The smart cities scheme of the government will require an investment of Rs 7 lakh crore over a period of 20 years. According to a draft concept note on the scheme released by the ministry of urban development (MoUD), a high power expert committee on investment estimates in urban infrastructure has estimated Rs 43,386 per capita investment cost over two decades.

The total estimate figure has been derived assuming each of these cities will have a population of 10 lakh.

The note, however, says that these estimates need to be analysed “for the purpose of funding by the central government”. The investment will be majorly on water supply, sewerage, sanitation and transportation related infrastructure, the note says. 

The MoUD is of the view that the infrastructure projects will be undertaken either through private investment or through public-private partnership. “A large part of the financing for smart cities will have to come from the private sector, with the state cities and central government only supplementing that effort,” the note says.

Government’s contribution – at central, state and urban local body levels – will be done in the form of viability gap funding.

The government will explore the possibility of setting up a fund which would blend grant funds from CSS, borrowings from multilateral and bilateral agencies and bonds subscribed by the national and state-level land development agencies.

The MoUD will largely focus on developing brownfield cities, though it will also develop “some new cities… in the hills and coastal areas”. For brownfield projects, the ministry plans to select nine cities which are satellite towns of cities over 40 lakh population. Forty-four cities with population ranging between 10 lakh and 40 lakh will be taken up for the flagship scheme.

The list will also include 17 urban habitats which are also capital cities. Besides, 10 cities having religious and tourist importance will be taken up. The list will also include cities in the 5 lakh to 10 lakh population range.

The government would also set up a project monitoring unit (PMU) at the central, state and ULB levels. “Proper planning and a holistic approach will be necessary,” the note says.

On Friday, the urban development ministry organised a conclave on smart cities attended by urban development ministers and secretaries from all states and UTs. The MoUD has sought feedback from states and UTs within a week. After incorporating the feedback, the draft paper will be revised and the final paper will be presented to the prime minister.