Company Raj Is Coming

The Meaning of ‘Smart City’

Dipankar Dey

[Within four months of the announcement of the 'Smart Cities Mission' in June 2015, the government of India, on 10th November 2015, has announced a bundle of changes in the foreign direct investment (FDI) rules for 15 sectors -including retail, defense, construction, banking and electronic media. And 100% FDI has been allowed in the 'management of townships and malls'. This piece tries to narrate, in brief, how, during the last one and a half decades, successive governments have created a conducive atmosphere, by amending and enacting existing and new municipal acts, for direct foreign interventions in Indian cities, the ‘engines of growth', of the nation. During 17th century the East India Company (EIC) came to do business in India. Eventually they became the ruler of the land. The piece ends with an apprehension of repetition of the same history of corporate takeover of the state power in 21st century.]

On June 15, 2015, the government of India has released the 'Smart Cities : Mission Statements and Guidelines'. In the opening statement, it states, 'Cities are engines of growth for the economy of every nation, including India. Nearly 31% of India's current population lives in urban areas and contributes 63% of India's GDP (Census 2011). With increasing urbanization, urban areas are expected to house 40% of India's population and contribute 75% of India's GDP by 2030'.

The government has identified 100 cities across the country (4 in West Bengal) to be developed as 'Smart Cities'. The guideline states that the 'Mission will be operated as a Centrally Sponsored Scheme (CSS) and the Central Government proposes to give financial support to the Mission to the extent of Rs 48,000 crore over five years i.e. on an average Rs 100 crore per city per year. An equal amount, on a matching basis, will have to be contributed by the State Urban Local Body (ULB); therefore, nearly Rupees one lakh crore of Government ULB funds will be available for 'Smart Cities' development'.

It is clear from the above statement that India's urban centers already contribute over 63% of the nation's GDP and is expected to house 40% of lndia's population and contribute 75% of India's GDP by 2030. It is obvious that anyone who controls these urban centers, by default, controls the economy of the nation.

Within four months of the announcement of the 'Smart City Mission', the government of India, on 10th November 2015, has announced a bundle of changes in the foreign direct investment (FDI) rules for 15 sectors -including retail, defense, construction, banking and electronic media. And 100% FDI has been allowed in the 'management of townships and mails'.

Independent India followed the western model of development. Large scale rural urban migration was a natural consequence of this economic growth model. Overcrowded urban space became a common feature of all major cities. Anticipating steep rise in the demand for urban space in future, land sharks started grabbing valuable city lands. This prompted the government to intervene, in 1976, by enacting the Urban Land (Ceiling & Regulation Act), to protect the interest of the urban poor.

The objective of the Urban Land (Ceiling & Regulation Act), 1976, (hereafter ULCRA) was to facilitate the availability and affordability of urban land by increasing its supply and by establishing an efficient land market. The ULCRA came into force in 1976, it covered 64 urban agglomerations spread over 17 states and three union territories (UTs) and towns with a population of more than two lakh as per the 1971 Census.

Then in the late 1990s, the Government of India decided to repeal the act with the passing of the Urban Land (Ceiling and Regulation) Repeal Act, 1999 and advised states to repeal ULCRA. By 2008, all the states, except Assam, Bihar and West Bengal, repealed ULCRA. Though draft for repealing ULCRA in West Bengal was made ready in 2008, till date ULCRA is in force in the state of West Bengal.

Question may be asked why, by 2008, most of the states had repealed ULCRA and enacted the Urban Land (Ceiling and Regulation) Repeal Act, 1999? Because, in 2005 the government of India launched a massive Urban Renewal Mission in the name of first Prime Minister, Jawaharlal Nehru (JNNURM) and 'repeal of the ULCRA' had been included as one of the mandatory reforms suggested by JNNURM. States had to 'commit to repealing it within a committed time frame'.

The Urban Renewal Mission, announced in 2005, had for the first time, categorically mentioned that 'the cities and towns of India are central to economic growth. For these cities to realize their lull potential and become true engines of growth, it is necessary that focused attention be given to the improvement of infrastructure therein'. And for achieving this objective, a Mission mode approach was felt essential and the following objectives were laid down:
l    Focused attention to integrated development of basic services to the urban poor.
l    Security of tenure at affordable price, improved housing, water supply, sanitation.
l    Convergence of services in fields of education, health and social security.
l    As far as possible providing housing near the place of occupation of the urban poor.
l    Effective linkage between asset creation and asset management to ensure efficiency.
l    Scaling up delivery of civic amenities and provision of utilities with emphasis on universal access to urban poor.
l    Ensuring adequate investment of funds to fulfil deficiencies in the basic services to the urban poor.
JNNURM had two Sub-missions :
l    Sub-mission I: Urban Infrastructure and Governance (UIG)
l    Sub-mission II: Basic Services to the Urban Poor (BSUP)
In addition to these JNNURM had two other components:
l    Urban Infrastructure Development of Small & Medium Towns (UIDSMT).
l    Integrated Housing and Slum Development Programme.

Though the objectives of the urban 'renewal mission' apparently looks heavily 'poor centric', it has actually done the opposite and grown into a 'removal mission' instead. In the name of 'slum development', poor slum dwellers have been evicted and pushed to the urban fringes. In addition to this, a variety of other programmes, like introduction of Street Vendors Protection and Regulation Bill, were also taken up by the government, almost simultaneously, to accelerate the integration of the local informal economy with the globalized economy.

