Kala S Sridhar: City limits

Indian urban development should aim for extensive, rather than intensive, growth

With the United Progressive Alliance (UPA) government in power, the focus of policy has shifted to rural India. A question that is now being asked frequently is: who will urban India vote for the next time? The question is relevant in the context of the current urban-rural transformation.

Do we expect urban population (read: electorate) to grow indefinitely? Are there limits to urban growth? What would happen if all cities in the country were to grow indefinitely?

In theory, if cities expand continually with in-migration and spatial expansion, they would cut into the growth of rural areas, and probably convert rural uses into urban. So we might become more than 30 per cent urban more rapidly.

This may actually accompany the process of economic growth that stimulates urbanisation and movement of economic base away from rural-dominated agricultural uses to non-agricultural uses. Further, rural areas would get to enjoy the benefits of urban services.

For instance, statistics show that China now has 668 cities, three times more than 20 years ago. In the case of India, the number of urban agglomerations grew from 275 to 375 between 1991 and 2001; we have 35 cities with a million-plus population compared to only 27 a decade ago.

So, while the number of cities can increase in countries the vast size of China or India, can individual cities grow forever? More than 400 of China's 668 cities are facing a water shortage, and of the 400, more than 100 are seriously threatened by the water shortage.

Further, with nearly half of China's rivers and over 90 per cent of its urban water resources having been polluted to some extent, only 33 of these cities have met state standards for water quality.

India's experiences are not very different, as will become clear from data from the ministry of urban development. This implies that there might be some limits to individual city growth.

The international traveller would certainly agree that Mumbai (for instance, power is never a problem) or New York are much more "livable" cities than Meerut or Ajmer, and it is urban management that is crucial for the delivery of services such as water, electricity or solid waste management.

But are there inherent limits to city growth? Interestingly, note this: for the mind-boggling city of international standards that Mumbai is, while in-migration into Greater Bombay was 52 per cent of its total population in 1981, this had reduced to a mere 35 per cent of its total population in 1991.

This may be explained by the fact that Greater Bombay was not yet an urban agglomeration in 1981, while in 1991, it had become one. The 2001 migration data might indicate further decline. Despite the fact that Mumbai is definitely more livable than some other cities, what explains this decline?

This lends support somewhat to the view that while cities continue to be habitable, there are limits to their growth. In the Becker-Mills-Williamson model, the first computable general equilibrium model of the Indian economy, the limits to city growth occur due to the inflation of urban site rents.

Further, rents are also aggravated in India's cities because of rent control that diminishes the incentives of property owners to maintain their property and artificially restricts the supply of rental housing.

So while cities can be managed well at any given point in time, they may not be able to accommodate continual growth (a more dynamic process) or migration.

What does this imply for India's cities? Rather than the expansion of a few big cities, it is likely that a large number of rural areas are converted to urban areas.

So we are more likely to have a more extensive rather than intensive urbanisation phenomenon. That is, more cities rather than more growth of existing cities.

The government should encourage this extensive growth phenomenon by stepping up infrastructure in the rural areas and persuade industry to locate there. For this, more local and state autonomy is required in the use of resources. This way, India's urban areas can compete internationally for investment.

Some cities such as Hyderabad and Bangalore have done this and shown that significant comparative advantage can exist at the local level. It is the responsibility of the individual cities as well as their state governments to foster them to grow into better urban areas for living and for conducting business.

In this context, it is highly desirable that we publish a yearbook of India's cities, like China does. In this publication, which can be brought out every year, the basic economic, demographic, social and infrastructure indicators should be summarised.

This can become a storehouse of information and best practices of cities that can learn from each other about various issues and problems. Further, it can also serve as an important document for businesses (especially BPO firms) that would wish to consider cost and skill factors before deciding upon a location.

Currently, only the demographics including gender composition, age and migration are published by the Census of India at the city level.

But in suggesting extensive rather than intensive city growth, are we suggesting that the food-growing lands of the country be converted into large, hungry cities that become net importers of food, just like China has recently become?

Not, because the process tends to be self-sustaining. For instance, prosperous agricultural farmers, with the benefits of technology (such as e-choupals) will not quit their occupations to go to urban areas. They might make better use of infrastructure in rural areas.

But small and marginal farmers would move to non-agricultural occupations if the infrastructure incentives stimulate private firms to locate there. Note that an urban area in India is defined as one having a minimum of 75 per cent in non-agricultural occupations.

So by providing good infrastructure (water, sewerage, roads, electricity, telecom and banking) to rural or semi-urban areas, we have essentially converted rural areas into those enjoying the benefits of urban areas without necessarily sacrificing food security.

This kind of extensive urban growth is the direction in which Indian urban development should head. Intensive city growth is feasible neither in theory nor practice, nor is it desirable.

(The writer works with the National Institute of Public Finance and Policy)