India Realty — 16 February 2013
Smart City – The New Concept In Indian Real Estate Market

Indian real estate market is into 21st century with a strong and global approach to make country one of the best place to live in. The science and technology is changing rapidly and is creating several challenges for the planning, development and operation of cities. These challenges are leading towards experimenting with new approaches to the governance, construction, design and finance of urban infrastructure and services or I must say, making of Smart Cities.
Today, more than 50% world’s population lives in a city. This urbanization change was self-motivated because mechanisation culture reduced the need of physical labour in agriculture and people have chosen to move to cities in search of better life. According to World Urbanisation Prospects, the 2011 Revision, 53% people lives in urban areas and 47% people lives in rural areas. It is quite visible that, today people are more likely to adopt urban culture rather than rural.
If we look at the history, the origins of cities dated back thousands of years. After the invention of agriculture around 12,000 years ago, population grew and people migrated outward from agricultural boundary, carrying their knowledge of farming with them. Actually, there was no governmental authority beyond the village. The first city came into existence when one member from an agricultural village focused totally on non-primary production activity. That was the beginning. Indus Valley Civilisation and Mohenjo-Daro are the best examples of a sophisticated and technologically advanced urban culture in India.

What is a Smart City?
The term ‘Smart City’ is little bit confusing because it comprises of several factors. It is also known as knowledge city, cyber or digital city and eco-city. Knowledge city mainly focuses on education, learning, innovation and intellectual development and personal growth. Cyber or digital city is basically driven by the investments from biggest information and communication technology (ICT) vendors. They aimed at enabling everything should be highly interconnected through high-speed networks and servers. The third is eco-city, which focuses mainly on environmental sustainability through adopting renewable resources. Additionally, a smart city comprises of all three of these.

Smart City Concept

                                                                             Smart City Concept

According to Ruthbea Yesner Clarke, Research Director, Smart Cities Strategies, IDC Government Insights, United States, “Cities operate in a globally competitive environment, and the ultimate goal of Smart City initiatives is to attract businesses and citizens for a vibrant city economy. Smart City is a finite entity with its own local governing authority that uses ICT and instrumentation technologies to achieve the explicit goals of improving the quality of life of its citizens and sustainable economic development. These goals are achieved via improved service delivery, more efficient use of resources (human, infrastructure, and natural), and financially and environmentally sustainable practices that support economic development.” The concept of smart city was first introduced in mid 2000s. She further states, “In the beginning, smart cities originally focused mostly on the environment and sustainability, as cities consume so many resources and produce so much waste and greenhouse gases. The concept took hold first in Western Europe around the Smart Grid concept.”

Additionally, smart city must be economically feasible. It means competing in global and knowledge-based economy. The six basic dimensions of a smart city are: Smart governance, smart economy, smart mobility, smart people, smart living and smart environment. These dimensions are based on regional competitiveness, transportation, information and communication technology, human and social capital, natural resources and participation of citizens in the governance of cities.
Significance of Smart City
India is a huge country with a population of 1,241,491,960. It has 28 States and 7 Union Territories. It is very difficult to handle such a big country. Our population is increasing rapidly. Today, a large amount of migration is happening in Indian cities. About 30 people migrate to major Indian cities from rural to urban areas every minute. People are leaving rural areas due to poverty, employment, lack of basic infrastructural facilities, better opportunities, availability of regular work and higher wages. It is quite visible that, by 2050, the number of people living in Indian cities will reach 843 million. To accommodate this massive urban migration, India needs smart cities.

The basic needs of smart cities are:

  • It will stop migration from rural to urban areas.
  • It will develop more urban areas in the country.
  • It will enhance the technology, living standard, transportation, basic infrastructure, social and cultural life of a city.
  • It will stop the population density in metros.
  • It will lead to equal population in every state of India.
  • Lastly, all these lead to the development of the country.

Government’s take-on
Seeing day-by-day challenges and problems in cities, a new step has been taken by the Indian Government. Ministry of Urban Development is planning to develop 2 smart cities in each state with several features like carbon neutral status and intelligent transport. It will be developed in the second phase of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). As stated by Kamal Nath, Urban Development Minister, “The medium sized cities with half a million to one million populations will be developed as smart cities and expertise of Austrian Institute of Technology had been sought for the purpose.” Plans are on the paper to convert at least 70 cities into smart cities with million plus population in India. Ujjain and Jabalpur are the place where this plan will be executed first. Australian Institute of Technology and the National Institute of Urban Affairs a research, information and training wing under the Urban Development Ministry, would be the partners in the project.
Government is focusing only on small cities because there is lack of infrastructural growth, new and innovative technologies and transportation facilities. These are the barriers in the development of a particular state. People moved to big cities for better life and future and finally settled down there. This is the main reason why big Indian cities have become so congested. In this regard Clarke adds, “To create a Smart City, a city need a strong, bold leader or leaders who can pull together a lot of different people and organisations from around the city and develop a strategy to change its city into a Smart City.”

