India needs futuristic policies to manage
economic growth and rapid urbanization
By Prakash M Apte, Urban Development Consultant

16 January 2011: With the recent rapid strides of the Indian economy, acceleration in the urbanization trend can be safely predicted. Every economy undergoing such rapid growth has witnessed higher levels of urbanization akin to what is taking place in China. Do India’s towns, cities and metropolitan centers have the institutional structures and resources to manage this transition?

Even if urbanization is an inevitable outcome of fast economic growth, should the policies be formulated at the expense of building sustainable rural communities? Or should the policy interventions be targeted to create a system with centers of prosperity spread across the country? What could be pillars of the country’s urbanization policy?

Creating multiple centers of prosperity
It is easy to view urbanization as the root cause of malaise affecting India’s cities. The country therefore needs to tailor urbanization policies to create a harmonious interface with our rural areas. Urban centers have the advantage of economies of scale and scope in offering a range of services to the citizenry that are uneconomical to provide in the vast rural hinterland. The percentage of India's urban population is close to only 30 per cent. Within this segment, the vast majority in concentrated in Class I cities and especially in large metropolitan cities. This has led to unbalanced development wherein metropolitan areas are becoming ungovernable with uncontrolled growth, and smaller cities lack the wherewithal to deliver even basic services.

This calls for a two-pronged approach where planners focus on consolidating growth and delivering better services to people in metropolitan areas but at the same time plan and develop new, smaller cities to become the engines of future growth. But given the socio-political structure that has emerged in established metropolitan cities, where competing power centers jostle for resources and influence, the task of bringing real change is difficult and could be painstakingly slow.

The options available to planners in this sphere range from building satellite townships, creating new planned cities and managing the growth of rapidly expanding cities through investments in institutional capacity building, developing industrial corridors and even building private townships where even the traditional municipal functions can be privately managed. We need to evaluate and follow appropriate for optimizing the full range of opportunities available to us.

Cities need to fulfill the economic, security, environmental, spatial, and other needs of people to create a sense of identity and build long-term sustainability. An essential step in this process is the creation of an enabling environment and a long-term global policy so that successive governments (irrespective of their political hue or ideology) take an ecosystem-centric view of urban development. For the cities to harness the human potential of the urban immigration, they must focus not only on promoting industries that take advantage of the opportunities available but also on taking steps to create new opportunities

India needs to expand the options available to people so that the large metros do not remain the only meaningful choice available to live an urban life. For the foreseeable future though, the large metros may continue to play a dominant role in the national economy and in creating a vast marketplace that will be at the apex of a multi-tiered, India urban system. The trends in recent years have shown a city like Delhi, which has a large degree of control over the generation and usage of funds, has had far better outcomes than places like Mumbai, which fill the coffers of the state government but do not get commensurate investments back. Cities are India’s greatest assets and we have the opportunity to either harness the urbanization trend to create more centers of prosperity or go down the path of metro-centric growth, which can lead to an urban disaster.

Urban development and economic growth
There exists a dual relationship between economic growth and urbanization, while urbanization is an important side effect of economic growth, it is at the same time essential to sustain economic growth. The Indian growth story however does not quite conform to this dictum. Despite India's recent rapid economic growth, the pace of urbanization has been slower than the economic growth. This is primarily a result of rural exodus to metropolitan cities, which have appropriated a large chunk of urban development resources, inadequate government policies, improper governance models, bureaucratic inefficiency, and lack of systematic urban planning. The problem being multi-faceted, requires multi-pronged solutions based on a critical analysis.

Urbanization in India is mostly oriented towards major cities, leading to the evolution of 'two India's ˆ the rich urban India and the poor rural India. The evolution of metro-centric growth and how it has affected the rate of urbanization are very important questions that may help in understanding how rural and urban economies interact to influence urbanization.

The rural economy in last few years has been highly unstable due to a decrease in agricultural productivity and lack of opportunities in the organized sector; urban centers on the other hand have witnessed rapid growth. This has resulted in skewed growth and a massive rural-urban migration. While the rate of migration increased, the rate of urbanization is not keeping pace and as a result cities other than metropolitan centres are no longer able to offer employment to all unskilled labor migrating from rural areas. 

It is therefore imperative for a developing country like India to improvise an inclusive economic policy and link it with urbanization policy to reduce rural urban migration, which adversely affects urbanization. To this effect the government has tried to make amends by programs like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the National Rural Employment Guarantee Act (NREGA) to facilitate inclusive and equitable growth, but the gap still persists.

What is required is economic empowerment of rural areas by reducing their dependence on agriculture and increasing the availability of opportunities in other organized sectors in rural settings; skills development and infrastructure improvement. This will facilitate growth of self sustaining rural economies capable of offering employment to rural laborers thus reducing rural-urban migration and making urbanization a broad-based phenomenon not restricted to metropolitan cities.

Another important issue which could facilitates rapid and efficient urbanization is 'decentralization of governance', especially devolution. This increases the accountability, responsiveness and ownership of local authorities and helps them tailor development activities, to local needs, thus speeding up the process of urbanization. The 74th Constitutional Amendment was enacted to implement this initiative. However, due to discretionary allocation of functions and insufficient allocation of executive control to the local authorities the local bodies have become ineffective, contrary to what was envisioned. Merely assigning the responsibility does not automatically enable local bodies to design projects and implement them. They require planning and resources support.

The government transferred developmental responsibility to local authorities without empowering them economically or raising their resource generating capacity. Though not a big issue for larger cities (due to better & larger recourse and access to state funds), it adversely affected smaller cities by increasing their dependence on external funds, which in turn affected infrastructure development thus limiting their growth. More over, the government has also failed to strengthen the management skills and capabilities of these bodies to help them manage this change. The government therefore needs to work towards delegating increased and substantial control to the local bodies, enhancing their skills to make this model of governance successful.

The government also needs to continuously and increasingly invest in infrastructure projects (transportation, electricity, water resource management etc.). This will enable equitable and sustainable urbanization and subsequent economic growth. This, however, requires financial planning (resource allocation) especially at the level of small cities and rural areas that are incapable of generating adequate funds for infrastructure projects. This can be achieved either through government funding, external institutional financing, or through community involvement.

What India needs is a futuristic urban policy that facilitates financial resource management, skills enhancement, improved governance, and infrastructure development- and not mere urban development; to tackle issues affecting India's urbanization process.

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