Divya Dwivedi: Urban Revolution Not Mere Urban Development

http://online.wsj.com/article/SB126957711072767735.html

There exists a dual relationship between economic growth and urbanization – while urbanization
is an important side-effect of economic growth, it is also important to sustain economic growth.
The Indian growth story does not quite conform to this and is very unique. Given India's recent
economic growth, urbanization is not only inadequate but the pace of urbanization has been
slower than the economic growth.

This is primarily a result of rural exodus, inadequate government policies, improper governance
models, bureaucratic mess, and lack of systematic urban planning. The problem being many
folds requires multi-pronged solutions based on a critical analysis.

The concept of urbanization in India has been mostly oriented towards major cities, leading to the
evolution of 'two Indias' – the rich urban India and the poor rural India. How this has happened
and how it affects the rate of urbanization are very important questions that help us in
understanding how rural and urban economies interact to influence urbanization.

The rural economy in last few years has been highly unstable due to decrease in agricultural
productivity and lack of opportunities in the organized sector; urban centers on the other hand
have witnessed rapid growth. This results in skewed growth and thus massive rural-urban
migration. While the rate of migration increased in subsequent years, the rate of urbanization has
been declining and as a result cities are no longer able to offer employment to all unskilled labor.
This leads to 'peripheralization of the core'- one of the major problems faced by urban India.

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 implemented various programs like Jawaharlal
Nehru National Urban Renewal Mission or JNNURM and the National Rural Employment
Guarantee Act or 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 cities.

The second most important issue which facilitates rapid and efficient urbanization is –
'decentralization of governance', especially devolution. This increases the accountability,
responsiveness and ownership of local authorities and helps them to tailor development activities,
envisioned by central governments to local needs, thus speeding up the process of urbanization.
The government of India made the 74th Constitutional Amendment to implement this initiative.
However, due to some drawbacks such as discretionary and not mandatory allocation of
functions to the local authorities and insufficient allocation of executive control to the local
authorities have rendered local bodies rather ineffective, contrary to what was envisioned. Hence,
merely assigning the responsibility does not automatically enable local bodies to design projects
and implement them. They require planning and resources support.

Nevertheless, the government transferred developmental responsibility to local authorities without

empowering them economically or raising their resource generating capacity. While not a big
issue for larger cities (due to larger recourse to state funds), it adversely affected smaller cities by
increasing their dependence on external funds which in turn affected infrastructural development
thus stunting their growth. More importantly, the government 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.

Last but not the least, 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 infrastructural projects. This can be
achieved either through government funding, external institutional financing, or through
community involvement.

Hence what India needs is an urban revolution - forward looking urban policies which facilitate
financial resource management, skills enhancement, improved governance, and infrastructure
development- and not mere urban development to sort issues affecting India's urbanization
dynamics.