We chose growth, development suffered. Now, try the other way around

Illusions & Delusions

Policymakers, right from the planning era of P C Mahalanobis to the present times, have always regarded economic growth, not urban development, to be the primary instrument for promoting progress, job creation and societal satisfaction. Despite this unifocal approach, growth performance has been uneven. It was insipid during the heydays of planning, forcing the 1991 liberalisation. It improved thereafter. We did well in the first two post-liberalisation decades in terms of parameters such as GDP, per capita income, exports, forex reserves and fiscal balance.

Yet, readers will recall that societal dissatisfaction with the results of growth was visible by the end of the second decade. Inequalities created by growth were causing problems. Jobless growth and social unrest were noticed. Dissatisfaction with environmental damage was rife and livability, as also the air quality indices of several cities, had turned problematic. “Why growth?” was often debated.

India experienced a growth collapse by the middle of the third decade. The arrival of Covid worsened matters. Now, Covid seems to be weakening. There are hopes that growth may pick up. Schemes to boost manufacturing, exports, agriculture and poverty elimination keep getting announced. However, urban development continues to be neglected, barring some national/state capital-focused schemes. The adequacy or lack of GDP growth dominates the policymaking mindspace, though the principal Indian cities are creaking with inward migration-induced space congestion despite low growth. Though the census identified 7,935 centres as having urban characteristics, less than half of them have municipalities. There are nine mega- and 44 more ‘million plus’ cities. But the pyramid thereafter narrows sharply and is unbalanced geographically. Only a handful of other cities provide any semblance of a full urban experience. This is the primary reason for the perennial migrant problems and, perhaps, growth challenges.

The official urbanisation level is only around 34%; it was 31.2% (37.7 crore) as per the census of 2011. However, it is much higher — 55.3% — as per World Bank estimates, based on satellite night lights data. This is the share of population living in urban-like density or ‘agglomeration index’, the globally used alternative measure of urban concentration in the absence of consistent cross-country census figures. It suggests that in major centres, population growth occurs outside the fringes of ‘official’ cities and thus fails to get recorded in official statistics.

Further, such settlements come up due to large-scale migration of people to cities, seeking fulfilment of their rising educational, job and ‘quality of life’ aspirations, which are difficult to meet in rural areas. In fact, villages, for long the refuge of many, are now considered passe, as the needs of the people have transformed, converting them into hapless consumers of the seemingly more attractive urban products.

In return, the only saleable product they have is their labour, but skill levels are not high. The resultant tacit, yet unauthorised, compromise is often called India’s ‘messy urbanisation’. Recently, this view received further affirmation with the draft Delhi Master Plan 2041 itself observing that 85% of the residents of Delhi cannot afford a house in planned areas and live in unauthorised or unplanned settlements, making planned development a notional exercise.

It is in this backdrop that we need to understand the difference made to the employment markets between the tacit permissions to growth of unauthorised settlements as currently witnessed, versus formally planned urbanisation with its accompaniments of education, health and recreation facilities like parks and playing fields and other forms of well-managed public spaces, practised in other countries.

Admittedly, the latter comes with extra costs for residents -- an annual property tax, higher fees for transfer of property, higher utility charges, restrictive land-use regulations, and building codes. But it is often forgotten that alongside come a variety of new jobs such as those of gardeners and park attendants, suppliers of various municipal and facility maintenance services apart from the jobs created by the new educational, health and recreational complexes.

Since we have not gone in for widespread planned urbanisation, the share of municipal, public administration, social security, defence and law and order type of jobs is only 1.5% in India. The global average share is much higher at 4.3%, often going above 7% in the advanced economies. It is a major job gap. About 10 million relatively low-skill jobs did not materialise because of our continued pre-occupation with Mahalanobis-inspired ideas of what constitutes progress.

Similarly, in education and health type of services, Indian employment is 5.1%, as against a global average of around 9.5%, going up to 23% for the advanced economies. This clearly shows that at least 15 million additional higher skill jobs which ought to have existed, did not materialise.

The Indian story thus suffers in two ways -- an avoidable shortage of dignified jobs, and an unwarranted shortage in skills created purely by a demonstrated, even if not intended, official apathy for organised widespread, well-managed, urban development and its essential components of education, health and recreation. These essentially pay for themselves, as is seen elsewhere in the world, yet are not provided here. It is no wonder then that there is so much angst about jobless growth and rising inequalities in India. It may be a good time now to revisit our strategies in the oft-neglected area of urbanisation. It may also actually help to reignite growth.