When contemplating Indian urbanization, I am reminded of an interesting experience I went through a few years ago. I was returning from Hyderabad to Delhi by train and was sharing my compartment with an elderly Sikh gentleman. His first response, when he heard I belonged to Delhi was, “Delhiites are crazy!” I was obviously startled, but less so when I came to know his argument. He had an unpleasant experience with traffic jams in an auto-rickshaw during his solitary visit to Delhi, particularly at Dhaula Kuan, which was hell in those days.
Years have passed, and Delhiites have rejoiced over the magnificent network of flyovers that has been built at the Dhaula Kuan intersection as well as in many other parts of Delhi since. But guess what, traffic in Delhi remains as crazy as ever! It must be noted here that this is just one of the problems that Delhi faces; and we are talking about the capital of India. At the risk of bringing up the clichéd comparison with China once again, I would like to add that people who have visited China admit that the facilities at Delhi lag behind even Tier 2 cities in China in terms of basic facilities.
Urbanization across the world
Urbanization, in itself, is a broad topic that links to several related and complex issues; but the crux is the same – planning the cart before the horse. Nevertheless, it is a phenomenon that cannot be ignored. As per UNICEF data, around 29% of the Indian population had been urbanized by 2008, and urbanization was growing at a rate of 2.4% per annum since the turn of the century.
According to Citymayors.com data, there will be 27 mega cities in the world by 2020. Mumbai will be the second largest city in the world in terms of population by then, estimated at 25.97 million, ‘bettered’ only by Tokyo. Delhi will be a close third with an estimated population of 25.83 million. As anticipated, quite a few other Indian cities make their place in the top 100 globally in terms of population by that year.
Urbanization in India
Unfortunately, infrastructure has remained a lagging indicator for this growing urban India. The number of cars people have in Delhi is still way ahead of the road infrastructure being built. Shopping malls are being built at a rapid pace, and imagine, among other things, the humongous amount of power they consume in a power starved country like India. People continue to migrate at an untethered pace to Indian cities, which get starved of space by the minute. Similarly, we pride ourselves in our demographic dividend, but the fact is that our statistics on educational facilities to create a skilled work force give little reason for hope. But then, talking about problems and blaming the government is the easiest part of the planner’s, or the writer’s job!
Moreover, increasing urbanization is a very important facet of development of a nation. The ideal scenario should be like a developed country, where villages have lower populations of farmers with large tracts of land and modern mechanized methods of farming, so that food production is not compromised. Consequently, we can have greater and greater numbers of people moving into cities and getting involved in our manufacturing and services sectors. So, planned urbanization is an imperative for India to unleash a further accelerated pace of development.
The appeal of Indian cities
Firstly, it is quite logical that places like New Delhi and Mumbai cannot help the fact that they attract a lot of people to their fold like magnets, since they are like islands of prosperity for the other 70% odd people in India living in rural areas; and hence they provide hope for a better life. In Mumbai, it is quite surprising to know of people who travel all the way from places like Surat and back to work every day. But the negative aspect is that a number of these people are chasing futile dreams. In fact, they even end up poorer in the cities and create further problems for India’s infrastructure. This is all the more evident in the fact that Mumbai is known as the world’s slum capital, where more than half of the residents are slum dwellers. It is easy to understand why politicians like Raj Thackeray are able to sell their vitriolic anti-North Indian slogans to locals there; because these poor locals do indeed get frustrated by their growing problems due to immigration. People view the government’s efforts to remove these slums as much more of lip service; since slums do have immense value; just like refugees from Bangladesh in Assam have immense value - in terms of vote banks. Creditably, though, a conscious effort has been made by the government since 2004 to remove the slums; in what is referred to as the Shanghaisation of Mumbai; with a Rs.31,000 crore package to remove slum areas. Part of the plan was to immediately remove illegal slums that had come up after 1995. Now, a scheme to remove slums has been developed that will provide slum dwellers a loan of Rs.1 lakh each and a lowering of interest rate to own their own property.
Roadblocks to urbanization and planning
Schemes like these keep coming, but just like most Government schemes, they typically take years to implement and come across as grossly inadequate. And that is why the role of the private sector is being supported across forums. For instance, in Mumbai, a property tycoon named Mukesh Mehta has developed a scheme to remove slums and also to ensure proper housing blocks on the same site for the slum dwellers. This way, the slum dwellers will not have to relocate too far from where they are living. The freed up land, in turn, would have a phenomenal value to develop malls, offices, residential complexes et al. Ironically Dharavi, which is arguably Asia’s largest slum has immense economic value; with the land projected to cost a whopping US$10 billion. Moreover, a scheme like this has to account for the multitudes of small businesses operating out of Dharavi, with a cumulative value estimated at around $650 million to $1 billion.
Urbanization and community involvement
Irrespective of economic value, the involvement of the community is a must in development initiatives; in the true spirit of democracy. Change in a democracy is slow due to consensus building, but more permanent. A public-private partnership is considered the best way forward. A successful precedent was made with a pilot project in Karnataka, where three cities - Hubli-Dharwad, Belgaum and Gulbarga were covered for improving the water supply. The project costed around Rs. 270 crore over a period of five years and covered a population of around 10% of the total in these places.
Earlier, these places used to get only two hours of water supply for every five days and people used to pay a fixed price on water of around Rs. 90. Moreover, this water reached only 50% of the population. The initiative included boosting water supply and installing meters for usage in every house. The private company was roped in to establish and implement the plan.
Another key to the project’s success was that people were initially asked to pay the fixed price. When they saw that they were getting 24-hour water supply based on usage and the variable price was also quite reasonable (Rs. 80-150 depending on usage); they were happy to shift to the new system. For the range of issues that India faces with its cities, this initiative provides valuable lessons. Involve the private sector, ensure community involvement and also ensure that the revenue model is intelligently developed to make excessive and irrational usage expensive.
To match that to the traffic congestion problem, the solution really is to make cars and fuel (other than essential for transportation, cooking, et al) prohibitively expensive. After all, keeping fuel cheap means that the government spends a whopping amount to bail out oil companies ($57.8 billion in 2008 on fuel subsidies). The same money can be spent on building a world class transport infrastructure in the cities.
Addressing the problems of urbanization
However, the fact is that these are symbolic of tackling the symptoms rather than the disease. The disease that a large degree of India’s rural population is chasing its dreams in a few cities has to be tackled by really building several more islands of opportunity to divert the influx. Bihar, for instance, is showing some degree of economic prosperity, few residents want to leave the state and migrate to Delhi, as they get their employment back home. The Jawaharlal Nehru Urban Renewal Mission has been set up to release funding and ensure private participation for implementation of infrastructure development and urban poverty alleviation schemes for urban poor with a planned outlay of around Rs. 50,000 crore in 63 selected cities. Success of the initiative is a key for India’s economic future. By 2021, it is estimated that around 40% of Indians will reside in urban centers and these centers, thanks to liberalization efforts, will contribute around 65% of India’s GDP depending on how well we develop infrastructure and employment opportunities. Undeniably, India needs to continue to place this agenda on top priority, as our current crop of cities gets crazier by the minute.
Chillibreeze's disclaimer: This is a contributed article and was published on Chillibreeze in March, 2010. The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article. The relevance of the facts and figures cited (if any) could change after a period of time.
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—About our writer:
Virat is an engineer and MBA based out of Delhi. He is the deputy editor of a mainstream business magazine, where he has been writing on issues related to economy and business strategy for over 5 years. He also teaches modules in marketing and sales management to MBA students.
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