India: Smart Partnerships Making Kolkata a Smart City
Thanks to innovative taxation and urban services reforms, the city is on its way to becoming smart.
Kolkata, the seventh largest city in India, is one of the country’s cultural wonders. Now, thanks to innovative taxation and urban services reforms, it is on its way to becoming a smart city.
Kolkata officially shifted to an online unit-area based property tax system on 1 April 2017. The introduction of this state-of-the-art system is a milestone moment for the city, which for the past two decades has partnered with ADB on urban reforms and infrastructure development.
When we recently listened to Mayor Sovan Chatterjee, head of the Kolkata Municipal Commission (KMC), explain the city’s plans to become “smart” this year, we couldn’t help but recall how 17 years ago our colleagues had sat in the same office discussing the financial and urban services reform conditions for our first urban project loan for KMC.
Back then, KMC was still using accrual-based manual accounting and had never had its books audited. Since then the transformation has been enormous. The city has come a long way.
We are now on our fourth loan to KMC under the Kolkata Environmental Improvement Investment Program (KEIIP). The program supports the KMC’s efforts to spearhead urban and financial reforms.
Gradually, Kolkata is turning into a city with smart urban solutions thanks to a number of innovative advances.
For instance, as a base platform to enable tax and urban reforms, KMC has deployed Geographic Information System (GIS) technology to digitally map properties and utilities. An interactive web-based platform for city officials and citizens allows Kolkata to drastically improve e-governance and public service delivery.
Citizens can now self-assess their property taxes and pay them online or at deposit counters throughout the city.
Robust, market-oriented property tax collection
Property tax is one of the main sources of revenue for KMC, accounting for over half of Kolkata’s total revenue in the last fiscal year.
The new system, based on the unit-area based method, is accepted widely in India and internationally as a more scientific method of tax assessment. It is fair, transparent—based on robust parameters such as land value, infrastructure availability, location, structure of the building, occupancy, usage of the building and its age—and empowers citizens.
The shift is expected to provide more accurate estimates for KMC’s revenue, improve its collection efficiency and overall financial management. By capping of the increase or decrease to 20% of the property taxes paid under the old system, KMC has tried to mitigate the risks of sudden shock to the system, public outcry and reduced revenue. It also provides exemptions for the poor, and rewards property owners for timely tax payments.
The annual property value calculated through the new system is more robust, and market-oriented.
Once the system is fully implemented, Kolkata will join six other large Indian cities that already offer unit-area-based property taxes: Bengaluru, Ahmedabad, Delhi, Chandigarh, Patna, and Indore. Kolkata has taken note of the experience in Bengaluru and Delhi.
The model followed by Bengaluru was a success because the city’s comprehensive inventory of properties and extensive outreach program for citizens helped increase property tax collection by providing visible incentives for compliance. In Delhi, on the other hand, a proper inventory was not set up prior to the rollout of the new system, so property tax revenues initially decreased.
Kolkata has followed in the footsteps of Bengaluru by rolling out the reforms along with a structured education program, allocating enough time to inform citizens, and adopting a phased approach that allows paying through the old system for the first two months.
More progress soon on smart water, flood management
Other service departments of KMC can now use the GIS platform to serve their customers better. All property owners will have digital IDs, and can access—and in future pay for—many other public services.
Soon, also, we will see remarkable progress on the smart management of water supply and urban flood management. KMC has partnered with the private sector to design and implement an early warning system for flood control, so citizens can receive warnings by SMS or other means.
New meters to calculate exactly how much water is wasted per user are a potential game-changer in ongoing efforts to reduce water loss. The city’s maintenance depots and customer service centers are being upgraded and connected to a computer system that gathers and analyzes real-time data. This will be linked to the GIS system so that the water supply department can address customer complaints, and act on them immediately.
With KEIIP’s support, KMC citizens in three service areas will soon enjoy a 24/7 water supply. Wherever uninterrupted water supply is not yet possible, KMC is working to supply at least 12 hours per day.
While Kolkata has made significant headway and shows good momentum on improved and smart urban services, a lot more needs to be done.
The city is on its way to fully cover sewerage drainage services and improve water supply. Through KEIIP, the city is also devising a strategy to improve its solid waste management by focusing on waste minimization, source segregation, efficient collection and adoption of appropriate treatment technologies for disposal.
Judging from the recent rapid progress, though, it will hopefully only be a matter of time before smart solutions are found to these challenges.