Posted by: Shiv Muttoo | August 24, 2010

India Needs Cities for Growth


It was that time of the year again. The monsoons were upon us, Bihar was flooded, millions reeled under the impact, thousands went missing, and hundreds would be dead. It could have been just about any of the last 50 years.

This was followed by the usual sequence of events – aerial surveys by the high and mighty, grand pronouncements, appeals for calm, promises galore, outbreak of epidemics, still more deaths in the aftermath, relief contributions from emergency funds, culminating in, of course, yet another opportunity for the local mandarins to contrive their annual quota of scams.

Every year, water released from overloaded dams in upstream Nepal adds to the fury of the Kosi. As the river breaches the shackles of its half-hearted embankments, the common man’s primary line of defense is to look heavenward in prayer as his elected representatives first take their own time to get off the blocks, and then make some feeble rescue attempts, before diving headlong into a finger-pointing melee. While New Delhi sanctioned over 1,000 crore rupees to repair the damage, the state demanded fifteen times more. Last year’s flooding ritual closely followed the state government’s announcement that Bihar was ravaged by drought, India’s other recurrent ‘natural calamity’, along with the usual appeal for alms.

In the middle of all this, nobody talked about preventing a repeat of this sad situation next year by focusing on planting trees, dredging the rivers or making more canals. Why kill the goose that lays golden eggs every year? This year, the rain gods have been kind to Bihar by passing it by, but the resultant drought bill is 5,000 crore rupees, duly sent to the central government.

Bihar automatically reserves its place in the bottom-quartile on almost every development parameter. Over the years, the state machinery has proven most inept while dealing with any situation of adversity. Religion and caste are the overriding influences over most decisions. The state almost always tops most crime and corruption charts despite stiff competition from many other aspirants. However, in more ways than one, the situation in Bihar just accentuates the ills that afflict the whole country.

90 percent of Bihar’s population is in rural areas. Rural incomes in India are less than a third of urban incomes. It is not too difficult to conclude that the average man in Bihar lives a life of extreme penury. So what does he do? Wait to get swept away by next year’s floods or head to the distant El Dorado. Over five million Biharis have already exercised the second option despite vociferous cries everywhere to keep them out.

Many of them land up in Mumbai, now an urban sprawl of over 20 million. Greater Mumbai, the core city, has continued to add two million every decade – four million in 1961 should be 14 million now, including a significant contribution from Bihar.

The city’s population density now exceeds 30,000 people every sq km, the highest for any city worldwide. That’s like 250 instead of the usual 22 on a football field, try dribbling the ball through this horde!

This puts tremendous pressure on Mumbai’s infrastructure. 54% of Mumbai stays in slums, only 40% of its sewage gets treated and the city provides only one square foot of open space to each of its citizens. Pressure from its growing population also extends to real estate prices that are amongst the highest globally (# 10 as per Global Property Guide, 2009 rankings).

But Mumbai is not the only Indian city singled out for special mention in the overcrowding sweepstakes. All of the seven largest cities in India are amongst the most densely populated urban areas worldwide. We have already achieved such heights (or depths?) at a stage when India is one of the least urbanized countries in the world. McKinsey research indicates that over the next twenty years, 250 million more will flock to our cities, up from 120 million in the last twenty.

There are fewer opportunities outside India’s largest cities, so many of them will go to Mumbai and Delhi, pushing these megapolises further down the tubes. We need new urban centers to stem this rot. We need to create plug-and-play urban infrastructure for businesses and people to move into and start functioning real time.

China has followed this model very successfully over the last 30 years. 45% of its people are in cities today, up from just 20% in 1980. While its population has increased by 35% in these 30 years, its urban population has trebled, delivering significant urbanization dividends. Sustaining a 10% growth rate, its GDP has increased 16 times since 1980 to $ 5 trillion today.

In the same timeframe, urbanization in India inched up from 23% to 30%. Its population has increased by 73% between 1980 and 2010, due to the limited success of the family planning program, while city population is up 120%. The economy is one-fourth that of China today, 30 years ago it was within hitting distance. While poverty has almost been pushed out of China, a third of the world’s poor are Indians today. China also surpasses us on every parameter measuring a country’s development and prosperity.

But all this can change. Over the next ten years, India’s working population will grow by 17% as it derives demographic dividends from its median age of 24 years. The Chinese are almost ten years older and this gap will remain. China’s population dependency ratio has started rising, India’s will continue to decline over the next 30 years.

To benefit from this position of strength, we need to get the 800 million people in our villages, largely disguised unemployed, to our cities and make them productive. But before that we need to create urban spaces for them to move into and operate from, educational institutes to prime them for greater contribution and an efficient system of governance to give them a life. If we don’t, the growth opportunity will pass us by and India will choke on its own prospects.

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Responses

  1. Very well written

  2. Reads well..

  3. What you suggest makes a lot of sense. The fact that we need to “de-congest” the bigger cities and dilute concentration of commercial enterprise is a no-brainer. I think the key challenge will be, as usual, in having the infrastructure in place for that to happen — no point in having a few new cities cropping if if they have lousy roads, 2-hours a day electricity, poor municipal services, and bad connectivity to other cities. Much of that is in the “able” hands of our netas.

    There still is room for optimism, as an increasingly younger and restless India will demand more and may be much less forgiving when it comes to incompetent/non-performing politicians.

  4. “Cities are Engines of Economic Growth of the Country”. Its been true that India need to be more urbanized. I suppose this has been realize by the Government a decade ago…. It has also been realize that Local self Government like Municipalities or Panchayats are not able to manage this accelrated growth.
    Hence few innovative models were being implemented… like formation of SEZs, promoting planned cities, etc… These models to certain extent had got a bad beating and turn out to be a haven for money laundering and benami land transactions…
    When we talk about Infrastructure development for urbanizing India. It is not merely the physical infrastructure like Roads, Electricity, etc, but also improvement required in social infrastructure like formalizing land policies (recent case of Adarsh society is a clear example), education (conducting live shows in Malls) There are many consumer research that show the frequency of mall visitors in peri-urban areas is higher.
    I feel the missing component in India is resolving the issue in piecemeal manner and not taking a holistic approach. Public-Private Partnership approach for infrastructuer development will be a success, nevertheless it has to be treated in a holistic manner and not in silos.


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