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RAS question

Under the Smart Cities Mission, each selected city must implement projects through a Special Purpose Vehicle (SPV). Which of the following statements about the SPV model is CORRECT?

Correct answer: (B) SPV is a limited company registered under the Companies Act, with the state government and ULB each holding at least 50% equity.

Under the Smart Cities Mission, each selected city’s SPV is a limited company incorporated under the Companies Act, 2013, with 50:50 equity shareholding between the State or UT government and the Urban Local Body as promoters.

  1. (A)

    SPV is a Central Government department directly under the Ministry of Housing and Urban Affairs

  2. (B)

    SPV is a limited company registered under the Companies Act, with the state government and ULB each holding at least 50% equity

  3. (C)

    SPV is a public-private partnership where the private sector holds majority equity

  4. (D)

    SPV reports directly to the elected Mayor and does not have an independent board of directors

Explanation

The SPV model is meant to keep Smart Cities Mission implementation city-focused while giving it a corporate legal form. Press Information Bureau, Government of India says all 100 selected cities set up Special Purpose Vehicles under the Companies Act, 2013, with a 50:50 equity shareholding between the State or UT government or administration and the respective Urban Local Body as promoters. That is why option B is right: the SPV is not a Ministry department or a private-majority PPP, but a jointly promoted limited company. Its mandate is to implement the mission through focused planning, project development, and on-ground execution, which matches the question’s stress on implementation through an SPV.

Why the other options are wrong

  • (A) The SPV is not a Central Government department under the Ministry of Housing and Urban Affairs; it is a company incorporated under the Companies Act, 2013, and promoted by the State or UT government and the ULB.
  • (C) The SPV structure gives 50:50 promoter equity to the State or UT government and the ULB, so it is not a private-sector-majority public-private partnership.
  • (D) The SPV has an independent board and CEO, so it is not a body that reports only to the elected Mayor without its own board.

Concept

This tests urban governance under the Smart Cities Mission, especially the institutional design used to implement city-level projects. It recurs in RAS because Rajasthan urban development questions often ask how central schemes are translated into state and ULB-level execution mechanisms.

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