Citizens' Issues
Smart-City Challenge: Building on pillars of good governance

Media reports reveal that a top government panel has approved an allocation of Rs.2.73 lakh crore over the next 10 years for 100 Smart Cities and 500 NURM habitations for modernisation of cities

 

The second budget of the Narendra Modi government has been presented. The Smart Cities programme and 500 habitations under the National Urban Rejuvenation Mission (NURM) together have been allocated Rs. 6,000 crore (approximately $1 billion). This is more than one third of the total allocation under the Ministry of Urban Development (MoUD).
 
At the same time, media reports reveal that a top government panel has approved an allocation of Rs.2.73 lakh crore over the next 10 years for 100 Smart Cities and 500 NURM habitations for modernisation of cities. It is a welcome move that Smart Cities and NURM are thought as complementary and not mutually exclusive programmes. Recently, Urban Development Minister M. Venkaiah Naidu spoke about a selection process for cities called the 'City Challenge'.
 
The months since the interim budget in 2014 had seen meetings, workshops and deliberations taking place in Delhi, in academic and expert circles, and in the social media on how to go about making cities smart. 
 
Meanwhile, some number crunching has revealed that about one-third of the budget on smart cities last year was not spent. The decision on pilot cities has been confusing, or apparently so, based on the news available in media. State-level departments and agencies are awaiting directions from the centre, while cities are awaiting a decision from the state governments. Speculation is running high and it's time that something decisive came out of the deliberations.
 
The idea of selecting pilot cities under the Smart Cities programme at the state level has been so far understood as a political decision. In this context, the 'City Challenge' is a positive approach towards bringing objectivity in selecting cities and thus increasing the chances of being successful in the pilot projects. The modalities of the 'City Challenge' are, however, not clear. There exists a good opportunity to build this process on the pillars of good governance, which was the driving message of the new government while coming to power.
 
The two primary objectives of a pilot project would be to enhance: 1)The probability of success - so as to enhance the buy-in of the concept from stakeholders, especially investors; and 2) The opportunity for replication in other cities and scalability - in this case to other cities of different characteristics spread across diverse geographic and socio-political jurisdictions.
 
The pilot cities can serve a larger development agenda by addressing: 1)Larger regional development goals; and 2) vulnerability concerns.
 
The process of selection requires a bottom-up as well as a top-down approach. While the bottom-up approach would give a platform for cities to show proactiveness, the top-down approach would ensure that the larger goals of urban development are not pushed out of focus. 
 
The next step is to operationalise this approach on the ground, for which the process would be as follows:
 
Step 1: Develop indices for cities
 
There is a plethora of indicators available from various sources which could be deliberated to select suitable indicators that address the four objectives, namely, probability of success, replicability and scalability, attaining larger development goals and reducing vulnerability. For example, the probability of success can be represented by broader themes such as economic growth potential, infrastructure preparedness, educated and aware citizenry, proactive city government and the like.
 
The indicators for infrastructure preparedness may include the status of physical infrastructure and facilities such as roads, water, sanitation, drainage, solid waste management and the like. Weightages for indicators can be decided based on a scientific method decided by consensus. Indices can be developed using nationally and internationally accepted methodologies.
 
Step 2: Call for proposals from cities
 
This step will entail a bottom-up approach. Proposals can contribute towards two major aspects of the city selection process: First, the city-level data required to measure the indicators, and second, the city's vision towards its future development which is necessary for any programme's success. The responsiveness of cities in participating in a competitive proposal bid can be indicative of the pro-activeness of a city's government.This is a critical factor for the success of the programme.
 
Step 3: Evaluation of proposals
 
This step would involve the evaluation of the proposals submitted based on the methodology decided during Step 1 and Step 2. An expert committee in each state, with representation from academia, research, think tanks and independent experts can be constituted. This committee can help state governments develop the framework for evaluation, be part of the evaluation process as well as support cities in preparing proposals.
 
The results may not be sacrosanct, and might require further deliberation in order to reach a consensus on the shortlisted cities for the first phase of the Smart Cities programme. The biggest outcome would be the practice of transparency, participation, consensus building, responsiveness, equity and inclusiveness - the critical spokes of good governance.
 

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Another Big Tobacco Bond Deal in the US, Cajun Style
Facing a giant budget deficit, Louisiana Gov. Bobby Jindal plans to borrow $750 million against future income from a landmark legal settlement with cigarette makers 
 
The allure of tobacco bonds appears to have won over another customer – cash-strapped Louisiana.
 
