Interview with Venkaiah Naidu

Biz@India

November 2015

Smart Transition of India

Venkaiah Naidu, Minister of Urban Development, India

Urban development faces numerous challenges with regard to power, water, transport, waste management and infrastructure. Keeping in view India’s commitment towards climate change, cities need to be innovative to finance their transitions. Developed countries can share their examples, says Venkaiah Naidu.

What were the main discussions during your visit to ITS World Congress in Bordeaux?

The World Transport Congress in Bordeaux focuses on intelligent transport systems. We discussed how to improve urban transportation and reduce emissions and make it more public oriented rather than individual transport. We shared ideas on new methods of commute such as cycling, pedestrian, inland waterways, trams and metros. Thirty ministers from across the globe came to approve a declaration over round table that calls all the countries to reduce emissions and increase public transport. Many French and other companies exhibited new technologies available for intelligent transport, tracking vehicles and geo tagging. Like, an intelligent mobility card that works in train, airplane, taxi or any other transport. Recently I have commissioned one in Cochin Metro. Some countries are at an advanced stage. It was a good learning experience.

You are in-charge of the ambitious 98 smart cities. Could you outline the progress until now?

It’s 100 smart cities, 98 has been finalised and two more will be added. Bloomberg recently hosted an Idea Camp in Delhi to support our initiative. Indian government will be investing an amount of INR 5 billion (EUR 70 million) in each city over five years. The remaining money has to come from state governments, urban local bodies and through public-private partnerships. First, the cities need to get ready and reform. Earlier mindset was that the government will do everything but today situations have changed. To become a smart cty, cities need to perform better, increase revenues and prove their creditworthiness. Indian government is having a sort of competition among the cities. First year, all these 100 cities were supposed to prepare themselves for the competition by December 15, 2015. Of this, 20 cities will be decided for this year, and forty each for two subsequent years. The response is enthusiastic. The project is difficult but doable.

What challenges do you see in the way?

Mindset is the main challenge. People have to follow civic rules. It can’t happen if you do not want to stop unauthorised construction and encroachments, to raise revenues or to pay extra. The mayors don’t want to impose taxes because there will be some public reaction. We are trying to show them how the world is moving and then see the benefits. A smart city is making urban life more comfortable, decent, with regular power and water, sanitation, solid waste management, good education, medical facilities and intelligent transport facilities like walk to work. The idea of smart cities is now catching up and Indian media is discussing a lot on this. Twentyfive countries have come forward to partner in the project. Also, thirty eight companies have been identified, who will be giving technical support.

Prime Minister Narendra Modi has a tremendous capacity to reach out to people. He has made an impact on their mind-set with regard to the changes that are needed. For instance, the planning commission has been replaced by Niti Ayog – the National Institute for Transformation of India. He wants to bring changes to every sector of public life, including sanitation, drinking water and Swachh Bharat (clean India). He has given a call for MISIDICI – MI means Make in India, SI- Skill India, DI- Digital India, CI- Clean India. This programme has caught up the imagination of people. If people see good examples and they are properly educated; they will join this campaign. However, India is a huge country with a huge population. Therefore, challenges too are numerous. But with initiatives such as these, we will be able to catch up with others.

How does the ministry address the day-to-day challenges such as clean drinking water, sewage management, solid waste management and power crisis?

Power in future is not going to be a problem as power generation is happening at a faster scale. The government is also betting on solar generation in a big way; we also had a discussion with renewable energy minister regarding this. Transmission within the country is being taken care of and states such as Gujarat, Madhya Pradesh, Chhattisgarh and Andhra Pradesh have 24/7 power supply while Telangana and other states are catching up. Earlier it was little populist, free power first means low power and then no power. Now Gujarat example shows that people want assured power rather than free power; they want quality power for which they are ready to pay. Water, however, will be a major challenge for most of the world in future, particularly India due to huge population and climatic changes. As rainfalls are reducing, we want to use rainwater harvesting. There are good examples in Tamilnadu where chief minister Jayalalitha is immensely promoting rainwater harvesting. Now we have made it mandatory for every building (small or big) to install rainwater-harvesting systems. Another technique is water recycling for which Singapore can be cited as a good example. It is now catching up for gardens and other facilities; although not yet for drinking water. Through this, we can save a lot of water. Most challenging is solid waste managementgarbage collection, segregation, transportation and then its conversion. Many companies have shown interest. We have few success stories in this segment but it is crucial to keep moving ahead.

