India's urbanisation challenge

Shankar Acharya:
Focus on upgrading existing towns, not showpiece new cities
Shankar Acharya
May 7, 2014 Last Updated at 21:50 IST
Read more on: Bjp | Manifesto | Cities | Towns | Urbanisation | Sewage | Slums | Shankar Acharya | Ravi Kanbur | 74th
Amendment | P K Mohanty | Urban Local Bodies | Isher Judge Ahluwalia | A Piece Of My Mind |Jawaharlal Nehru National
Urban Renewal Mission
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Halfway through its 40-page manifesto, the Bharatiya Janata Party (BJP) - the likely anchor of a new
coalition government - identifies "urban areas" as "high growth centres" for India's development and
promises to build "100 new cities". The identification of good urban policies
as prerequisites for rapid economic and social development
is sound: two-thirds of national gross domestic product (GDP)
comes from urban India. The apparent focus on new cities is
not. What India needs is not a whole lot of very costly,
brand new cities but a revamping of urban institutional
structures and policies to improve the obvious squalor and
inefficiencies of the country's existing 8,000 cities
and towns. The BJP's brain trust on economic and social policies would do well to read three
good new books on Indian urbanisation that have been published over the last two
months: Transforming Our Cities, by Isher Judge Ahluwalia (Harper Collins); Urbanisation in India, edited
by Isher Judge Ahluwalia, Ravi Kanbur and P K Mohanty (Sage); and Cities and Public Policy, by P K
Mohanty (Sage). They could start with Dr Ahluwalia's highly readable and engaging introductory chapter
to her book.

In this brief column, I rely heavily on these recent books to give some flavour of the major issues and
challenges that India faces as her urbanisation proceeds. And proceed it will, since the shift
from rural to urban habitation is an intrinsic dimension
of the larger process of economic development and
structural change experienced by all major nations. As
incomes rise, the relative role of agriculture shrinks, while those of industry and
services rise. And, the world over, these non-agricultural activities of industry and services prosper best in
urban areas, which nurture the economies and efficiencies of scale, scope and connectedness (the so-
called benefits of agglomeration). The choice before India is not whether to
urbanise or not, but rather between reasonably planned, efficient, growth- and employment-enhancing
urbanisation, and the higgledy-piggledy expansion of congested, polluted, under-serviced and unhealthy
urban sprawl that is so typical of today's Indian urban landscape, and so damaging to India's long-term
development prospects.

Some dimensions of the challenge
Actually, the pace of India's urbanisation has been slow by
international standards. According to census and United Nations data, India's share
of urban population in 2011 was 31 per cent, compared to around 50 per cent in China, Indonesia and
Nigeria, 61 per cent in South Africa, 78 per cent in Mexico, and 87 per cent in Brazil. In the 60 years from
1950 to 2011, India's urban population share rose from 17 per cent to 31 per cent, while China's
quadrupled from 12 per cent to 49 per cent. Nevertheless, the number of people
involved is large: in the 20 years from 1991 to 2011, India's urban population rose to 377
million - 160 million more than in 1991 and 90 million more than in 2001. By 2031 the urban
population is projected to increase by more than 200 million to 600 million, or 40 per cent of
the national population.

Despite India's relatively low level and pace of urbanisation (by international standards), the condition of
urban communities and their services in India is woefully inadequate. Consider the following:
Twenty-five per cent of urban India dwells in slums; in
Greater Mumbai the ratio is over 50 per cent.

Barring a couple of small towns in Maharashtra, no city provides continuous
piped water. And the water that does come, fitfully, is rarely fit to drink
without boiling or other treatment. In contrast, cities in China and Brazil get much better water 24x7.

Very few Indian towns (such as Chandigarh, Navi Mumbai and Surat) treat over 90 per cent of
their sewage (excrement and waste water) before discharge into rivers, sea and lakes. In the vast
majority of urban communities, the sewage treatment rate was far
lower, well below 50 per cent. Until recently it was 30 per cent in Delhi, and
has now increased to 50 per cent.

Urban India is estimated to produce 180,000 tonnes of garbage every day, most
of which ends up in huge rubbish heaps or "landhills", instead of being
composted, converted to energy or sealed in sanitary
landfills. Overflowing garbage bins and rubbish heaps are common sights.

Little wonder that diseases like dengue, malaria, typhoid, swine
flu, diarrhoea and respiratory ailments are on the rise
in most towns in India.

Urban road systems are grossly inadequate and poorly
maintained. Typically, public transport is scarce: only about 500 out of
8,000 cities and towns have a public bus system.

The way forward
At the heart of the quality of urbanisation is the governance system of
institutions and policies that guide and oversee the
planning, execution and co-ordination of land use,
building regulations, road construction and delivery of
key services such as water supply, sanitation,
transport, and solid waste disposal, while ensuring
adequate mobilisation of the necessary financial
resources. The institutional framework for urbanisation in India has been historically
weak. Significant improvement occurred in 1992 through the 74th
Amendment to the Constitution, which emphasised the importance
of urban local bodies (ULBs). But many believe that this matter needs to be
revisited to assign better revenue resources to ULBs, clarify expenditure
responsibilities in relation to state and central governments, and improve their staffing and
competencies.

Such systemic reform may well be necessary. But a great deal can be accomplished within the
existing framework, with strong administrative and legal support from state
governments and some assistance from the Centre, as through the Jawaharlal Nehru National Urban
Renewal Mission. First, it is surely shocking that while over 2,000 new areas
were designated as "towns" by census enumerators
(according to established criteria of population, density
and employment in non-agriculture pursuits) between
2001 and 2011, the number of towns with statutory
ULBs increased by less than 250. Thus, a very large number
of small towns do not have a ULB to deliver the basic
services necessary in order to avail the benefits of
agglomeration. The facilitation of new ULBs is surely a primary task of state governments,
with some assistance from the Centre.

Second, ULBs are chronically short of resources. Yet within the existing framework,
many of them, especially city municipalities, could do a far better job in exploiting
existing revenue bases such as the property tax. International
comparisons show that Indian cities are unusually
deficient in raising revenue from property taxes,
usually the prime source of income for urban local
governments worldwide. Indeed, as Dr Mohanty spells out, there is a range of
other revenue instruments that could be deployed for harnessing some of the
soaring land values in urban locales to fund the necessary urban
infrastructure. Third, user charges need to play a bigger role to fund
provision of services such as water, electricity, bus services and waste disposal. Fourth, as Dr Ahluwalia
shows, ULBs can improve - and have improved - resource mobilisation and
service provision through intelligent deployment of
information technology. More generally, there is a great deal that India's urban
governments can learn from each other.

Dr Ahluwalia documents some 40 case studies of progress in urban service provision. Not all of them are
replicable or scalable. But quite a few surely are, especially with the support of state governments.

The basic point is simple. Well-functioning urban institutions and
sound policies will nurture faster economic growth and
more employment for the cities as well as the nation.
Continued neglect of urban governance and policies could cost the nation dearly. And the focus has to be
on India's 8,000 existing cities and towns, not on a few dozen costly new showpieces.


The writer is honorary professor at Icrier and former chief economic adviser to the government of India.