Nizamabad MP

A Vision for Urban Growth in India

Cities or even mega cities have been one of the most major and marvelous social innovations ever devised by the humankind. Certainly, great civilizations such as the Indus-valley civilization, the Egyptian civilization, and the Mesopotamian civilization and others are lauded in history as distinctive marks of human achievement, as opposed to the nomadic kingdoms (which at times even fail to be characterized as civilizations), because the great civilizations were based on a robust core of highly developed urban spaces such as Harappa, Cairo, Babylon, Luoyang etc. As the civilizations grew bigger, the cities turned into megacities or Mahajanpadas and became harbingers of growth and prosperity.

In India today, while one the one hand we are aspiring to reclaim our position as one of the leading civilizations of the world, our major urban centers are still ill-prepared to sustain the vigor that would be required to launch India into the position of being a superpower. There is no doubt that the major cities in India are already driving the nation’s economic growth – Mumbai contributes $310 billion to the GDP of the country, while Delhi has a GDP of $293.6 billion, Kolkata of $150.1 billion, Bengaluru of $110 billion, Chennai of $78.6 billion, Hyderabad of $75.2 billion, Pune of $69 billion, and Ahmedabad of $68 billion. Together these eight cities contribute towards 44.42 % of the total GDP of the country. However, there is an ever-growing consensus that the governments are not doing enough to make these urban centers as the driving engines of growth needed for success in the 21st century, to make these cities comparable to other major urban centers of the western world or those in the Southeast Asian countries.

The first instinct of the Indian development planners when they look towards the east and the west is to simply replicate the tall skyscrapers, the mega infrastructure such as bullet trains and other outward appearances of development. However, this is an instinct of misplaced priorities as they fail to notice that urbanization does not guarantee growth in all cases. Many African countries are a victim to such a phenomenon where urbanization has not translated into economic growth due to income inequalities, inadequate planning, and barriers to social mobility that hold back huge sections of populations from reaping the benefits of urbanization.[1] Taking our cue from cases of such countries, there is a key lesson for India in its bid to become a superpower – the lesson is that we need to make our urban structures more robust and for them to be so, the government’s policy planning needs to be focused towards reducing income inequalities and promoting inter-generational mobility. In essence, we need to be looking at the more fundamental underlying aspects of growth rather than simply replicating the outwardly visible.

It is naïve to think, in fact, that the mere presence of cities can lead to growth. It is the element of social mobility in a society that creates more economic output, which in turn, leads to growth. Urban centres merely provide networked environments that facilitate returns to scale and productivity that amplify this growth.[2] [3] But the original growth impulse comes from equal opportunities to grow, reflected in inter-generational mobility.  The following diagram explains the model of growth that I have discussed in this article further on.

Figure: A Model for Urban Development


Disconnected Neighborhoods and Income Inequalities

The urban population share has been rising steadily over time in India, from 17% in 1950 to 31% today which points towards the concomitant and large-scale migration of rural populations to urban settings. However, according to scholars (such as Jagdish Bhagwati 1993; Eswaran and Kotwal, 1994), the slow pace of labour absorption from agriculture associated with the more inward-looking and capital-intensive development path that urban development has taken in India has created its own set of challenges. Riley et. al have likened the slum dwellers to refugee populations living in abject poverty and infested with chronic diseases. Some 81 million Indians living in urban areas earn incomes that are below the poverty line. They are more prone to industrial hazards, communicable diseases, and social discrimination. According to the Indian Institute of Population Sciences, 89.6 per cent of people living in slums die of respiratory diseases followed by digestive problems (41.6 per cent) and aches and pains (37.8 per cent). Approximately 54 per cent of urban slums do not have toilets.[4]  Overall, the urban sprawls of India hide an ugly underbelly which is perhaps the weakest link of the chain of the Indian growth story.

According to various studies, the story of urban poverty and inequality starts with first generation slum dwellers who are migrants from villages and their self-definition is captured in the phrase that: “We are only Here to Settle our Village Debts”.[5] In general, people leave their villages due to droughts, debts, and the general difficulty in making a living (Krishna et. al, 2014). They are a potential force for economic growth but the lack of capacity of the urban systems to accommodate them leaves them in “disconnected neighbourhoods” or slums outside of these urban centres. It is essentially, the failure of the systemic capacities of the metropolitans to harness these human resources, rather than the other way around. Today, in India, over 65 million people or 17.4 per cent of all urban households live in urban slums – an increase of more than 700 % in the past five decades.

Barriers to Inter-generational Mobility

The intergenerational mobility in these concentrations of urban poor is abysmally low and virtually non-existent as they struggle to make ends meet. The comparative studies of the first generation and ‘notified’ or fourth generation slums show that majority of the slum dwellers’ occupations are concentrated in the informal sector even though the nature of the work changes from generation to generation. This restriction to the informal sector and to certain types of works that are caused by the lack of social mobility keeps them from availing formal financial assistance to support high growth ventures that could help them escape poverty and contribute towards national growth. So essentially, the lack of capacity of our urban structures in assimilating the low-income groups into their financial and other structures contributes towards restricted growth.

If socio-economic mobility is an area of concern, it is necessary to look into the expenditure patterns to understand what resources or services may enable or hinder growth for low-income populations. Based on such an observation, effective urban development policies could be designed.

The slum dwellers of India allocate approximately 41-59% of their total income to food procurement and nearly half of them do not possess ration cards as opposed to the well-off urban population who allocate approximately 11% to food expenditure.