Smart city will enhance Financial Systems
As far as Indian economy is concerned, smart city concept is a fertile field that can provide various developments and opportunities to state and its people. In this context, Clarke further adds, “We live in a global economy and it is getting more mobile and global every day. Many talented and educated people can choose jobs in different cities around the world today. Cities must work to attract businesses to their cities, not only through tax incentives or other policies, but also because there is a pool of workers there for the businesses. In the future, many jobs will no longer require going in to an office to work and will be done from home or any location. This means that more and more people will be free to move wherever is the most attractive – cities that have parks, restaurants and cultural activities, where other educated and creative people live, where it is easy to get around via many different methods (think beyond cars, bicycles and buses to electric vehicle, bike and car sharing programs etc), and where there is decent and affordable housing in attractive neighborhoods. So, Smart Cities benefit the state or country by attracting business and workers who contribute to the tax revenues of that city or state and to the growth of the state overall.” This concept will also enhance the economy of state and the country.

The opportunities

  • It can provide several job opportunities to people and attract skilled workforce in each state.
  • It can offer various opportunities to IT/ITES sector.
  • It also provide lot of benefits to sectors such as service, hospitality, retail, education and health care and finally this provide benefits to government as well as local economy.
  • It can offer huge investment opportunities to investors because this concept will increase the ratio of direct jobs and services.
  • This experiment also provides better infrastructure, intelligent transportation, broadband facilities and carbon neutral status to each state.
  • It also facilitate improvements and productivity of a state.
  • Finally, smart city brings great exposure to people and economy of a state. Additionally, this provides great benefits to the country and its people.

The obstacles ahead
Executing this plan is not an easy task for the government. It needs strong government policy, huge investment, highly-experienced and talented individuals and lot of time. In the time of recession when the value of rupees is too less as compare to dollar, is this a right time to create smart cities in India? First of all, government should concentrate on this serious issue. General public has also put a big question mark on this new venture of Urban Ministry. According to Akash, a bank employee from Mumbai questions, “How will ministry ensure there are no kickbacks in such ambitious project and government will not make their own profit?” Subrata, a research analyst from Kolkata says, “We are still depending on those cities which were created by British rulers some 300 years back. It’s very shameful. First of all government should has to build two decent cities, in past 65 years which have not been done. Then talk about some new plans. Whenever ministers declare something extravagant, we know what exactly we are going to get. There is nothing substantial for citizens but, a legacy of scams.” These views shows Indian citizens are still not sure about the promise of 2 smart cities of government. The main problems which lies ahead are:
Need of large investment- This experiment needs lot of money. But, at present our Government is not in the condition to invest in any new plan. Several developments plans are still pending on urban ministry. So, it is very difficult to execute such plan.
No co-ordination between Central and State Government- In India Central and State government both are poles apart. Both the entity has their own departments, working area, laws, rules and regulation, policies etc. They cannot be able to link-up with each other. So, if state government is planning to develop 2 smart cities, it has to depend on the order of central government finally. This process will be time consuming.
Lack of basic infrastructure- States in India lacks the necessity of basic infrastructure. Electricity, water, transportation, roads, bridges, schools, hospitals universities etc. are not properly available in each state. The primary task of government is to provide infrastructural facility. Then, government has to think about developing smart cities.
Not possible without PPP model- Public-Private Partnership (PPP) involves a government service or private business venture which is operated and funded through a partnership of government and one or more private sector companies. But, PPP model is still not a successful venture in India.

Solution to the Problem
There are pros and cons of everything. To carry-out the plan of 2 smart cities, government will face several challenges. But, at the same time it has to think about the solution of these existing problems.
Formation of strong government policy- No idea can work without any strong government policy. Government should have to come with strong and valid policies to develop this plan.
Foreign investment- Due to lack of financial aid government should have to think over foreign investment strategy. For example, the cost of Phase I and II of Delhi Metro Rail Corporation (DMRC) was 14,430 crore approximately. 30% of total investment has been raised through equity capital with Governmnet of India and Government of Delhi. Rest 60% has been raised through soft loans from the Japan Bank for International Cooperation. The same agenda should be followed in Smart city concept also. It will decrease the burden of government.
Funds from private sector- Government should have to raise funds from private firms or companies. These firms will be active when government will give some benefits to them. Companies will also get some good opportunities after investing in this plan.

Smart Cities In India – The Road Ahead
Today, the world is an unprecedented level of urbanisation. Cities can support large-scale business and investment networks that create economies of scale in absorbing and extending innovation. To compete in this new economic environment, cities will need to better apply advanced information technology, analytics and systems thinking to develop a more citizen-centric approach to services. Smart cities can better attract, create, enable and retain their citizens’ skills, knowledge and creativity.
Source-PO

By-
Alok Kumar Upadhayay
Real Estate Professional 

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Alok Upadhayay, founder / chief editor of Indianrealestatemarket.com is very passionate blogger and writes updates about Indian Real Estate Market, Tips For Investors, End Users and NRIs, Finance and Property Management and Project Reviews. You can follow him on twitter @alokupadhayay

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