Institutional, business and sectoral reforms needed to increase private sector collaboration in India’s smart city initiatives: PwC-World Economic Forum report

Apr 08, 2016

New Delhi, 8 April 2016 – India has seen improved business environment in the recent past, as reflected in India’s ranking in Global Competiveness Report released by the World Economic Forum. However, much more needs to be done across dimensions such as land acquisition, dispute resolution, permitting process, information availability and procurement process to propel India’s global standing.

This is according to a World Economic Forum-PwC report Reforms to Accelerate the Development of India’s Smart Cities:  Shaping the Future of Urban Development & Services that identifies the key challenges limiting private sector participation in urban development projects. The report presents a comprehensive set of institutional, business and sector specific reforms to enhance private sector participation for inclusive and holistic development of urban India.

With the inception of the ambitious smart city programme and the identification of the 20 cities to be developed, the action now moves towards implementation of initiatives envisaged in the proposals submitted by cities. The private sector will play a pivotal role in the execution of the urban development projects in India and the state governments and local governments can consider the reforms recommended by World Economic Forum to accelerate the development of smart cities and to rapidly move from the conceptualisation stage to the execution stage.

Alice Charles, Community Lead, Infrastructure and Urban Development Industry, World Economic Forum said, “While cities in India plan to embed technology in the delivery of urban infrastructure and services, they should also plan to bridge the demand-supply gap in the provision of core urban services such as water, waste management and sanitation. A holistic approach where equal importance is given to infrastructure, technology and governance is required to improve the quality of life in urban India.”

Neel Ratan, Leader, Government and Public Sector, PwC India added, “The Government of India has commenced the reforms process. Now state governments, local government and newly constituted special-purpose vehicles will need to drive the reforms agenda forward by ensuring the permitting process is simplified and risk-sharing in public-private partnership is optimal. Collaboration among multiple administrative entities will be of utmost importance if smart-city projects have to be completed within budget, and implementation timelines have to be met.”

The recently launched programs in India, including AMRUT, provides a perfect opportunity to blend in reforms with large- scale development initiatives. The selected cities will be equipped with basic infrastructure, efficient urban mobility and public transport, IT connectivity and e-governance mechanisms. An investment of Rs. 50,802 crore has been proposed in selected smart cities and towns during the five-year period.

The report includes best practices from India and rest of the world to help guide state and local governments in undertaking the reforms process:

  • Institutional reforms: The report recommends better collaboration and a unified command structure across multiple planning and administrative bodies within a city, and devolution of power to local government to determine and collect user charges and taxes in order to make local bodies financially independent.
  • Business-environment reforms: The report provides a methodology for formulating public-private partnerships in urban development projects and details how other cities have adopted measures that reduce risk in public-private partnerships. Practical suggestions for improving the permitting process, land acquisition, procurement process and dispute resolution mechanisms are recommended to attract the private sector’s help in implementing India’s urban-rejuvenation initiatives.
  • Sector-specific reforms: In relation to the physical infrastructure sector, reforms are recommended to establish independent regulators and empower them where they already exist, ensure metering and enforce collections (of user charges and taxes) from large defaulters.

Urbanisation in India will accelerate further as the population is set to reach 814 million by 2050, and India needs to develop world class cities to compete at a global scale. Urban rejuvenation programs coupled with fundamental reform will go a long way in helping India develop globally competitive cities and a congenial business environment will go a long way in ensuring adequate private sector participation for helping Indian cities become top-notch.

Notes to Editors:

Ends

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