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An ignored boom in India

It’s time to refashion policies keeping in mind India is urbanizing at a faster pace than estimates
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First Published: Sun, Oct 07 2012. 10 18 PM IST
The neglect of census towns shows glaring gaps in our understanding of how the Indian economy works. Photo: Pradeep Gaur/Mint
The neglect of census towns shows glaring gaps in our understanding of how the Indian economy works. Photo: Pradeep Gaur/Mint
Updated: Sun, Oct 07 2012. 10 51 PM IST
Recently, Mint published a series on urbanization and small towns in India. It is also important to look at the analytical aspects of the process of urbanization and policies for it.
In the middle of the last decade we established what we called “large villages” which met the census criteria of towns that were not classified as urban areas by the government. This led to a pessimistic perception of urbanization by experts like Rakesh Mohan and Amitabh Kundu. We argued then that a part of this pessimistic perception might arise from settlements which are “urban” by census definitions but which are still not classified as “urban”. While the absolute differences on this account may be small, due to the nature of computational methods to arrive at population projections, in the end “small” absolute differences can lead to “large” end differences and may affect projections. These can lead to the wrong policy choices on urbanization.
Applying the census criteria of considering rural areas as non-statutory towns, to village-wise data of 2001 census, it was estimated that out of 18,539 populated villages of Gujarat, 122 villages were classified as non-statutory towns, which the Mint articles call census towns. The population of the 122 big villages was 2.21% of total. If this was added up to the estimated state urban population then the revised degree of urbanization was 39.57% (i.e. roughly 40%). The level of urbanization in Gujarat had therefore not increased by 2.87 percentage points, but by 5.06 percentage points, which was close to double the earlier estimated change. This makes a big difference in policy and forecasts. In 2006, we estimated urban population at 42.2% for 2011. The census estimate was 42.6%. This is a difference of 2.57 crore persons. But the projections of the urban population by the Technical Group on Population Projections (TGPP) after the 2001 census was 2.4 crore and so for almost a decade, policies were made ignoring around two million persons in urban Gujarat and their needs.
Urbanization in Punjab is much lower than in Gujarat. The urban population in the state was more than 50% only in four districts out of twenty. But it is an advanced agricultural state and the phenomenon of census towns was widespread there. The urban population grew by 25.7% from 2001 to 2011. But for ten years the Punjabi was not migrating to what they called towns but places he did business in. He converted large villages to small towns but was missed out. There were 143 statutory towns, but the 2011 census discovered 74 census towns. The people of Punjab were creating these towns but nobody knew of that and no one was worried about them.
Bihar is a poor state and its urbanization rate in 2001 was 10.46%. The TGPP projected a near stagnant urbanization rate in 2011. However in 2011, the actual rate of urbanization was higher. The growth rate of urban population at 35.1% in the period 2001 to 2011 was higher than that in the rest of the country. In a large state that means a lot of people. The missing Bihari urban people numbered 1.5 million. They were in fact going to places where the infrastructure was poor. If one includes census towns urban growth more than 50% took place in distinctly rural and not very developed districts.
The number of statutory towns increased by 242, but census towns increased by 2532 from 2001 to 2011. But the policy did not adjust accordingly. The Planning Commission has finally changed its earlier figure of urban population in 2011 at 357.95 million to the 2011 census figure of 377.11 million (earlier missing out 2 crore persons). The 12th Plan approach paper noted the phenomenon of census towns but has persisted with projections for the future as earlier. The projection of 405 million Indians living in urban areas by 2017 is not a serious one, as also 600 million in 2030.
All this leaves these “new” urban places virtually in limbo. An earlier scheme for small towns was dropped. The Jawaharlal Nehru National Urban Renewal Mission does not cover census towns. Public Private Partnership (PPP) models are not the answer. CRISIL has shown that very small towns cannot service charges for private investment in urban infrastructure. We need to go back to the drawing board. Indian agriculture will meet the requirements of food security and rapidly diversify itself. It will function in a rural urban continuum, with rapid developments of markets and shifting of working populations from villages to linked small towns and also from crop production to value added activities. In our paper, “The Future of Indian Agriculture” (Indian Economic Journal, April 2011) we showed that with income elasticities of demand of between one and a half to two, the demand for non-grains, like milk products, edible oil, sugar and fruits and vegetables rises by more than 10%, for if per capita consumption rises by six and a half per cent consumption of these goodies will rise by one and a half times that or more. Employment growth will be high in these agricultural activities chasing a high rate of economic growth. But when the kisan goes to his market there are no facilities. She transports her crops on roads that exist only in name. There are no facilities for processing or storage. It is high time that we started a virtuous cycle of investment and growth. The neglect of census towns shows glaring gaps in our understanding of how the Indian economy works and invites rising food prices and immiserization.
Yoginder K. Alagh is chairman of the Institute for Rural Management, Anand, and a former
Union minister
Comments are welcome at theirview@livemint.com
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First Published: Sun, Oct 07 2012. 10 18 PM IST