Smart cities aren't built overnight, particularly in India. Which is why Prime Minister Narendra Modi has turned his grand urban policy effort into a competition. The India Smart Cities Challenge, being run by the government in conjunction with the New York-based Bloomberg Philanthropies, involves 100 competing cities, a three-year competition cycle and up to Rs 48,000 crore in central funding.

On Thursday, the Ministry of Urban Development released the list of 98 nominated cities, with two names still to come. Over the next three years, these 100 cities will take part in a competition to receive funds from the Centre on the path to becoming "smart cities". The announcement of these 100 cities, covering 24 capitals, 64 small and medium category cities and at least one city in every state and union territory, is only the beginning of what will certainly be an interesting experiment in urban policy.

But first...

What is a Smart City?
There’s no simple definition for smart cities. The term encompasses a vision of an urban space that is ecologically friendly, technologically integrated and meticulously planned, with a particular reliance on the use of information technology to improve efficiency. In most parts of the world, the idea begins with using digital technology to make a city more efficient and to improve wellbeing.

The Modi government's idea is a little different. The government's reference note for Members of Parliament on the issue actually offers a fairly simple definition: "Smart Cities are those that are able to attract investments." Everything else, such as good infrastructure and simple processes that make it easy to start and run businesses, follows from this.

What makes it smart?
The Ministry of Urban Development's note on this includes 10 infrastructure elements that are preconditions for a city to become smart, including adequate water supply, electricity connections, affordable housing, robust IT connectivity and so on. It also includes an illustrative list of smart solutions that would help them earn the tag.


How were the 100 cities picked?
The Union government sent a letter to each of the states and union territories including within it Stage 1 criteria on the basis of which they had to then send the nominees to the Centre. This included a specific scoring formula based on which the cities had to be evaluated.


For example, cities could earn 10 points for each percentage increase in household sanitary latrines over the number recorded in the census in 2011, five points for making sure it penalised departments that were late in service delivery and 10 points for the percentage of reforms under previous urban policy schemes it had implemented. The formula was split into existing service levels, institutional systems, self-financing and past track record.

Once this had been calculated, states were supposed to forward the highest-scoring candidates, of the ones they chose to shortlist, to the Centre. The final list of 98 cities is here.

Why did some states get more cities than others? (Why does UP have 13 and Andhra Pradesh just 3?)
Even before informing states about the initial challenge, the Centre had already used a formula to determine how many potential smart cities could compete from each of the states. The formula gave equal weightage (50:50) to the urban population of the state as well as the number of statutory towns within to come up with a number of potential smart cities. Uttar Pradesh ended up with most, at 13, followed by Tamil Nadu's 12, while 23 states and UTs got just 1 each.

Why are there only 98 cities? (Weren't there supposed to be 100?)
Jammu and Kashmir has asked for more time in picking its one city, partly because of the difficulty in selecting just one city across the Jammu/Kashmir valley divide.

Uttar Pradesh ended up putting forward 14 names for its 13 slots, mostly as a way of avoiding politics over the final choice. Both Meerut and Rae Bareli have the same score based on the formula, and the UP government has not formally declared its preference between the two. According to the Times of India, the Samajwadi Party, which runs UP, doesn't want to tick off the Congress by not picking Rae Bareli, which is the constituency of Congress President Sonia Gandhi, while the Bharatiya Janata Party, which is in charge at the Centre, would prefer to reward its loyal constituents in Meerut.

What happens now?
Stage 2 of the challenge is an all-India competition, with those 100 cities working with a consultant and a hand-holding external agency to prepare a Smart City Proposal, "containing the vision, plan for mobilisation of resources and intended outcomes in terms of infrastructure upgradation and smart applications".

Although the government doesn't want to prescribe a specific model, it has laid out a series of elements that must form part of the proposals, such as 10% of the energy should be from renewable resources, 80% of buildings should be green, and of the total greenfield development, at least 15% should be in the affordable housing category.

The proposals are expected to be ready by October, and then submitted to the government for evaluation. The government is expected to select about 20 in the first round, although it has only committed to name a "small number; those with exceptional proposals" in the first round by December as "early winners," basically to be examples for the rest. The next 20 or so will continue in the competition before the final set of 20 cities from the first round are announced by March or April next year.


What happens to the losers?
Cities that don't make it to the first cut over the next eight months will be encouraged to work on their proposals and refine them for the second round of the competition cycle that will take place across 2016-17. A third round will also take place over 2017-18.


What happens to the winners?
The Centre and the state government will set up a Special Purpose Vehicle to finance the smart city redevelopment plan. In the first year the government will give up to Rs 200 crore, followed by Rs 100 crore every year for the next three years, based on certain conditions.

Here's a handy flow chart to see how this will work.