The three-pronged initiative of the NDA government through big ticket urban-focused investment schemes of Atal Mission for Rejuvenation & Urban Transformation (AMRUT), Smart Cities Mission & Housing for All with central funding of Rs.4 lakh crore ($63 billion), holds the promise of providing the much- needed fillip to real estate, housing and infrastructure and raise the living standard of people by creating world class cities and spaces.
But the government needs to surmount a number of tough challenges to successfully implement these schemes and realize their full potential.
As per the plan, under the Smart Cities Scheme, 100 cities will be developed, with each getting an annual central funding of Rs.100 crore each over the next five years. Under AMRUT, 500 cities and towns would be rejuvenated over next 10 years. And under Housing for All, two crore affordable houses will be built through slum rehabilitation with the help of private developers, housing for poor with credit- linked subsidy, housing projects with public and private sector and subsidy for individual house construction.
The enormity and challenge of urban revamp can be gauged from the urban population explosion. Every decade, we add one Brazil (181 million people). By 2020, about 123 million of additional urban population will be added. An estimated 600 million Indians will be living in cities by 2030, up from 290 million, as reported in the 2001 census. By 2025, 78 percent of India’s urban population will be concentrated in 69 metros, putting severe pressure on already crumbling physical and social infrastructure.
Inefficient and faulty urban planning is resulting in massive consumption and wastage of precious water and energy resources and causing major sanitation and health problems due to increasing slums and poor waste disposal.
In this backdrop, Prime Minister Narendra Modi’s initiatives assume significance, especially as the contribution of the built environment to the economy accounts for about 17.5 percent of GDP, as per 2010 statistics, and in view of industry and services growing faster than agriculture, people are moving from farms to urban areas.
That technology holds the key to government’s initiatives aimed at urban rejuvenation, is amply demonstrated by a recent survey of 2,000 buildings in India done by Honeywell that emphasize on the need to invest more in smart building technologies as such smart building solutions can make facilities more connected and adaptive, reduce energy and operating costs and improve the safety and quality of life for occupants and users.
Information & Communication Technologies (ICT) help make smart city’s critical infra, components and utilities interactive and efficient. Through Intelligent Building Management Solutions, energy saving and lower maintenance costs can be achieved, at the same time prolonging the life of assets and reducing the carbon footprint.
Last year, the government introduced draft Internet of Things(IOT) to create IOT- enabled smart cities eco system to ensure faster implementation to improve overall efficiency. CISCO has established IOT hub in Bangalore to help companies develop software application for deployment in upcoming 100 smart cities. IBM has prepared the Integrated Communication Technology (ICT) Master Plan for Dighi Port Industrial Area under DMIC.
Along with technology, crucial real estate reforms are necessary for the success of programmes aimed at urban revamp. Considering that in future, power will be increasingly generated from renewable resources, it is necessary that we move from a consumer- oriented generation model to one based on principles of smart power generation, smart power grids, smart storage and smart consumption. Keeping this in view, the government has converted the Solar Energy Corporation of India into a growth-oriented commercial company to generate and sell power and develop other sources of renewable energy. It has also revised the solar power generation target for 2022 from 20,000 mw to 100,000 ME.
In another progressive policy initiative, the government has approved 6.5 percent interest subsidy on housing loans with tenure up to 15 years for economically weaker sections and lower income groups. It is, however, questionable as to why real estate has been kept out of GST when fees and taxes account for as high as 35 percent of what the home buyer pays for a house.
Similarly, with direct institutional support to the real estate sector from banks, HFCs, private equity and the like accounting for only 22 percent of total investment flow in the sector, reforms to increase capital flows are required.
There are other key challenges which need to be met before government’s initiatives for urban revamp could be successfully implemented. There is funding challenge. Though the centre has earmarked liberal funding for the three initiatives , it will not be easy for the states and local urban bodies to arrange for additional large investment, considering their poor financial health.
It is also a big challenge to meet the huge gap in services under AMRUT scheme. Against the desired water supply of 135 litres per person per day, the urban population gets only about 69 litres. Besides, cities and towns are able to treat only five percent of total waste while sewerage treatment is merely threepercent.
The situation on the power front is equally bad. Also, considering the scope and scale of urban development initiatives, there is a severe shortage of skilled professionals, with a demand-supply gap of 82-86 percent in the core professional group of civil engineers, architects and planners, not to talk of skilled labourers.
There is a huge challenge to make land available for massive urbanisation programme. On the technological front, the challenge will be to achieve economy of scale and their viability on mass scale.
And last but not the least, there is a challenge of smart governance at the local urban bodies level as there is a tremendous shortage of professionals. The challenge is to provide transparent and efficient governance at the municipalities’ level.
(Vinod Behl is editor, Realty Plus, a leading real estate monthly. The views expressed are personal. He can be reached at vbehl2008@gmail.com)