Background Note

Massive increases in financial investment in urban infrastructure development and increased migration of rural populations into urban areas due to increased rural distress, along with aggressive financialisation of urban land, has transformed the character of urbanisation in recent decades. Guaranteeing affordable housing, inclusive mobility, access to safe drinking water, securing public health and education, ensuring sufficient open and green spaces are available and accessible to all, are values that were core to urban planning and governance before. But they appear to be lost now as cities are envisaged increasingly as financial constructs.

This when critical challenges in waste management, holding on to green open spaces, tackling traffic congestion and addressing widespread pollution of air and water and other such challenges are perceived essentially from a question of affordability and not as an outcome of human rights.  The increasing emphasis on promoting ‘smart cities’ is skewing away attention from attending to core challenges of urbanisation.  In this workshop we focus on the governance and financial implications of this emphasis on ‘smart city’ development in India, in comparison with global experiences.

Governance Challenges

Ground up planning as envisaged in the Constitutional 74th Amendment (Nagarpalika) Act, 1992 has largely been relegated to the background in the Indian Government’s emphasis on ‘smart city’ development.  The effort has largely been on inviting and securing investments in large financial institutions from India and abroad in the creation of ‘smart cities’. Corporate leaders, politicians, bureaucrats and also science, social science, planning and tech communities are increasingly focused on developing ‘smart cities’ as the solution to challenges of rapid urbanisation. This when in the five years since the ‘smart city’ mission was pitched by the Central Government, it does not seem to have delivered on the promised results.

Indian Prime Minister Narendra Modi pitched the idea of creating 100 ‘smart cities’ as part of his vision of initiating an urban revolution. As he imagined, they would be satellites to existing cities and metropolitan areas replete with plush infrastructure and ‘smart solutions’, and needless to say – ‘smart people’. The terms ‘smart cities’ and ‘smart solutions’ have since been employed with little effort at rationalisation.  In all of this, elected urban local bodies and urban communities have not been consulted as is mandatory per the Nagarpalika Act. 

Several studies now indicate that the ‘smart city’ initiative is subsumed with controversies at its operational levels, and also about how projects under the scheme were conceptualised and promoted. A host of policies and programs of Local and State governments which had evolved over time with the intent of organising equitable urban development, have been sidestepped. As a result, a skewed emphasis in administrative and financial attention has resulted towards fundamentally favouring ‘smart cities’ with consequent neglect of historical urban challenges.

Moreover, focus on rehabilitating existing city infrastructure has shifted emphasis to retrofitting technocratic solutions often in variance to ‘master plans’ howsoever problematic they are. The political capital gained by promoting ‘smart cities’ has also resulted in the neglect in the lack of coordination among civic, planning and implementing agencies, and substantially contributed to the lack of democratic and financial accountability. 

The creation of special purpose vehicles (SPV) to implement the ‘smart city’ project and its financing via public-private partnerships (PPP)  has also pushed projects on the basis of financial viability, and not in responding to aspirations of the people, particularly those from vulnerable groups.  Besides, public projects and schemes that were normatively implemented by urban local bodies as an outcome of democratic decision making are now channelled through corporatized SPVs and guided by highly centralised decision making and also structural accountability to the Central Government. This is corrosively affecting the federal character of the Indian polity with States losing power to shape their regional visions of urbanisation and turning redundant the Constitutional mandate of a 3 tier governance structure.   It appears as though ‘smart city’ projects are designed to sidestep Constitutional mandates of federated democratic systems of decision making. 

Further, ‘smart cities’ are also promoting digitisation of data and surveillance systems under the problematic, and thus widely contested, notions of modernism.  Core values of inclusivity and attending to disparities in social and economic development are not integral to the mission’s focus. Enclave development is core to the form of ‘smart city’ missions and that without critical review of its implications to urban futures. The neglect of rights based urbanisms is strikingly apparent as is the emphasis of building infrastructure and provisioning of services which are designed to respond to demands of particular constituencies, particularly the middle classes and the rich.

Such lack of speaking to prevailing urban challenges is evident from a range of ‘smart city’ projects: that which promote biking lanes in gentrified neighbourhoods but do not focus on safe mobility of all; promotion of app based public transport systems which excludes almost all the poor from benefiting – as they can’t buy into such restrictively expensive technologies; privileging enclave development with a range of high end services supplied by labour  who do not have the right of residence within such enclaves; promotion of problematic technocratic fixes (waste to energy, for eg.) while neglecting the fundamental needs of sanitary workers. The majority of urban populations is thus left out of the benefits from ‘smart cities’. The mission appears rather disassociated from aspirations and imaginaries of urbanisms of the majority of the local citizenry.

Financial implications of ‘smart city’ project

While urban governance in the context of evolving ‘smart city’ projects has thrown up a variety of challenges and controversies, the financing of the projects resulting from the ‘smart city’ mission is controversially linked to extensive privatisation and corporatisation of urban infrastructure development, services and spaces. When the mission was launched in 2015, the guidelines promised Rs. 48,000 crore investment over five years with an overage Rs. 100 crore per city per year assistance directly from the Centre. However, until July 2019 about a third of the amount (Rs 17,114 crores) has been released by the Centre and only Rs. 6,160 crores utilised by the cities – a mere 3% utilisation of the total estimated costs of the projects as conceived in 2015.