And how do we control the volume of waste?

India generates a lot of waste unlike the western countries. Changing the lifestyle habits and converting this waste into energy and into compost is required. I had a meeting with the renewable energy minister; they are bringing a new system, where it will be mandatory for distribution companies to purchase every unit of power generated by ‘waste to energy’ technique. Additionally, now as people are over-using urea, the government embarks on making the use of compost mandatory. If you want subsidy for urea then you will have to use the compost. Such incentives, disincentives, persuasion and also education are the methods for bringing change.

With regard to sanitation – Prime Minister’s Swachh Bharat (Clean India) is gaining people’s interest. By 2019, we want to make India clean, like Mahatma Gandhi’s dream. Now even the school children talk about Swachh Bharat; if a girl eats a chocolate and throws the wrapper on the road then other girl stops her saying, “Hey! Swachh bharat”. This is what our PM wanted, to make it into a Jan Andolan – a people’s movement. Everybody from movie stars, icons in public life, cricketers, sports people, IT giants and business associates like CII (Confederation of Indian Industry), FICCI (Federation of Indian Chambers of Commerce & Industry), Assocham (Associated Chambers of Commerce of India) are getting involved. Religious and spiritual leaders like Sri Sri Ravi Shankar, Baba Ramdev ji, Gayatri Parivar, Shankaracharya, Sikh Gurudwara Management Committee, Jamate- Islamic are showing interest too. However, reduction of waste generation and landfill are a few of the key concerns and we have to adapt to the new methods. For instance, I was under the impression that burning means more pollution but Tokyo is doing it through capturing carbon.

How does the government propose on financing the smart cities?

Now we are going to bring Municipal Bonds. It all depends on the creditworthiness of the city. We are asking them for a periodical rise in their revenue. If you are transparent, accountable and do good work, people are willing to pay. Surat for example, with a simple ring road made INR 6 billion (EUR 83 million); in addition to Hyderabad ring road. We also want to convert metro station and bus stands for generating revenues. The centre is giving INR 1 billion (EUR 13 million) per year; we have permitted the states and urban local bodies to use this as seed money to get funding.

FDI (foreign direct investment) is now allowed in the real estate sector. I hope in the coming days this will catch up- as I told you many companies are interested. Some of the countries are also showing interest in smart cities. If they come forward to take part in the transfer and bidding system and if we can showcase some cities to the people, other cities will follow. For the socially and economically weaker sections, you have to give certain amount of subsidy. My housing ministry is giving 6.5 pc interest subsidy – that will take care of their EMI (equated monthly installment). Secondly, the government is going to pump in more money into infrastructure that already received INR 700 billion (EUR 9.8 billion) last year. In the coming days the funding will increase, once the economy improves. The IMF (International Monetary Fund) chief, Christine Lagarde, recently said that the world is still under recession. China is going negative. The only island of hope as of now is India. If we get our act together and introduce institutional reforms, definitely India will raise its GDP and spend more money on infrastructure and services.

It is important to spend on cities as 31 pc people live in urban areas and it may rise up to 40 pc by 2020. That means you have to focus on creating urban infrastructure and improve the living standards in urban areas wher people migrate for education, employment, entertainment, economic activities and advanced medical facilities. If you create all this, you will have an orderly city life. For smart cities, you need smart leaders; smart in their thought, vision, transformation and capable of taking tough decisions. There is a saying “People deserve the government they elect”. So the PM is stressing on larger public participation. It should not be just the government that creates some concrete infrastructure and then asking people to use it. At all stages, people have to be involved.