provide for basic amenities in Class 1 cities — around 500 cities with over one lakh people — such as water supply to each household, sewer connections, sanitation and solid waste management, provision for roads and public transportation.

Thus, the overall theme of the government is to improve the physical capital of Indian cities. The right physical capital increases the efficiency of cities, allowing for more and better innovation. In words of leading urban economist, Edward Glaeser, this will enable human capital to succeed.

The budgetary allocation for each smart city, though not huge, can be leveraged sensibly by the cities if they choose their projects smartly. Small-scale PPP projects in transportation such as installation of traffic monitoring camera at major intersections or an energy efficiency project in water supply and street lighting, can also improve citizens’ quality of life.

Let’s discuss outsourcing of city surveillance and traffic management services. The private partner would set up and operate the entire city surveillance project comprising of CCTV cameras, automatic number plate reading cameras, and command and control centres. It would assist the city administration and police department for information sharing and maintaining law and order, traffic management and data collection services.

The private partner will generate fines for traffic violations and handover them to the traffic police, which will further issue them to violators. With the New Motor Vehicles Act, 2015 (Bill) on the anvil, revenues in form of penalties from traffic violations would be high enough to cover both project and operational cost, apart from making roads safer. This also releases already under staffed traffic police personnel for other law and order duties in the city.

Similarly, private sector can be engaged in implementing energy efficiency measures in, say, water supply, maintaining street lights, etc. Studies have suggested that investing every rupee in energy efficiency can help government defer investment of ₹10 in adding generation capacity as well save ₹2 annually in fuel costs. Private sector can be engaged in implementing these projects. The concerned department will benefit from improved service delivery and cost savings from achieving energy efficiency.

The main aim of the government through the Smart Cities Mission is to improve the quality of life of citizens. This implies providing better employment and investment opportunities and making the city more competitive by addressing the core issue of infrastructure gaps.

Large citywide development projects have long gestation period and huge capital investment. Smart Cities funds from government should be used for these projects. Smaller infrastructure projects can be developed with negligible public investment through PPP with quick turnaround time, going a long way in making cities better and safer. We are going through an inevitable transition and we have the option to either manage it well or manage it poorly.

The writer is Director, Clearmaze Consulting, and a former IRS officer