Cities: Trapped in central planning

India's urban policy continues to follow old-style bureaucratic control, leading to dysfunctional and ugly cities. An overhaul is urgently needed

Imagine a greenfield city being built from the ground up. Imagine also that there is no statutory monopoly on the development of colonies or layouts as granted to a Delhi Development Authority or a Bangalore Development Authority. Imagine that the private sector is building on the land in an uncoordinated way, based on simple self-interest. What would go wrong?

Simple profit-seeking behaviour of private individuals would lead to excessive use of land for private projects, leaving insufficient land for parks and streets. Urban infrastructure, such as water, sanitation, solid waste, electricity, and telecom would also be poorly executed in a simple uncoordinated private-sector sprint. There is market failure, which motivates state intervention. The field of urban policy consists of understanding this market failure, and devising the most effective path for state intervention to address the failure. The fact that India does not have nice cities proves that at present, urban policy — that is, the tactics, techniques and procedures of state intervention in city formation — works poorly.

In the brilliant inaugural lecture at the Emerging Markets Conference in Mumbai in December, urban thinker Bimal Patel drew our attention to the ground reality of how town planning works at present in India. There is widespread rhetoric that after 1991, India put an end to central planning. But there is a big gap between this slogan and the ground reality of the Indian state, where intricate intervention into the economy happens on an extravagant scale. And so it is with town planning. Far from adopting a restrained role in focusing on streets, parks, and urban infrastructure, the state has aspired to control the built environment in great detail.

Within each city (or a bigger urban agglomeration), there are “development authorities” that meticulously plan the city in great detail. They write “comprehensive development plans” that carve out the city into residential, commercial, industrial, and green zones, and specify the use of all the space in minute detail. These are not aspirational documents that seek to inspire private landowners to think better: They are binding and legally enforceable.

This approach works poorly because no government organisation knows enough about society to correctly centrally plan it. The right way to organise a society is to base it on freedom, where private persons do what they want, with narrow exceptions for state intervention that are motivated by market failure and enveloped in constitutionalism and the rule of law. While many in the Indian elite readily slip into dreams of a planned city like Chandigarh, the fact is that the great cities of the world evolved organically, through myriad decisions by private persons, without central planning.

Leaving aside the high objective of achieving nice cities, there is a more basic problem of violations of constitutional principles. You could be the owner of a piece of land that falls in the green zone (e.g. meant for parks). The development authority is legally within its rights to refuse you permission to build a house if the land is vacant. Worse still, if there is an existing house in which you are living, the development authority can refuse you permission to modify or reconstruct the house, as it is in the green zone. The development authority, in performing this legislative function, is one of a piece with the Indian administrative state — the rule of officials — where the basics of democracy are faltering. Their legislative actions run through the executive branch and often constitute expropriation without compensation. Some courts have directed the development authority to acquire the land and convert the same into a park within a specified timeline or release the land from the green zone classification. In practice, this seldom happens, and landholders often find themselves running around development authorities without any relief.

The anger of expropriated individuals, and the economic incentive for private persons to rationally use land in ways not imagined by the central planners create a mess. Town plans are violated on a large scale. Violations are grounded in corruption, and create arbitrary power for authorities who can choose which private person to attack.

Another culprit is building regulation. They require land to be left open for many reasons. There are setbacks from plot boundaries, from other buildings and cart tracks. The regulations provide for approach roads within plots and require common open space and an additional setback from the common open space! In addition, there are requirements for greenery, parking, space for fire tender movement and clearances from trunk infrastructure and natural features. Over and above this, most cities have regulations restricting building coverage. All these rules waste land.

Mr Patel’s big idea is that land in Indian cities is poorly used. Between 50 and 60 per cent of land is used up for private open spaces with just under a quarter available as building footprint. In nice cities abroad, less than 10 per cent of land is private open space. In addition to a building footprint of over 50 per cent on an average, they also have close to 40 per cent space for parks and streets. In India, we have the worst of all worlds, with a shortage of land in parks, in streets and in privately built structures.

The failures of town planning in India are grounded in the lack of economics knowledge. As pointed out by Alain Bertaud, “unfamiliarity with basic urban economic concepts by those in charge of managing cities is one of the major problems of our time”. A good reorientation of the foundations for India is the problem statement of the Barker review of 2006 in the UK, where the terms of the reference were “to consider how planning policy and procedures can better deliver economic growth and prosperity alongside other sustainable development goals”.

As with most fields in India, the need of the hour for Indian urban policy is a new level of intellectual capability in understanding market failure, in establishing frugal tools of state intervention, and in designing laws and organisations that achieve state capacity.

The writer is an honorary professor at CPR, member of a few for-profit and not-for-profit boards, and a former civil servant