Special purpose vehicles for smart cities: A question on governance

  • Blog Post Date 05 July, 2019
  • Notes from the Field
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Meenakshi Sinha

Indian School of Business


All 100 cities selected to become ‘smart cities’ under the Smart Cities Mission in India have Special Purpose Vehicles (SPVs) incorporated in them. In this note, Meenakshi Sinha posits that the SPV-driven mode of governance of cities is fraught with power asymmetries that are likely to bolster elite control over city’s resources and urban spaces of governance; thus, aggravating the class inequalities across cities.


The Smart Cities Mission (SCM) in India has raised some key issues of governance. All 100 cities selected to become ‘smart cities’ selected in four rounds of an all-India competition have Special Purpose Vehicles (SPVs) incorporated in them (Press Information Bureau, 2018). Unlike traditional forms of municipal government bodies that function as the third tier of local governance units, SPVs are envisaged to function as companies incorporated under the Indian Companies Act, 2013 at the city level. However, the envisaged corporate style of functioning of SPVs presents challenges of urban governance and raise questions of political participation in civic issues that have only been insufficiently construed hitherto. I posit that governance under the SPV mode of implementation of SCM represents a narrow vision of governance that primarily interprets governance in administrative and managerial terms, with rather a sceptical approach towards aspects of governance that concern competitive democratic politics (see, Leftwich 1993). Similarly, I further suggest that any participation engendered in building of smart cities through parallel governance institutions as SPVs will merely remain consultative or geared toward manufacturing consensus to pre-designed urban models rather than city spheres constructed and negotiated through democratic political processes. To substantiate my claims, I draw on both primary and secondary sources of data to understand the role of SPVs in facilitating urban development in India. These include official government documents, media reports, and interviews with key government officials, journalists, and citizen groups. A part of this data was collected during my fieldwork study, between 2014 and 2015, of two case studies of urban development projects in Bangalore and Kochi. The other set of documentary sources of data were available online. 

SPVs versus local municipal bodies

SPVs essentially represent a template of outsourced form of ‘urban governance in contemporary India’ (Kennedy and Sood 2019). As envisaged under the SCM these SPVs will be headed by a chief executive officer (CEO) – usually a senior bureaucrat who would be appointed by the state government for a fixed term of three years and can only be changed or removed with the authorisation of the Government of India (Sandhir 2019). It remains questionable as to what extent SPVs will have representation from any of the democratically elected local urban bodies, if at all. Rather, the fact that the power to appoint the CEO of SPVs lies with state governments and further that they can only be removed by the authorisation of the central government, places SPVs beyond the legal and administrative purview of the any of the electorally mandated local authorities. Thus, there is a clear tendency of centralisation, and a move towards top-down management of city planning process through the institutionalisation of SPVs.     

Nonetheless, despite the skewed political rationale that underlies the constitution of SPVs to steer governance in our cities, SPVs have been promoted in the name of efficiency; ability to raise funds for infrastructure projects; and capacity to better coordinate and effectively channelise efforts for speeding up the process of urban development. The municipalities are mostly viewed as lacking in any of the aforementioned attributes, and hence the need for new institutional configurations such as SPVs, has been articulated. The SPVs have built in models to raise finances; have the powers to enter into partnerships with private actors to build, lease or manage assets; and lastly, the lean structure of SPV administration with minimal staffing ensures expediting the decision-making process. However, SPVs are only a precarious solution to a partly diagnosed problem. The weak municipal structure of Indian cities is the result of half-heartedly pursued decentralisation measures that have not really empowered the municipalities either politically or financially. Similarly, the immense concentration of powers in the hands of parallel governance structures such as SPVs that bear little accountability to any of the elected local level bodies will have serious repercussions on how scarce resources within our cities will be allocated and also on how inclusive our city spaces will remain.

Participation minus politics

Local urban elected bodies are not only important for their elected representatives, but are also constitutive of political and democratic institutional spaces where the citizenry can, to an extent, effectively bargain with the State actors. Contrarily, SPVs that have been entrusted with the task of governing our cities are registered as companies under the Indian corporate law, and often function as corporate bodies that are not accessible to citizens in the same way as local municipal spaces may be. The processes of political deliberations and democratic practices of contestation, which are part of proceedings of urban local bodies such as municipal councils, are absent from managerial mode of governance practiced by organisations as SPVs. Moreover, whether a company should be allowed to supersede electorally mandated local bodies remains a politically irresolute issue. 

The participatory spheres or consultative spaces where citizen participation is sought by SPVs have asymmetric power hierarchies built in through them. Moreover, as citizen groups interviewed during my fieldwork in Bangalore and Kochi revealed, most of the public meetings held by SPVs are not legally binding on project implementing agencies (the SPVs). Hence, any demand put forward by the citizens merely amount as suggestions that can easily be ignored by the project implementing agencies. Also, a report by the Centre for Policy Research, documents that the processes of citizen engagement are not recorded precisely in the proposals for smart cities and indicate that despite the extensive rhetoric of public participation, most of the proposals do not provide a strong argument to justify the claims of citizen participation (Anand et al. 2018). Moreover, ideas of participation in smart cities have been floated around through the use of information and communications technology, especially mobile-based tools and even social media platforms (Sandhir 2016). Such propositions of citizen participation promoted using technological idioms assume a certain degree of value-neutral position with regard to how technology must mediate social relations. In other words, technology-driven changes in spheres of urban governance and planning come with their own challenges of how data generated and/or created in the process may be used by different actors – both State and non-State actors. In such a scenario, should we be complacent to let specific digital innovations arbitrate our relations as citizens with the State, even before we have debated the pros and cons of such a system. 


The SPV-driven mode of governance of our cities is fraught with power asymmetries that are likely to bolster elite control over both city’s resources and urban spaces of governance; thus, aggravating the class inequalities across our cities. In the absence of strong legal and administrative regulatory framework that govern relations between SPVs and urban local bodies, the concentration of power in the hands of SPVs will further debilitate the already weak municipal structures and strengthen state and central governments’ control in urban development. In sum, visions of urban development such as smart cities promoted through the mode of purpose-specific special authorities such as SPVs indicate a “centralised and technocratic approach [to governance] in order to expedite political decision-making by the executive, limiting the transparency of its actions” (Ruparelia 2015). 

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