India can reap benefits of urbanisation

One of the main reasons Mr Narendra Modi scored such an overwhelming victory in last month’s general election is also one of the least recognised: India is far more urban than it likes to think. India thinks nostalgically of itself as a nation that “lives mainly in its villages” and official statistics show that more than 30 per cent of its population is urban.

However, that wildly underestimates the true number. If “urban” India is defined by population density and includes former “villages” whose life has been turned upside down by roads, the Internet, satellite television and availability of non-farm jobs, it is more likely that 70 per cent of citizens are living something akin to “city life”.

MORE URBAN THAN INDIA ADMITS

Mr Modi, the new Prime Minister, realised this. He tapped the sense of aspiration this rapid urbanisation has engendered. The paternalistic Congress party did not. It continued to talk to the villages, failing to recognise it was addressing a dwindling constituency.

Even official statistics are striking. In 1951, there were only five cities with a population above one million and only 41 with more than 100,000. At that time, most of India’s 360 million people lived in 560,000 villages.

Now, there are at least 53 cities or “urban agglomerations”, the term used by demographers, with a population above one million and three with more than 10 million.

By 2031, six cities — Mumbai, New Delhi, Kolkata, Chennai, Bangalore and Hyderabad — will have 10 million to 30 million inhabitants each. Today, cities with such unfamiliar names as Kozhikode have joined the likes of Barcelona in the million-plus club. India’s population, now 1.2 billion, is expected to peak at 1.6 billion in 2050.

The really interesting developments are happening outside the biggest cities altogether. India’s statisticians define an “urban” place as one with more than 5,000 people, at least 75 per cent of male inhabitants working in non-farm jobs and a population density of more than 400 per sq km.

However, if density alone is counted, then, as far back as the 2001 census, 68 percent of Indians were already urban.

Indeed, it is in towns and peri-urbanlandscapes, where rural and urban India blend into one another, that the biggest changes are taking shape. Mr RajivKumar of New Delhi’s Centre for Policy Research estimates that more than half of those living in so-called villages derive at least part of their income from activities besides farming.

Forty years ago, Mr Yamnaji Gule was driven by hunger from his village in Maharashtra to work in Mumbai, where he delivered tiffin lunch boxes. He says younger people these days prefer to work at the factories that have sprung up near his village.

India, then, is more urban than it admits. This has big implications, not least for business, which has much money to make if it can anticipate the needs — from toiletries to cars — of the new aspirant class.

ENGINES OF POVERTY REDUCTION

From the administrative side, too, there are vital challenges and opportunities. For a start, more effort must go into planning cities. India can no longer pretend urban squalor is temporary and that migrants can simply return to their villages. The same goes for transport, housing, roads and sewerage.

Of the 53 cities with a population above one million, only eight have integrated transport authorities, said Chennai-based economist Jessica Seddon. Cities have been allowed to sprawl willy-nilly, depriving them of the cost and energy efficiencies that can result from density.

Nor has welfare provision, still mostly directed at poor villagers, caught up with new demographic realities.

Creating the conditions for enough urban jobs, one of Mr Modi’s main election promises, will be another crucial task. If most men, half of whom are below the age of 26, have cut ties with village life, they will become frustrated and potentially dangerous if they do not find gainful employment.

Without jobs, the supposed demographic dividend may become more like a time bomb. Male violence could also increase due to the sex imbalance that has resulted from selective abortions of female foetuses.

On the other hand, social mores are changing fast as more people break free from the influence of conservative villages.

Mr Modi’s Hindu nationalist Bharatiya Janata Party does not have a reputation for being socially progressive. To prevent an ugly conservative backlash against such shifts, the Prime Minister will need to steer his party towards tolerance.

Properly run and supported by appropriate legislation, the country’s “cities could be engines of poverty reduction”, in the words of the Indian Institute for Human Settlements.

As countries such as China have found, urbanisation can do wonders for productivity growth and wealth creation.

India’s 53 biggest cities alone, home to 13.3 per cent of the population and occupying only 0.2 per cent of the land, produce nearly a third of national output. The 100 biggest cities produce 43 per cent.

Mr Modi owes his job in large part to the ranks of new urbanites. He should now make it his mission to put India’s cities to work.

THE FINANCIAL TIMES

ABOUT THE AUTHOR:

David Pilling is the Financial Times’ Asia Editor.