In a determined bid to recast the urban landscape of the country to make urban areas more livable and inclusive besides driving the economic growth, the Union Cabinet chaired by Prime Minister Shri Narendra Modi  approved Central Government spending of about one lakh crore on urban development under two new urban missions over the next five years. The Cabinet has approved the Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation of 500 cities (AMRUT) with outlays of ₹ 48,000 crore and ₹ 50,000 crore respectively.

 Under the Smart Cities Mission, each selected city would get central assistance of ₹ 100 crore per year for five years. Smart City aspirants will be selected through a ‘City Challenge Competition’ intended to link financing with the ability of the cities to perform to achieve the mission objectives. Each state will shortlist a certain number of smart city aspirants as per the norms to be indicated and they will prepare smart city proposals for further evaluation for extending Central support.

 This Mission of building 100 smart cities intends to promote adoption of smart solutions for efficient use of available assets, resources and infrastructure with the objective of enhancing the quality of urban life and providing a clean and sustainable environment. Special emphasis will be given to participation of citizens in prioritizing and planning urban interventions. It will be implemented through ‘area based’ approach consisting of retrofitting, redevelopment, pan-city initiatives and development of new cities. Under retrofitting, deficiencies in an identified area will be addressed through necessary interventions as in the case of Local Area Plan for downtown Ahmedabad. Redevelopment enables reconstruction of already built-up area that is not amenable for any interventions, to make it smart, as in the case of Bhendi Bazar of Mumbai and West Kidwai Nagar in New Delhi. Pan-city components could be interventions like Intelligent Transport Solutions that benefits all residents by reducing commuting time.

 Under smart cities initiative, focus will be on core infrastructure services like: Adequate and clean Water supply, Sanitation and Solid Waste Management, Efficient Urban Mobility and Public Transportation, Affordable housing for the poor, power supply, robust IT connectivity, Governance, especially e-governance and citizen participation, safety and security of citizens, health and education and sustainable urban environment.

 Smart City Action Plans will be implemented by Special Purpose Vehicles(SPV) to be created for each city and state governments will ensure steady stream of resources for SPVs.

 The two missions are interlinked. AMRUT adopts a project approach to ensure basic infrastructure services relating to water supply, sewerage, septage management, storm water drains, transport and development of green spaces and parks with special provision for meeting the needs of children. Implementation of this Mission will be linked to promotion of urban reforms such as e-governance, constitution of professional municipal cadre, devolving funds and functions to urban local bodies, review of Building bye-laws, improvement in assessment and collection of municipal taxes, credit rating of urban local bodies, energy and water audit and citizen-centric urban planning.

 10 percent of budget allocation will be given to States/UTs as incentive based on achievement of reforms during the previous year. A reform matrix with timelines would be circulated to States in the Guidelines.

 This Mission will be implemented in 500 cities and towns each with a population of one lakh and above, some cities situated on stems of main rivers, a few capital cities and important cities located in hilly areas, islands and tourist areas.

 Under this Mission, States get the flexibility of designing schemes based on the needs of identified cities and in their execution and monitoring. States will only submit State Annual Action Plans to the Centre for broad concurrence based on which funds will be released. In a significant departure from JNNURM, Central Government will not appraise individual projects.

 Central assistance will be to the extent of 50 percent of project cost for cities and towns with a population of up to 10 lakh and one-third of the project cost for those with a population of above 10 lakh. Central assistance will be released in three instalments in the ratio of 20:40:40 based on achievement of milestones indicated in State Annual Action Plans. AMRUT seeks to lay a foundation to enable cities and towns to eventually grow into smart cities.

 The Cabinet also  approved Central funding under AMRUT to the projects sanctioned under JNNURM and not completed. JNNURM projects relating to urban development sanctioned during 2005 -2012 and achieved physical progress of 50 percent availing 50 percent of central assistance released and those sanctioned during 2012-2014 will be supported till March, 2017. Accordingly, 102 and 296 projects respectively will get Central support for balance funding to complete these projects.

 Central spending approved for the next five years under the two new Missions assumes significance in the backdrop of the approved Plan outlay of ₹ 42,900 crore for JNNURM that was implemented over nine years between 2005 and 2014. Out of this, actual Central assistance released was ₹ 36,398 crore.

 Further to  Cabinet approval, a minimum investment of over ₹ 2 lakh crore would flow into urban areas over the next five years (2015-16 - 2019-20) since States and urban local bodies would mobilise matching resources ranging from 50 percent to 66 percent. In addition, substantial private investments would be mobilized by states and urban local bodies through PPP model as required to meet project costs.

 The architecture of the Smart Cities Mission and AMRUT is guided by the twin objectives of meeting the challenges of growing urbanization in the country in a sustainable manner as well as ensuring the benefits of urban development to the poor through increased access to urban spaces and enhanced employment opportunities.

Smart Cities Mission selection and central funding to upgrade urban infrastructure, linked to performance-based competition and state reforms. Union Cabinet approved two interlinked urban programmes: the Smart Cities Mission, using a competition-based City Challenge and city-level SPVs to implement area-based smart solutions, and AMRUT, a project-oriented mission to secure basic infrastructure conditioned on specified urban reforms. States submit State Annual Action Plans for concurrence, receive milestone-linked central assistance differentiated by city size, and gain incentives for achieving reforms; unfinished projects from the predecessor programme are eligible for completion funding.