WHY CRUMBLING SMART CITY MISSION NEEDS URGENT INTERVENTION FROM PM MODI ?
The ambitious
Smart City Mission was one of Prime Minister Narendra Modi's key electoral
promises in 2014. The scheme, launched on June 25, 2015, aimed to develop 100
cities across the country, making them citizen-friendly and sustainable. The
total proposed investment in the selected cities under the scheme is over Rs
2.05 lakh crore. But according to government data, a mere 33% of the total
5,151 Smart City Mission projects have been completed or are under
implementation, utilising 25% of the envisaged investment.
Under the Smart
City Mission,it was decided to form a Company for each smart city,in
which the State/UT and the Urban Local Bodies,will be the promoters having
50:50 equity shareholding. With so much Government money involved in these
projects, it was expected from the Ministry of Housing & Urban Affairs that
it will keep a close watch on the implementation of the Smart City projects,
but unfortunately ministry has miserably failed in monitoring the smart city
projects. It seems that Ministry of Housing & Urban Affairs is under the
wrong impression that once the Company for implementation of the Smart City
Project is formed, its responsibility for monitoring the operations of that
company is over. The question is who will be responsible if the company formed
for the implementation of smart city project is not working as per the
guidelines, advisories and instructions issued by the Ministry ?
Since
all the smart city projects are Government funded and a huge amount of more
than Rs.2 lakh crore is involved in its implementation, the Ministry rightly
issued an advisory on 9/3/2016 for appointment of Independent Directors on the
Boards of these Smart City Companies from the panel of independent directors maintained under
section 150 of the Companies Act,2013. The purpose of this instruction from the
ministry was to ensure better corporate governance and transparency in the
operations of the smart city projects. However, most of the smart city
companies have not appointed Independent Directors defying the instructions
from the Ministry and are using all the Government money in the arbitrary
manner as the transparency measure and corporate governance missing altogether
from the system.
The most shocking and surprising fact
is that the Ministry of Housing & Urban Affairs is indifferent and at all
not concerned whether any smart city project is following their advisory for
the appointment of Independent Directors. In an RTI Application, information
was asked from the ministry as to the number of smart city companies, who have
appointed Independent Directors on their Boards as per the Advisory
Instructions issued by the Ministry. In response to a RTI Application, the
Ministry of Housing has given the following reply : “The implementation of the
Smart Cities Mission is to done by a city level Special Purpose Vehicle (SPV)
incorporated under the Companies Act,2013 in which the State/UT and ULB are
promoters having 50:50 equity shareholding. The SPV will plan, appraise,
approve, release funds, implement, manage, operate and monitor the smart city
development project. As such the information regarding the appointment of
Independent Directors may be had from the concerned city/SPV.” This reply
clearly indicates that Ministry of Housing neither has the information about
the appointment of independent directors by smart city companies, nor
they are willing to know this crucial detail, which is the only mechanism
available with the ministry to ensure the better corporate governance and
transparency in the operations of the Smart City Projects. Since the ministry
does not have these details, it means, the smart city projects are not being
monitored by the Ministry and it has been left open to smart city management to
utilize the huge fund of more than Rs.2 Lakh crores in the arbitrary manner,
without following the prescribed procedure, guidelines, advisory and
instructions.
The Ministry has issued an advisory
instruction that each and every smart city company must appoint Independent
Directors from the prescribed Panel of Independent Directors as per section 150
of the Companies Act,2013. After issuing this advisory instruction, the
ministry thinks that its responsibility is over and the smart cities themselves
will do the monitoring work which the ministry is supposed to do. When the
ministry has given certain instruction to the smart city company, then Ministry
is duty bound to ensure whether the instruction given by it, is being strictly
followed or not. But that is not happening and the huge amount of Government
money is being spent by the smart city companies without any transparency or
corporate governance mechanism in place.
For the reasons explained above, this
ambitious project of PM Modi needs urgent intervention from PM himself, before
this results in some scam after few years. If funds are left at the disposal of
the local Government, without ensuring the transparency and corporate
governance measures, scams are bound to happen.
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