Figure: India – Share of Each Sector in Household Total Consumption, by Consumption Segment (%)


From the above pie charts, certain general trends emerge. Firstly, as one moves to higher income groups, a larger share of expenditure is allocated to housing and the proportion of expenditure allocated to food reduces. Therefore, it also follows that housing is also the largest barrier to socio-economic mobility in India. It is no surprise, therefore, that the Telangana government has provided free housing to nearly 10 lakh people. While other governments charge higher than usually affordable sums even when providing low-cost housing to people, the government of Telangana has sanctioned more than two lakh eighty thousand, two-bedroom houses for the poor, absolutely free of cost. The construction of 1,72,447 of such 2BHK houses is already underway. Indeed, for any government serious about pursuing a progressive and sustainable urban policy, providing low-cost housing needs to be a top performance agenda.

Another area where the share of expenditure increases while moving to higher income segments is transportation. In fact, according to a Harvard University study, commuting time has emerged as the single strongest factor in the odds of escaping poverty.  While the lowest income groups spend 3.85% on transportation, they would need to allocate greater proportions to transportation expenditure as they move to higher income segments (8.41% in middle-income segment, 20.2% in higher income segment). Many of the urban poor work in the informal sector as electricians, plumbers, house helps etc. and since they live in disconnected neighbourhood settings which are far away and not well integrated to their places of work, their transportation costs and time increase beyond the capacity of sustenance of these workers.

The idea here is to develop low-cost housing in areas which are not physically separated by the so-called gentrified urban areas. This automatically reduces the cost and time of transportation. Chetty and Hendren (2015) have found that policies that “reduce segregation and concentrated poverty in cities” contribute towards increased social mobility. The proximity to well-to-do areas not only brings down the time and costs of transportation but also affects a second factor – access to better educational environments and neighbourhoods. Interaction with people from a comparatively high resource environment helps children learn about new opportunities and possibilities and therefore leads them towards greater social mobility. Hendren and Chetty have shown that “every extra year a child spends in a better environment – as measured by the outcomes of children already living in that area – improves her outcomes”. This phenomenon has been termed as the “childhood exposure effect”. Similarly, as per the IAS turned Duke University professor, Dr Aniruddh Krishna, “well-informed and well-intentioned outsiders – a cousin, an uncle, a neighbour, or a teacher, who happened to come along at the right moment – feature prominently in the story of every… (successful individual to) overcome the most important obstacles to upward mobility.”

Additionally, according to Krishna, social mobility “is about quantum improvements in living standards and not so much about incremental improvements” and is related to better living environments, education, and mentors. These are essentially the factors that the Telangana government is looking at to create more robust urban environments and indeed these are some of the factors that any government that seeks to create healthy urban growth centres, should focus on. The provision of free housing and free education (such as in the KG to PG scheme)by the Telangana state government is undoubtedly a “quantum” rather than an “incremental” improvement to facilitate social mobility that in turn, facilitates healthier urban growth.


Concluding Remarks

A lot of our barriers to success in developing our urban centers as robust engines of growth are related to misplaced priorities and lack of planning. While infrastructural development is a welcome move for developing progressive urban infrastructure, mindful expenditure of our national resources is a necessary precondition to achieving effective and productive urbanization. The policy of urban development should be focused towards inclusiveness and the same should be seen as a facilitator of growth rather than its by-product. In particular, governments should focus on the cities which are already leading the growth and should focus on implementing policies that ensure affordable housing, that too in a non-segregated manner. Further, the improvement of educational infrastructure and reduction in transportation costs is a key to facilitating social-mobility – another prerequisite of effective urbanization capable of supporting national growth. This should be done in tandem with other qualitative initiatives such as mentorship programs for youngsters led by accomplished and trustworthy adults.

Finally, the central government needs to play a more active role in this effort as the cities that contribute to nearly half of the national GDP are equally the responsibility of the central government as they are of the state and local governments. And yet, it is disheartening to see that the central government’s National Investment and Infrastructure Fund (NIIF) sums to a paltry total of $ 3.08 billion.[6] Likewise, the Rs. 6000 crore or $849.7 million allocation to Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is merely a drop in the bucket. Even the flagship urban development endeavour in India – the Smart City Mission – has a small outlay of 2 lakh crores or $28 Billion (approx.) which is lesser than what any decently sized city generates as GDP, let alone the amount they use as input investments.

Rome was not built in a day and similarly, our metro cities, especially the growing powerhouses of urban progress such as Hyderabad, Chennai, Pune, and Bangalore are still expanding and evolving as they have yet not achieved their full potential. While there is a reasonable need to develop a hundred cities as envisioned by the smart city program, it is all the more necessary to invest in the cities which are already the engines of growth in the nation. Delhi, for example, deserves at least an allocation of 10,000 crores from the central government alone because it is the capital of the country and a continuously growing metropolitan.  If (a) Mumbai with a municipal corporation budget of Rs 27,258.07 crore can produce a GDP of  22 lakh crores (79 times return on expenditure); (b) New Delhi produces a GDP of 20 lakh crores while being allocated a state budget of Rs 48,000 crore and a central government budget of 790 crores, resulting in a 42 times return on expenditure; (c) Hyderabad contributes a GDP of 5.26 lakh crores on a recently increased expenditure of 13150 crores (40.03 times the expenditure); there is a need for the central government to do its part for the national capital. The central government certainly and especially needs to do more than the 790 crores it has allocated for the development of the national capital region (NCR) in 2018-19, which is almost a fifth of what it spent last year on publicity alone (4300 crores). Similarly, all of the top ten largest and highest revenue generating cities should be given greater financial stimulus by the central government which would, in turn, result in setting the nation on the path of exponential growth. If our nation seeks to take its strategy of urban-led growth seriously, it is imperative for the governments to walk the talk and “put their money where their mouth is”.







[5] (PDF) Urban Slums: An Enquiry into Concept, Characteristics and Policy Interventions. Available from: [accessed Sep 03 2018].



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