The growing town-city divide

If we had been a polity where contenders to power after next year’s election had to focus on policies rather than personalities, a major focus could have been on how they would deal with the vacuum that is set to emerge in urban policy.

With the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) being extended only till next year, the new Government would need a developed urban policy as soon as it comes to power.

This would ideally be built around recognition of the major failures in the philosophy of JNNURM.

In the process, it would be much more sensitive to a strategy of urbanisation that focuses not so much on big metropolises as on emerging manufacturing townships.

A major weakness in the JNNURM strategy for urbanisation is that it focuses on cities more than on urbanisation.

The emphasis has been on developing ‘world-class cities’ rather than the process through which the rural becomes the urban.

Rising land prices

Projects are typically chosen in terms of how they compare with the best in the world, instead of their cost-effectiveness.

These costs are sooner or later passed on to the users, thereby affecting the competitiveness of larger cities.

As the larger cities become less competitive in terms of manufacturing and services, local capital has little option but to move into real estate.

This investment is encouraged by predictions of rapid urban growth that are far ahead of what the Census figures suggest.

These predictions serve to further raise the prices of real estate and thus attract even more investment.

The higher real-estate prices compound the high-cost disadvantage of most Indian cities.

The disadvantage of high real-estate costs affects both investors as well as labour. As higher land prices raise the cost of projects, investors are less inclined to step in. To the extent that manufacturing is more land-intensive than services, it leads to a relative slowdown in manufacturing.

At the same time, as the cost of living in the cities keeps growing, labour is forced to stay away.

The resultant shortage of labour in urban areas is particularly ironic at a time when millions of workers are leaving agriculture.

There is thus a huge labour force potentially seeking industrial work. But industry cannot tap them as the workers cannot afford to move en masse into the cities. A meaningful urban policy must then move beyond a preoccupation with ‘world-class cities’ to the building of urban spaces that relate to the larger processes of urbanisation.

Attracting labour

One way to do so would be through the creation of manufacturing townships. These townships would recognise that labour requires more than the workplace to live.

The manufacturing centres would also have to offer education, health, recreation and other facilities outside the workplace.

Once workers find the place attractive, industries that need this labour can be encouraged to move into established industrial estates within the townships. And as industries move in, they will attract more labour, and so on.

For these townships to succeed, however, they must not lose their cost advantage. And the location of these townships can play a significant role in keeping costs down. If they are located in the midst of areas that are seeing a major shift away from agriculture, they would be accessible to those who were previously working on farms.

Even when workers choose to migrate into the townships, they have the option of doing so in stages with some in the family staying back in the village until such time the main earning member in the family establishes himself or herself in the urban centre.

Location matters

As these townships need not be at the periphery of major urban centres, they could be in areas of low real-estate values.

It is also possible to develop mechanisms that keep down the costs of dwelling units, at least as far as workers are concerned.

A well-developed and affordable local public transport system would enable workers to reside at home and work in these townships.

This would act as a dampener on the rate at which real estate prices will grow within the township.

The location of these townships in areas that are already in the process of moving out of agriculture would also reduce the scope for conflict between farmers and industry.

A well designed plan for the township that would allow farmers to own their land even after it is urbanised, would give them a stake in the process of urbanisation and industrialisation.

Such a strategy would also tap local resources, including land and capital, for the growth of industry.

The availability of local resources for the township would help the government to focus more on the development of road and other connectivity that would be needed. A broad-based network of townships would also allow for a more dispersed and equitable process of urbanisation.

Such a strategy would have its economic, social and political rewards for those implementing it. But it will require several changes in the official mindset, including greater convergence between the government’s urban and industrial policies.

(The author is Professor, School of Social Science, National Institute of Advanced Studies, Bangalore. >blfeedback@thehindu.co.in )

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