Just few days before the JNNURM Mission came to an end in March 2014, the government of India enacted and notified the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act to formalize and regulate this vast informal sector. This has been done with the sole aim of integrating this huge informal retail chain with the global supply chain of the organized retailers.

Smart Cities Mission
In June 2015, the government of India announced the Smart Cities Mission, with the objective to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of 'Smart Solutions'.

As per the document the focus was 'on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will act like a light house to other aspiring cities.' (Emphasis as per the government document)

It is also mentioned in the document that 'during the preparation of the Smart Cities Mission, a number of foreign Governments have offered to provide Technical Assistance (TA) support. Additionally, other external organizations, including bilateral and multilateral institutions, as well as domestic organizations have suggested to the Ministry of Urban Development that they can give technical assistance support. These include World Bank, ADB, JICA, USTDA, AFD, KFW, DFID, UN Habitat, UNIDO, etc.'

The most important and frightening feature of the Mission is the implementation plan. It clearly states that the 'Implementation of the Mission at the City level will be done by a Special Purpose. Vehicle (SPV) created for the purpose The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. Each Smart City will have a SPV which will be headed by a full time CEO and have nominees of Central Government, State Government and ULB on its Board'.

It is also mentioned that—
l    'SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level, in which the State/UT and the ULB will be the promoters having 50:50 equity shareholdings. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the shareholding pattern of 50:50 of the State/UT and the ULB is maintained and the State/UT and the ULB together have majority shareholding and control of the SPV'.
l    'The SPV may appoint Project Management Consultants (PMC) for designing, developing, managing and implementing area-based projects. SPVs may take assistance from any of the empanelled consulting firms in the list prepared by the Ministry of Urban Development (MoUD) and the handholding agencies'.

Delegation of powers to the SPV—the most objectionable issues:
The Mission document states that 'One of the primary reasons for the creation of an SPV for the Smart City Mission is to ensure operational independence and autonomy in decision making and mission implementation. The Smart City Mission encourages the State Government and the ULB to adopt the following best practices to create empowered SPVs to the extent and as provided under the municipal act.

l    Delegating the rights and obligations of the municipal council with respect to the Smart City project to the SPV.
l    Delegating the decision making powers available to the ULB under the municipal act/ Government rules to the Chief Executive Officer of the SPV.
l    Delegating the approval or decision making powers available to the Urban Development Department / Local Self Government Department/ Municipal Administration department to the Board of Directors of the SPV in which the State and ULB are represented.
l    Delegating the matters that require the approval of the State Government to the State Level High Powered Steering Committee (HPSC) for Smart Cities.
As mentioned earlier, within four months of the release of the above document, the government, on November 10, 2015, has allowed 100% foreign direct investment (FDI) in the 'management of townships and malls'.

Few essential questions:
l    Does it mean that the proposed SPVs will be allowed to be managed fully by foreign firms?
l    What happens to the citizens' rights to elect their Councillors/Mayors once the 'rights and obligations of the municipal council' and 'the decision making powers available to the ULB under the municipal act/ Government rules' are 'delegated to the Chief Executive Officer' of the SPV Company?
l    Will the residents of the Smart Cities be treated only as 'consumers' of a company and not as 'citizens' of a democratic country?
l    What would be status of street vendors in these new Smart Cities?
l    Will the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act 2014, which ensures accommodation in the city to 'two and half per cent of the population of the ward, zone, town or city, as the case may be, be in the plan for street vending'?

East India Company (EIC) to Smart City Company
After the Battle of Plessey (1757), the British East India Company (EIC) won another decisive war, the Battle of Buxar (1764), fought between the forces of the British East India Company led by Hector Munro and the combined army of three local princely states.

As a reward for winning the Buxar war, the EIC got revenue authority (Diwani rights) for almost 100,000 acres of land in the modern states of West Bengal, Odisha, Bihar, Jharkhand, and Uttar Pradesh, as well as in the neighboring areas of Bengal. In return Mughal emperor was given 26 lakh rupees. This arrangement made the British East India Company the virtual ruler of Bengal, since it already possessed decisive military power. All that was left to the Nawab was the control of the judicial administration. Warren Hastings was appointed Governor-General of Bengal from 1772 to 1785. And the Nawab was forced to hand over the judicial power to the Company in 1793. Thus the company's control on this land was virtually complete.

Is history being repeated again?
These initiatives like JNNURM and Smart Cities Mission have exposed the hollowness of urban centric growth policy of Independent India which has actually turned the rural Bharat into its colony. The British GNP increased due to transfer of looted wealth from their Indian colony. Bank of England was established out of the looted wealth of Bengal. The British legacy continued even after their formal departure. The clientele group, they had created comprising of comprador business class and western educated elites, now look after the interest of the global capital by turning the rural India (Bharat) into an internal colony of modern India . This clientele class now lives and dies for FDI and foreign technology as they have totally lost their traditional knowledge. Smart Cities Mission is just an arrogant statement of these colonial forces and their office bearers.

Vol. 48, No. 25, Dec 27, 2015 - Jan 2, 2016