Three years ago, it was expected that more than half of the world’s population lived in cities and towns for the first time in history. There are, however, sharp differences across the developing world that is experiencing the relentless march of urbanisation. While Latin America, Central Asia and West Asia and North Africa have made this historic transition, India and China will take a few more decades. The share of urban population in India is only 31.2 per cent according to the latest decennial Census of 2011.
To be sure, there are economists and even officials who believe that the extent of urbanisation in India is actually much higher than the Census estimate. Since much of the growth in the metropolises and cities is spilling across municipal borders, there is a sense that this process is not being captured by the data. According to an agglomeration index – a new measure proposed by the World Bank based on a more uniform definition of what is urban – the extent of India’s urbanisation is around 52 per cent.
Despite the scepticism surrounding the country’s “puzzling under-urbanisation”, its experience is very much in line with global experience. Although India is still an agrarian economy – “one of the few examples left in the world of an enormous population still largely dependent on agriculture” to borrow an expression of historian Eric Hobsbawm – there has been an ongoing shift of its population from villages to the towns and cities. This is, after all, what modern economic development is all about.
The land is, no doubt, emptying itself and filling up India’s urban settlements. But the pace is not that rapid as has been observed in developed countries like Finland and other Scandinavian nations in which this historic shift took place within a single generation itself. In sharp contrast, in India the share of population living off the land for long has remained stuck at 70 per cent despite an acceleration in the pace of urbanisation and the memory of any connection with the land receding with every succeeding generation.
India’s sectoral shift away from agriculture to industry and services is reflected in its spatial pattern of urbanisation with firms locating in bigger cities and metropolises to exploit economies of scale. A workshop on “Urbanization beyond municipalities” by Somik Lall (jointly with Tara Vishwanath, Nancy Lozano, Siddharth Sharma and Hyoung Wang) organised by the Centre for Policy Research and Centre de Sciences Humaines outlined interesting facets of India’s economic liberalisation.
Since the 1990s, this process has encouraged the clustering of businesses in the country’s seven largest metropolitan areas with considerable spillovers beyond municipal cores of the largest cities into the immediate hinterland. There is now a fast-growing export manufacturing cluster (electricals, electrical equipment, machinery, iron and steel, organic chemicals and apparels) in Delhi and the National Capital Region. A high-tech manufacturing belt (pharmaceuticals, aircraft and spacecraft parts and so on) spreads from Mumbai, Pune towards Ahmedabad in western India. Finally, there an ICT services cluster in the Bengaluru-Chennai-Hyderabad triangle.
These clusters are not mutually exclusive. Chennai, for its part, is also a big automobile manufacturing hub (like Pune) with leading global giants like Hyundai, Nissan and Ford assembling vehicles for the domestic market and exports. Similarly, Gujarat is, no doubt, the location for large petroleum refineries but automobile companies like Tata Motors are also present assembling the Nano, the cheapest car in the world. There are reports that Ford is also planning to build two new automobile factories in the state. The Delhi-Gurgaon cluster, too, is an automobile hub of major consequence.
The challenge for policy-makers is to make this metropolis-driven process of urbanisation more inclusive. The booming large cities are only small islands in a largely rural hinterland. Over 75 per cent of India’s urban population and 95 per cent of the rural population live beyond these engines that drive India’s robust growth rates of eight to nine per cent a year. The need is for balance in providing opportunities for enhancing the living conditions of the latter without undermining the efficiencies of these business clusters.
According to the researchers, for a strategy to be reasonable, it must be prioritised and sequenced. During early urbanisation, policy-makers should not discriminate between urban and rural areas — they should instead provide basic social services everywhere, and ensure functional land and labour markets; at an intermediate stage, connective infrastructure is needed; while advanced urbanisation requires, in addition, place-based interventions such as better housing and slum development.
The last factor mentioned is relevant since policy-makers worry that as the developing world becomes more urban, this portend new poverty problems, with slums burgeoning in congested mega-cities like Sao Paolo, Mexico, Mumbai, Kolkata and Dakha, among others. The answer, from centuries of global experience, is that success comes with sequenced measures: first institute land markets and provide essential services such as security, schools and sanitation, and improve transport. Then, with well-timed and targeted interventions, slums can be fully integrated into the big metropolises.
From the Ivory Tower makes research from the academic world accessible to our readers
