Forbes India 15th Anniversary Special

Smart cities: Proceed with caution, says Planet 3 Studios' Kalhan Mattoo

We need to be careful about accepting public-private partnerships and technology as the panacea for all ills

Published: Apr 7, 2017 07:46:30 AM IST
Updated: Apr 6, 2017 12:55:59 PM IST

Smart cities: Proceed with caution, says Planet 3 Studios' Kalhan Mattoo Prime Minister Narendra Modi has a mission to make our cities ‘smart’. The jury is still out on what makes smart, but speed, efficiency and optimisation enabled through superior governance and technology, and financed through monetisation of assets and public-private partnership are suggested by the Smart Cities Mission. As an inspirational call for citizens to take pride in and participate in community building, it has been marketed well and has ensured enthusiastic participation of competing cities in the Smart City Challenge.

Indian cities have problems of a magnitude and complexity that defy conventional solutions. The experience with the models of urban development we have implemented in the past is that they have failed us spectacularly. This is an out-of-the-box idea that attempts to break the logjam created by antiquated systems, low capital and skills available with the government. As an angel investor, the government only seeds the initial capital and allows for what are essentially competing business plans with the best socio-economic sustainability to take over the mandate of city building. It’s a hands-off model with low resource investment and potentially high rewards to accrue in a limited time.

The competitive nature of the challenge can spark innovative thinking in urban design and adoption of best practices can grow through the network of individual test bed cities. Designing from first principles and stitching new scalable models of development that can be emulated is the promise implicit in the process. The focus on technology creates an opportunity to leapfrog to better means without going through the whole developmental curve.

However, special purpose vehicles (SPVs) will frame rules to govern the entities without dealing with the messiness of the ordinary democratic process. This is legislation without representation that undermines democratic principles and effectively marginalises the role of the state. It was the intent of the 74th amendment to empower citizens for long-term urban development and the Act put a constitutional obligation on revitalising and strengthening urban local bodies, but this effectively dilutes that intent with political bypass. SPVs are presented as an instrument created to ensure the cooperation of the state and local governments under the supervision of the Centre, but that undermines federalism in a fundamental way. The long-term intent is not clear, and questions about the tenure of SPVs and whether urban governance and assets revert to the elected bodies when the SPVs cease to exist are relevant. The bigger question of the government outsourcing the mandate for development must be debated.

Smart cities: Proceed with caution, says Planet 3 Studios' Kalhan Mattoo
The competitive nature of the Smart City Challenge can spark innovative thinking in urban design
Image: Sajjad Hussain/ AFP/ Getty Images

These SPVs are expected to generate funds through feasible financial means. Dipping into existing government policy provisions, secured bonds, debt, etc, will only cover a fraction of the investment required. The real incentive for these corporations for profit is the common assets that can be monetised. Pune is looking at one-third of the Rs 31,000 crore-investment to come from monetised assets and the narrative is similar in other proposals. While unlocking the developmental potential and triggering economic activities is desirable, the risk lies in the valuation of the assets and how the deals are structured. Just because the government is incapable of unlocking value, it does not diminish the intrinsic value of an asset. We need to have adequate safeguards to ensure that we don’t sell jewels for nothing. It’s likely that these corporations will levy ‘fair’ usage charges for the new infrastructure put in place. These are merely new taxes with a corporate tag and cities for profit that focus on timely return on investment question the very notion of a welfare state and social equity.

Profit management by entities is a paradigm shift that will have immense impact on the relationship that citizens share with the government. Public-private partnership (PPP) as the new institutional framework for development is fraught with risk. The last time India was ruled by a corporation, it didn’t turn out so well.

We have always had bubbles of urban socioeconomic efficiency and prosperity—successful SEZs and private developments like Powai’s Hiranandani Gardens are a case in point. But their success hinged on two crucial aspects. One, insulation from the larger urban mess around through local, effective governance, and two, offer of a superior quality of life at higher costs. These happen to be specifically created urban work and life solutions for a particular socioeconomic class. The Smart Cities Mission suggests a rather similar model of development that risks alienating ordinary citizens who lack the requisite ability to pay for more. The isolation of the haves from the have-nots will exacerbate and potentially lead to social strife, which may ultimately derail the very intent to improve our collective condition.

Preserving a sense of place and memories while embracing change is a worthy smart goal

Technology is being sold as a panacea for almost everything that ails our cities. We need to be mindful of the limitations of what technology can achieve. Information and communications technology is a multibillion dollar business and foreign technology comes at a cost. Additionally, embedded hardware is intrinsically a high-risk investment with unplanned obsolescence a real possibility. Cities driven through smartphones, sensors, analytics, open source software, cloud platforms and machine-to-machine communication is a utopian concept and way up on the hierarchy of needs. That pyramid needs a big base of low-tech solid waste management, sewerage, water supply, uninterrupted power, transportation, housing, etc, to support appropriate technology solutions. Data ownership in a surveillance-led monitored society can be an issue since inadequacies in The Information Technology Act, the National Cyber Security Policy and other laws do not offer sufficient safeguards against potential techno-totalitarianism.

What is economically profitable is not always culturally, socially and civilisationally significant. The keeping-faith-in-business-models-over-humanities view has a chance of socio-cultural deprecation. With efficiency, technology and speed as defining features of Smart City Urbanism, we might be creating placeless cities, identities of which exist more notionally rather than physically. Preserving a sense of place and memories while embracing change is a worthy smart goal.

Fixing our dysfunctional cities is critical and it is commendable that the government has put it on priority with the Smart City Mission. However, citizens have to be better informed of the implications and consent has to be sought. Technology can be a great enabler with direct democracy and it’s our right and duty as citizens to demand participation in crafting our collective future.

(This story appears in the 14 April, 2017 issue of Forbes India. To visit our Archives, click here.)

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