Gov. Bobby Jindal, a potential GOP presidential candidate, is scrambling to deal with a $1.6 billion hole in his next budget. Now, over the opposition of the state's treasurer, Jindal has lined up a $750 million deal to borrow against future income from the state's share of a 1998 legal settlement with cigarette makers.
 
We've covered tobacco bond deals in depth, most recently focusing on a handful of deals to bail out these costly debts held by many state and local governments.
 
New Jersey, Rhode Island and two New York counties have rescued failing bonds in the past year. In New Jersey's case, a tobacco bond bailout turned a profit of more than $100 million for a hedge fund in middle of the deal. Six more New York counties have OK'd similar transactions.
 
As we've reported, these bailouts are the legacy of a borrowing binge by politicians who wanted to turn annual payments from the landmark settlement into upfront cash. Many got just pennies for every dollar they promised to repay.
 
Louisiana's budget problems, brought on by spending down state savings accounts and a decline in revenues from falling oil and gas prices, quickly caught the attention of Wall Street firms. 
 
In February, Citigroup brought state officials a flashy 62-slide presentation titled "Financing Tools for Managing Budgetary Stress." It featured a list of 36 revenue sources that governments have borrowed against to tide over budgets – everything from taxi surcharges to income from the 1998 tobacco settlement.
 
Borrowing against future revenues could "buy more runway" for Louisiana, the presentation said, highlighting tobacco bonds as one major option.
 
Rival Goldman Sachs approached the state in March and also suggested borrowing against the tobacco settlement money or lottery revenues.
 
At 5 p.m. on Friday, March 13, Jindal's office announced the appointment of four members to a state-run corporation that oversees Louisiana's tobacco borrowing. Four days later, the corporation's 13-member board held a hastily called meeting to approve a $750 million deal with the help of Citigroup.
 
That didn't sit well with Treasurer John Neely Kennedy, also a Republican, who sits on the board along with Jindal's appointees and other statewide elected officials. "This is about the last savings account left that we haven't taken money from," Kennedy complained at the March session.
 
The deal would pledge 40 percent of Louisiana's annual tobacco settlement revenues in bond repayment that would stretch out nearly 30 years. In 2001 and 2013, the state borrowed against the other 60 percent of its tobacco settlement money, netting about $1.2 billion. Citigroup served as an underwriter in 2013.
 
Turning recurring revenues like the tobacco money into upfront payouts is widely considered poor fiscal management.
 
"You're borrowing money from the future to pay today's expenses. That's how we got into this problem, and this is only kicking the can down the road and paying interest on top of it," said Steven Procopio, Policy Director for Public Affairs Research Council of Louisiana, a Baton Rouge research group that has studied the state's financial woes.
 
Firms like Citigroup get paid based on the size of the bond issue, creating an incentive for big deals. A Citigroup spokesman declined to comment.
 
Given the size of the new Citigroup deal – it would be Louisiana's second-biggest bond issue after the original 2001 tobacco bond sale – Kennedy wanted to bid out the underwriting and related services contracts to ensure the best price. A spokeswoman for the Louisiana Treasury said it would have been “best practice” to do so.
 
Competitive bids aren't mandatory under Louisiana law, state budget officials said, but the deal requires approval by the legislature, which adjourns on June 11.
 
 
Courtesy: ProPublica.org

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Chinese fugitive arrested after posting holiday selfies

The 27-year-old man, surnamed Qin, went into hiding last year after reputedly being hired as a hitman and seriously injuring his target, a villager in central China's Henan province

 

Chinese police have captured a fugitive who revealed his whereabouts by posting holiday selfies on social media.
 
The 27-year-old man, surnamed Qin, went into hiding last year after reputedly being hired as a hitman and seriously injuring his target, a villager in central China's Henan province.
 
But on May 3, the last day of the May Day holiday, Qin emerged on the popular messaging and photo-sharing service WeChat with selfies taken on Wudang Mountain in Hubei province, which neighbours Henan to the south. The photos were forwarded by an unwitting friend of Qin and drew the attention of the police.
 
Wudang Mountain police said on Monday that they quickly located Qin by identifying the photos' backdrops and made the arrest on May 5, Xinhua news agency reported.
 
According to the police, Qin told them that he had joined a group of friends on the mountain tour and, believing that "the most dangerous place is the safest", even registered in a luxury hotel right beside the police station.
 
He posted the selfies as the relaxing trip made him complacent about his fugitive status, he said. 

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