The rise of Indian Cities: Jobs vs Development

Indian cities suffer from a grave paradox as they are reported to have the lowest floor space index of construction in the world, but are among the most densely populated. It is also evident that India devotes a disproportionately high percentage of its land to agriculture at 48 per cent. The rise of cities is inevitable, with a decline in agricultural employment from 75 per cent in early post independence years to 58 per cent in current times. According to a 2014 working paper by Denis and Zérah, the number of people for whom farming was the main occupation declined from 103 million to 98 million between 2001 and 2011. In 2014, a survey of farmers conducted by CSDS found that 62% of those surveyed were willing to leave farming for a job in the city. A Lokniti survey estimates that 60% of farmers want their children to settle in cities, and only 19% think that village life is better than city life. Meanwhile, India’s farms have significant problems of under-productivity, so the country would do well to focus on non-farm avenues of growth as it works to increase the efficiency of farms.

As the pull of a city is the promise of upward mobility and affordability across public goods, India is slowly drifting towards a services dominated economy. This rural to urban transition suggests that an increasing number of people would gather around fast growing cities, resulting in India’s metropolitans to grow larger even as small towns congregate to become ‘urban’. Therefore, if India has to absorb the large numbers of people leaving agriculture and having aspirations of a better life, it cannot afford to ignore its urban areas. Urban areas means not just large metropolises, but also the smaller cities, towns, and large villages, where much of the job creating economic activities like manufacturing, small-scale industries, and construction are taking place. To match demands over the next decade, India will need to annually invest between 8 per cent and 10 per cent of its GDP on developing its urban infrastructure. Investments in infrastructure and amenities along with skill development would be vital for augmenting employment productivity in these areas. India will possibly double the size of its urban area over the next decade from 3 per cent of overall land area to 6 per cent and to make cities more inclusive to an increasing number of citizens, there is a drastic need for flexible master plans and strategic investment in incremental planning.

But first, transfer of land for urbanization will require land titles to be clear and land acquisition to be transparent and participative. Second, to fund such large investments, cities will have to look towards its own citizens, whether it is through monetizing of its lands, higher usage charges for public goods, or higher property taxes. Hence, the slow, bottom-up changes should be supplemented from the top, with a policy direction that recognizes urban India, and leverages this demographic change to spur economic development.

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