From its turbulent past, the Indian economy seems to be on a recovery path. Like many other sectors, the Indian real estate and construction sectors are expecting some reforms from the new government. But what could become the precedence of all the change within the sector is the announcement by the new government to create 100 new smart cities and bring housing for all.
As per news reports, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the UPA government’s flagship urban modernisation programme will be discontinued by the newly formed government and relaunched in a new avatar with a focus on creating 100 smart cities across India. The new urban development minister M Venkaiah Naidu has said in one of his speeches that the government’s plan will be based on a scheme that will focus on modern concepts for cities on geographic information based planning and will have solid and liquid waste management to develop clean cities. These will offer a smart, safe and better environment, facilities, connectivity and living conditions. If implemented, there are some immediate advantages. First, the planning and creation of 100 smart cities will help reduce the housing shortage in the country, which is already grappling with shortage of around 18 million units. As most of the current housing shortage falls in the affordable range, a huge portion of this shortage will be addressed.
Second, with the creation of 100 smart cities, urban infrastructure in and around these cities will get a boost. It is often seen that some areas despite a healthy housing supply is unable to get uninhabited due to poor infrastructure. Third, it would help rationalise soaring property prices, as with increased supply of housing, the pressure on the supply chain will reduce. Fourth, the creation of smart cities would boost economic activity and create new business centres. This would generate employment for millions.
The implementation of this big dream itself will require collaborative efforts between the government and the development community. Inclusion of private players will bring healthy competition resulting in quality projects and smarter concepts. This would attract funding from private investors.
Of all the problems the country faces, delay in projects remains one of the biggest concerns. Considering that most projects are delayed because of a number of government approvals required before commencement, there is a need for a single window approval process. In this regard, the government needs to implement the recommendations of the Committee on Streamlining Approval Procedures for Real Estate Projects (SAPREP). The Committee appointed by the Ministry of Housing and Urban Poverty Alleviation worked extensively during the period from April 2012 to January 2013 to understand issues and recommend corrective actions.
While we need to act quickly and swiftly to implement the dream of 100 new cities, we also need to increase the housing supply within our mega cities. Our existing cities too need emphasis on the infrastructure and funding of new projects. Regions where infrastructure is already in place can be picked for the development of new housing schemes.
The huge task will require huge funding. A government which is tackling the issues of a high fiscal deficit will require more sources of funding. Therefore, the government should first look at generating more sources of funding before the actual commencement of the mega project. It is advisable to first assign the kind of funding these projects can actually attract. And should the funding first go into the development of infrastructure followed by housing or vice-versa can be discussed at a later stage.
It is likely that the new cities will act as catalyst for further development and growth. It is therefore imperative that these cities are developed in regions with lower productivity and lesser economic activity. Presence of a smart city will automatically boost the infrastructure and socio-economic status of the region requiring growth.
• The author is MD of RICS, South Asia. He can be contacted by email at email@example.com