The World Bank estimates infrastructure investment gap in urban areas of about $5.4 trillion every year. Asian Development Bank’s baseline estimates for India’s urban infrastructure deficit is $ 230 billion per year.  World Bank advocates closing such gaps by securing finance from multiple sources, particularly private and international finance, and by strengthening fiscal capabilities and systems of urban governance. But such transactions are largely located within the framework of supporting projects that guarantee viability to the financiers and do not necessarily speak to the needs of the multiple publics.

As Indian revenue streams are insufficient in closing these gaps, there is now a clear shift in the Prime Minister’s message that such gaps must be closed through market mechanisms. This would entail increased reliance on private sector investment, and increased borrowing from national and international financial institutions. In fact, this has been emphasised from the very commencement of the ‘smart city’ mission with the Indian Ministry of Housing and Urban Affairs (MoHUA) partnering with World Bank and Asian Development Bank in promoting the project. It is not surprising then that the World Bank’s private financing arm the International Finance Corporation and various bilateral agencies view the ‘smart city’ mission as a space for aggressive marketing of their loan and development aid packages.

The message has been and continues to be that resources needed to build ‘smart cities’ should come from private players and international finance, and projects are designed and developed on cost recovery mode. In fact the prevailing infrastructure deficit is looked upon as a huge investment opportunity by private investors and they take many forms: promotion of renewable energy, public transportation, ‘smart water and energy supply’ systems, solid waste management, promotion of green buildings, etc.  

The financing of ‘smart city’ projects is largely and inherently reliant on market based instruments. This involves raising funds through bonds, pooled finance mechanisms, loans, user charges, local taxes, etc. All of which is undertaken without due legislative review and public involvement in decisions, even as the financial burdens of these projects will be borne by municipal bodies and tax payers.

The heightened need for critical enquiries of ‘smart cities’:

The COVID pandemic has brought to attention the need for critical review of such aggressive promotion of ‘smart cities’ as a response to urban challenges in the age of urbanisation. This when normative urban governance guaranteed constitutionally as a ground up mechanism has suffered substantially due to weak or no implementation of Constitutionally guaranteed decentralised governance systems, and the unstable support to the financial and public administration needs of Local Governments. That the ‘smart city’ mission is not nested within urban local governance frameworks is resulting in the manifestation of structural and historical injustices.

The need for critical engagement with the ‘smart city’ notion of urban development is also heightened by the increasing emphasis on technocratic deliverance of urban services embedded as it is with various disparities. This privileges those with agency to further benefit from their easy access to technology, finance and power. That would mean those without privilege and agency would suffer, as they have historically and structurally been denied access to resources, to employment and to political power. The ‘smart city’ mission makes no effort to problematise such gaps.


Environment Support Group (ESG)[1] and Centre for Financial Accountability[2] (CFA) collaborate in organising this workshop to draw wide public attention to this problematique of ‘smart city’. ESG has over two decades experience in working with various urban planning and governance challenges, and CFA over the past five years has worked to enhance public interest in developmental finance, especially that relating to urban infrastructure and finance. The workshop is organised in collaboration with ESG’s partners Program on Science, Technology and Society, Harvard Kennedy School, USA[3] & Helmholtz Centre for Environmental Research-UFZ, Germany[4] in the project Governance of Socio-Technical Transformations (GoST)[5].

About GoST:

The GoST project focuses on transformations in three areas of crucial relevance to sustainable development, relating in particular to pressing imperatives in countries of the Global South: energy systems, agriculture, and urban digital infrastructures. Each involves intricate North-South linkages that must be better understood for global sustainability efforts. Adopting a systematic comparative approach, GoST uses the concept of sociotechnical imaginaries, or collectively held visions of technological futures, to make sense of how imaginations of transformation help shape societal choices. Many challenges in the three focal areas are related to the prevailing imaginary, and solutions may require imagining radically new alternatives.

Through analysis of two interlinked parameters of transformation (dimensions and timelines of imagined change) across five countries (Germany, India, Kenya, UK, US), leading research centers in each examine, in cooperation with key stakeholders, the frictions between imagined and experienced states in each focal area of transformation in each country. Through these analytic lenses, GoST aims for a methodologically innovative, integrative, empirically grounded approach that opens up new and nonlinear pathways of transformation.

Expected outcomes and impacts: GoST will demonstrate feasible choices among alternative pathways for enacting socially progressive transformations towards sustainability, producing insights of immediate practical importance for how such transformations can best be governed in each selected area: by whom, to what ends, by what means, and with what welfare consequences for affected groups.

Welcoming wide participation:

The organisers invite your participation in this workshop which will be held over two days  via Zoom on successive Thursdays, 12th and 19th of November 2020. The workshop will bring together a diverse set of people who have been engaging with the conceptualisation, financing and implementation of ‘smart city’ projects across India, in the wider context of the urbanisation experiences in India. The core idea is to develop a critical outlook to the ‘smart city’ mission in the overall landscape of governance and planning and to particularly aid researchers, activists, media persons, public administrators, corporate executives, planners, architects, students and academics to develop a critical understanding of the implications of the ‘smart city’ mission.

How to participate:

To participate in this workshop, email your Name, email ID and a two line description of yourself (and affiliation if any) to: 2 pm on Thursday, 12th November 2020.  The Zoom link will be sent two hours before the commencement of the workshop on the first Thursday and the same link will work on Day 2 of the workshop.  You, therefore, need to register only once.