In India, only 31% of 1.2billion population live in cities. However, the urban population accounts for 63% of the nation’s economic activity and urbanisation is now on the horizon as half of the population is projected to live in cities within 2030. The Prime Minister of India, Narendra Modi, has acted accordingly by initiating the Smart City Challenge.
What is the Smart City Challenge?
A smart city is a municipality that uses technology to become more cost-effective, save energy and improve infrastructure. The main aim of a smart city is to improve the quality of life and boost economic growth without wasting resources. There has been a global interest in smart cities and smart solutions. For instance, in 2003 Thailand’s poorest citizens were living in rundown slums and lacked basic necessities. The government consulted the poorest people affected and launched the Baan Mankong project which channelled government funds directly to the poor communities in the form of infrastructure subsidies, soft housing and land loans which allowed the communities to build collective housing. This resulted in an improvement of 54,000 households. Clearly, a smart solution like this would benefit India which has a high rate of poverty.
There is no doubt about it, making cities smarter will require large investment. Just recently Modi’s government has nominated 98 cities who will be beneficiaries of an annual federal grant of one billion rupees (£9.8 million). Nevertheless, Modi is not just rewarding the money to the cities. The municipals must propose plans for a smart city and their concepts should reflect the city’s local context, number of resources and priorities of citizens. This allows the people to be directly involved in shaping their community, which Modi advocates.
“Good governance is putting people at the centre of the development process.”
Implications for India’s Economy
Foreign direct investment (FDI) has been surging and the introduction of smart cities could continue this momentum. Siemens, the German electronics giant, has proposed integrated solutions to smart cities by offering to cover areas of infrastructure, energy, security and waste management. Already, the Smart City Challenge is attracting global attention.
One of the benefits of creating a smart city is infrastructure will be improved. This is vital for the Indian economy as an improvement in roads could have the potential to attract multinationals who will create job opportunities which will reduce unemployment and drive long-term growth. The improvement in infrastructure would also have an impact on the labour market as it would allow workers to be more geographically mobile, enabling them to take on jobs that are in other cities.
Smart cities may also be beneficial for the poor. Poverty is a big problem in India – 50% of Indians do not even have a nearby water source. However, with the introduction of smart cities there will be an improved water supply and clear system, allowing more people to access water. In fact, the UK wants to get involved in this by helping India build a water system. Recently, Lord Francis Maude of Horsham, minister of state for trade and investment, produced a report proposing physical, digital and commercial involvement in the building of smart cities.
“As India embarks on its ambition to build 100 smart cities, the UK hopes to be an invaluable partner. We look forward to sharing our expertise in building smart cities with India.”
Lord Francis Maude of Horsham
A Smart Idea for the Global Economy?
The creation of smart cities in India should spur on other countries to incorporate smart solutions and prepare for urban development. All countries need to act now. It is claimed that over 60% of the world’s population will live in urban areas by 2050 and therefore it is vital to prepare for urban development in order to improve quality of life and boost long-term economic growth.