June marked the third anniversary of the Smart Cities Mission, a marquee project of the government, which had attracted international interest and appreciation. The involvement of international financial institutions and agencies had raised hopes for development of the 100 cities chosen through a competitive process. However, despite efforts of the Urban Development Ministry and the initial enthusiasm, the overall progress of projects in the selected cities has been disappointing.
Several cities are yet to incorporate the special purpose vehicles (SPVs) to undertake smart city projects, and many SPVs are yet to receive the grant funds. Although blueprints of area-based and pan-city elements of projects are in place, not much has happened on the ground in most of the cities. Key to success of the mission is to prioritize projects, identify and achieve development milestones within a specified timeframe, monitor the projects until completion, and operate and maintain the assets for public use during their lifetime. From a legal perspective, a comprehensive contractual arrangement and a dedicated institutional framework are crucial.
A master developer agreement between the SPV and its shareholders, i.e. the state government and the relevant municipal body, could provide the contractual framework required to segregate the scope of work, specify the role and responsibility of each party, ensure transparency and accountability, and set project milestones and timelines. Such a framework should ensure requisite support from the shareholders and adequate autonomy to the SPV to carry out the activities.
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Soumya De Mallik is a partner at HSA Advocates. HSA is a full-service ﬁrm with ofﬁces in New Delhi, Mumbai, Bengaluru and Kolkata.
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