‘Decentralised’ Urbanisation Key To Growth, Sustainability & Equity
India's rapid urbanisation presents a golden opportunity. Equally a monumental challenge. Urbanisation is a necessity, an irreversible process, a trigger to economic transformation. It catalyses social mobility. In developing economies, cities are growth fulcrums. Well planned, well governed sustainable cities are the key to societal progress and prosperity.
*Growth, socioeconomic mobility embedded in urbanisation
Economic and demographic ascendancy of cities is coming under greater scrutiny. A Crux study of 18,000 citizens, and 60 economists, policymakers and city administrators across eight of the largest Indian cities provides a valuable insight, and underscores policy priorities. The impact of urbanisation on the economy and the accompanying challenges should be on the high table.
An insight from the study is that cities can generate 85 per cent of net new jobs and contribute to three-fourths of the GDP. They can stimulate a near two-fold increase in per capita income during this decade. Urbanisation creates jobs, induces investment, and triggers a consumption boom. It spawns "true" discretionary spending.
A city is a powerhouse of productivity. It’s a hub for dense and frequent interactions, compelling individuals to engage with one another. It enables interactions and fosters efficiency. Urbanisation facilitates and generates returns through a multiplier effect. It’s a growth engine that catalyses economic development through agglomeration and has spill-over effects.
Policymakers must seize the moment, act decisively to create an urban infrastructure capable of supporting equitable access to urban life, employment, education, public amenities, and entertainment. Unfortunately, our track record has been less than promising. Most citizens are denied basic services.
The study highlights that if we continue with the current trend of ‘poorly planned, sprawling and unconnected’ pattern of urbanisation, it could impose an estimated cost of up to Rs 2 lakh crores by mid-century. As an example, a 10 per cent increase in a city's dispersion index could lead to about 0.8 per cent decrease in economic growth.
The intangible cost is even more, and manifests as unfulfilled life. Traffic snarls and a polluted environment take a toll on mental well-being and deteriorates the quality of life. An insight from the study is that people commuting to work for more than two hours suffer a poor quality of life. It spills over to their social and family circle. They are more likely to be divorced, more likely to be stressed and suffer psychological issues and are less likely to have an engaging social circle. They tend to have poor health and will lead shorter lives.
Furthermore, the resource crunch amplifies social inequality. The urban middle class is deprived. The poor live in squalor, with limited access to education and job opportunities, perpetuating a cycle of poverty that is difficult to break. They are marginalised and excluded.
Underfunded municipalities are at the core of the urban transformation problems. Revenue of all the municipal corporations put together is approximately one per cent of the GDP, and amongst the lowest in the world.
India needs to invest over Rs 5 lakh crores to revamp its urban infrastructure. Can India realistically find such enormous sums? It is challenging, but doable. It will require a mind-set change. Municipalities must create a cohesive public-private partnership.
The landscape has evolved from government agencies to a complex institutional setup with multiple actors (private, government and civil society) playing a role in service delivery. They must build capacity. Identify a service-oriented framework and transition to a citizen centricity model. Well-run cities around the world tap appropriate and sustainable revenue streams. Municipalities must create a fair and transparent mechanism to collect property taxes and user charges that reflect costs. They must monetise land assets This alone can meet 80 per cent of the funding requirements.
The rest must come from state and central governments. Cities generate almost 75 per cent of the taxes. They deserve a stake in their growth. Additionally, financial empowerment will alleviate the service offering. The Crux study recommends that the government share a fifth of the GST revenues with them.
*Most cities are complex conundrums
State governments have an even bigger role to play. Metropolitan areas in India are marked by administrative polycentricity, with a diverse set of central, state, and municipal agencies ‘shaping’ policies and implementation. These functions often overlap, leading to uncoordinated development, lack of accountability and transparency.
Local governments (ULBs) are often bypassed, rarely empowered, further hindering the translation of the urban development agenda into action. This translates into poor planning, inefficient revenue collection, appalling service delivery and, above all, execrable governance.
Municipalities must broaden their perspective, and move beyond ‘administration’ that overshadows planning. Well-conceptualised, holistically planned cities provide a roadmap for effective governance, thriving and productive ecosystem and a better quality of life. Our cities are governed poorly and planned badly. Planners pay little or no attention to equity. There is scant regard for affordable housing. The ‘essentials’ of city infrastructure like, drainage and sanitation, roads and public transportation, are often ignored. The informal economy is neglected. Liveability indicators suffer.
While megacities do contribute significantly to the economy, they often come at the cost of compromising the environment and equity. To promote sustainability and equity, policymakers should emphasise decentralised urbanisation as a more viable approach.
*Much to do. And holistically
India underperforms on all aspects of urban management. It must make enormous strides. Municipalities need efficient planning and a new governing model. For instance, unlike in most countries, in India city ‘administrators’ are neither empowered not have the requisite authority. Most administrators lack the capacity and have little stake in the municipalities.
Decentralisation could be a solution, but the Crux study ends on a cautionary note. It should be carefully planned and more importantly, balanced well. The goal must be to create a thriving regional ecosystem. The focus must be to create a collaborative and connective framework where smaller towns can complement the strengths of larger cities without becoming isolated or disconnected.
Thus far India has barely acknowledged the challenge in its cities.
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