Indian urbanisation ‘messy’, reforms needed: World Bank

Terming India’s urbanisation as “messy and hidden”, a World Bank report today called for initiatives at the policy and institutional level to tap the economic potential it offers.

“Although they have made progress, India and other South Asian countries can make better utilisation of opportunities that urbanisation provides them to transform their economies to join the ranks of richer nations,” it said in a report titled ‘Leveraging Urbanisation in South Asia’.

The World Bank said there has been difficulty in dealing with pressures that increased urban populations put on basic services, infrastructure, land, housing and environment, fostering “messy and hidden” urbanisation.

This, in turn, has helped constrain the region’s full realisation of the prosperity and liveability benefits of urbanisation, it said, adding that at the institutional level, there would be benefits from improvements in ways in which towns and cities are governed and financed.

The report put reforms in the spotlight, saying these are required to address three fundamental deficits in empowerment of local governing bodies, resources and accountability.

“Inter-governmental fiscal relations must be improved to address empowerment; practical ways must be identified to increase the resources available to local governments to allow them to perform their mandated functions and mechanisms must be strengthened to hold local governments accountable for their actions,” the report highlighted.

To tackle messy urbanisation and bring about lasting improvements in both prosperity and liveability, policies are also required to improve the ways in which cities are connected and planned, working of land and housing markets, and cities’ resilience to natural disasters and the effect of climate change.

“If managed well, urbanisation can lead to sustainable growth by increasing productivity, allowing innovation and new ideas to emerge,” said World Bank Managing Director and Chief Operating Officer Sri Mulyani Indrawati, who is on a three-day visit to India.

She said absolute poverty has come down in the region, but South Asia has not fully realised the potential of urbanisation and much needs to be done.

“This messy and hidden urbanisation is a result of cities finding them struggling with the growing urban population,” she added.

The report said urbanisation has been relatively slow in India, with the share of population living in urban settlements growing at a rate of just over 1.15 per cent a year from 2001-11.

“Hidden urbanisation is seen in the large share of India’s population that lives in settlements that possess urban characteristics, but do not satisfy the criteria required to be officially classified as urban,” it added.

The report said messy urbanisation in the country is reflected in nearly 65.5 million people who live in urban slums as per the 2011 census and the increasing sprawl that afflicts many Indian cities.

Also, 13.7 per cent of urban population lived below the national poverty line.

“If managed well, urbanisation can lead to sustainable growth. Better cities can help reduce poverty, improve living conditions and create environment for more and better-paying jobs,” Indrawati said.

Annette Dixon, World Bank’s Vice-President for the South Asia Region, said policymakers in the region can either continue with the same policies or undertake reforms to tap into the unrealised potential of cities in the region.

The urban population in South Asia increased by 130 million from 2000 to 2011 and is poised to grow by almost 250 million in the next 15 years.

“It is essential to move forward. It won’t be easy, but with the right policies and investments, South Asia’s cities can be much more liveable and prosperous,” Dixon said.

It said major cities like Delhi, Mumbai, Hyderabad, and Kolkata have seen the fastest population growth on their peripheries. Bangalore, Chennai, Delhi, Gautam Budh Nagar, Greater Mumbai and Kolkata rank high among the Indian districts on the World Bank report’s prosperity index.

As per the World Bank analysis, India added seven multi-city agglomerations between 1999 and 2010 taking the total to 30, but Indian cities have so far not been able to take full advantage of these agglomerations.

“The largest metropolitan centres — Mumbai, Delhi, Bangalore, Kolkata, Chennai, Hyderabad, and Ahmedabad — saw a 16 per cent loss in manufacturing jobs between 1998 and 2005 within 10 kilometres of their city centres.

“On the other hand, job growth in their immediate peripheries increased by almost 12 per cent,” said the report.

However, the World Bank said it supports India’s Smart Cities and AMRUT initiatives and has been engaging with the government for initial level funding support.

“It is very encouraging that programmes like Smart Cities and AMRUT are incorporating many of the ideas outlined in this report,” said Onno Ruhl, World Bank Country Director for India.

“The challenge will be to make this transition inclusive, providing opportunities and jobs to youth, especially women, and supported by efficient service infrastructure.”

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