Finance, Urban Development ministries at loggerheads over ‘Smart Cities’

Navadha Pandey New Delhi | Updated on January 23, 2018 Published on April 27, 2015

Lack of consensus over scale of project funding delays clearance

Prime Minister Narendra Modi’s ‘100 smart cities’ pet project has been caught in a tussle between the Urban Development and Finance ministries over the scale of funding. This has led to a delay in the project getting mandatory approvals.

“There is a difference in perception between the two ministries regarding the scale of funding. When we sent the file to the Finance Ministry, the Expenditure Department suggested some scaling down in financing,” a senior official in the Ministry of Urban Development told BusinessLine.

The source added that Urban Development Minister M Venkaiah Naidu was unhappy with the suggestion as this is a signature project of the Modi government. It is understood that Naidu feels that if funding is scaled down, the scheme would lose its appeal.

First phase: 20 cities

The Central government plans to select around 20 cities in the first phase for which the Ministry of Urban Development wants at least ₹20,000 crore over ten years (₹100 crore per city, per year).

State governments and urban local bodies will be given the flexibility to use the money.

The Union Cabinet was expected to consider the proposal last week but due to a lack of consensus between the two ministries it could not be sent to the Cabinet.

The Finance Ministry wants funding scaled down because the Centre’s revenue pool has come down due to implementation of the 14th Finance Commission’s recommendations giving States more funds, another official said.

Two schemes of the Ministry of Urban Development — 100 smart cities and urban renewal of 500 towns — are awaiting clearance by the Union Cabinet.

Last year, Finance Minister Arun Jaitley had earmarked ₹7,060 crore for smart cities and other urban development projects, but the ‘100 smart cities’ scheme could not utilise the funds, as plans hadn’t been finalised — the cities had not even been selected.

Foreign assistance

Many countries such as Singapore, Japan, France and the US have shown keen interest in partnering with India for this project.

On Monday, Spain presented a draft memorandum of understanding to the Ministry of Urban Development for cooperation in developing smart and sustainable cities. In the draft, it has proposed to assist in developing Delhi as the first global and smart city in India.

Published on April 27, 2015
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