Digital Mission (NUDM), with an aim to create a digital infrastructure for the Indian cities. The mission aims to compliment Government of India’s flagship programs and is a step forward to institutionalize a citizen-centric approach to urban governance and service delivery in cities by the year 2022, and across all the towns and cities of the country by 2024. Also, to better connect with people on the Smart Cities Mission and to make it easier for Urban Local Bodies (ULBs) and citizens to access resources related to their work, the Smart Cities Mission website 2.0 was launched to serve as a single stop for all initiatives. b. Model to implement various projects in SMART Cities To meet the objectives of the smart cities, it is imperative for the Smart City Corporations to undertake developmental projects and services in accordance with the objectives. These developmental projects can be implemented through various models from fully funded projects by smart city corporation to Public-Private
Partnership (PPP) projects. As these projects are capital intensive and time consuming, the risk of execution of these projects is significant. Some of popular implementation models in PPP12 are Management contract (private partner shares minimal risks with public sector), lease contract (private partner take operating and collection risks) and BoT contracts (private partners take investment and financing risks), among other. While PPP projects in India have seen less success, these projects run by private partners will give an opportunity for private sector to innovate in type of financing such as Hybrid Annuity Models (HAM) and Viability Gap Funding (VGF) where execution risk and time to implement the project are dealt separately to add viability to the project depending on project size and scale. An important step after procurement is arranging finances for the project. The type of financing activities also depends on the type of procurement process employed by the smart city. The following figure illustrates, key financing options available for smart cities.
Types of financing models Smart Cities employ
Self Funding
Financing of Smart City Projects
Debt
Smart cities can raise capital through debt to fund smart city projects. Debt can be raised either specifically for an asset (to be created) or by the institution. Financial viability of a project and financial health of a smart city is taken into consideration for raising debt for an asset and an institution respectively. Examples: Bonds and Export Credit
Equity
Equity for projects can be raised from Parent organization, Multilateral agencies, Impact funds, Infrastructure funds, and other institutions. Quantum of equity can be either partial or complete requirement of the project. Examples: Sponsor / Multinational Financing and Infrastructure funds
Hybrid
Source: Deloitte
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URBAN REJUVENATION Transition to a Smart & Sustainable Future
Based on the environmental, social, economic and other associated benefits of a project, National Governments, Multilateral Agencies and other institutions provide grants/funds for implementation of projects. Quantum of funds can be as per viability gap, partial or complete funding or as per prior agreements. Examples: Grant Funding and Government funding
Hybrid finance is where various stakeholders (vendors) in the project (technical, infrastructure, etc.) invest in the project (infrastructure/products/services) initially and recover their expenses as per predetermined model. Examples include DBOOT, BOOT, etc. PPPs are also part of this model. Examples: Vendor Financing and Mezzanine Financing
