Over 70 per cent of executives from the accounts and finance departments at various municipal corporations across the country are cautiously optimistic about the government’s ambitious plan to build 100 smart cities, says a 40-city survey conducted by UK-headquartered ACCA (Association of Chartered Certified Accountants), the global body for professional accountants.
Accounting and finance professionals constitute an important component in the roll-out of smart cities as municipal corporations and urban local bodies across India are expected to raise Rs 48,000 crore over the next few years to match the central government’s allocation towards developing such cities.
The survey was conducted with 40 respondents from accounts/finance and another 40 from general operations relevant to that city’s smart city plan during June-July 2016.
Significantly, 73 per cent of the finance executives were cautiously optimistic, while 27 per cent were pessimistic. However, even those with a pessimistic view described the concept of smart cities as good; their pessimistic view was largely linked to doubts about the realisation of the concept rather than the idea itself.
Respondents also listed the main issues that would critically influence the development of smart cities over the next three years. Fund raising and availability of talent was the top challenge, followed by legal framework (the large number of clearances, documentation for public private partnership (PPP) contracts, etc.), and project management issues linked to tight deadlines set by the Smart Cities Mission. Other concerns included political intervention and coordination – across the centre, state and municipal government, and between departments within a municipality.
Other key findings of the survey indicated that there is an overall shortage of staff within accounting teams. In half the cities surveyed, between 61 per cent and 70 per cent of permanent posts within accounts and finance lie vacant. In terms of need for skills enhancement and training for accounting staff ‘budgeting, planning and forecasting’ emerged as a key area requiring attention, followed by ‘cost and expenditure management’ as the second most commonly cited area.
ACCA’s global chief executive Helen Brand OBE, said, ‘Developing smart cities requires a step-change in the way cities are governed and managed. A key part of this improvement will involve capacity building at city level in the field of accounting and finance.’ She added, ‘India requires a shift in the traditional financial reporting role of accountants in local government towards greater emphasis on financial planning, forecasting, scenario planning, commercial awareness, risk management, and skills building to ensure that public services are provided as efficiently as possible.’
Report author Narayanan Vaidyanathan, who develops ACCA’s research and insights with a focus on the future direction of business and accountancy, said, ‘The discourse around smart cities talks extensively about the role of government and technology providers; but there is an important third leg in the picture which is the finance and accountancy community. This report highlights the urgent need for professional accountants to develop their own digital capability and understanding in order to provide the expert guidance (in areas like cost-benefit analysis for example) and strategic counsel necessary to shape the city of the future.’