One of the biggest announcements after Narendra Modi assumed office was the announcement of the smart cities project, which involves overhauling of urban infrastructure in 100 Indian cities.
In April, Niti Aayog chairman Arvind Panagariya predicted India’s urbanization rate to increase to over 60% in the next 30 years, assuming a 7-9% rate of economic growth.
These policies and statements underline the importance of urbanization in the Indian growth story in the days to come.
Analyzing India’s urbanization performance, so far, could be a useful tool to get an idea about how realistic such claims are. The numbers are not very encouraging.
Between 2001 and 2011 census, India’s urbanization went up from 27.8% to 31.1%. Not only is the number far from impressive, it also makes Panagariya’s predictions way too optimistic. What explains this tepid growth in urbanisation in India?
A recent paper titled Urbanisation, Demographic Transition and the Growth of Cities in India, 1870-2020, authored by Chinmay Tumbe, an assistant professor of economics at IIM-Ahmedabad, gives some useful insights on this issue.
Tumbe argues that India’s urbanization has been both low and slow irrespective of which definition is applied to measure its pace. The 2011 census defines urban areas as settlements with a local urban body and with a population of at least 5,000 people, density of at least 400 people per square km, and at least 75% of the male main working population engaged in non-agricultural activities.
But even if the definition of urban areas were to be relaxed to include all rural areas with a population of more than 10,000, the change in urbanization would remain the same, although the level would increase to 37% for 2011, the paper says.
If the definition were to be further expanded to include all rural areas with population over 5,000, India’s urbanization level would increase to 47% in 2011, but the pace of growth would still be around three percentage points.
In fact, analysis of historical figures from 1870 onwards shows that India’s urbanization pace has slowed down in the recent period.
An international comparison with some major economies shows that not only is India’s urbanization score among the lowest, it also lags behind global average and major developing economies from 1971 to 2015.
Tumbe lists a counter-intuitive reason, which is responsible for holding back India’s urbanization speed. It is the freedom to keep on migrating from villages to cities and then back to villages which is acting as a fetter on speed of urbanization in India, his paper says.
In countries such as China, the government regulates rural-urban migration through permits and entitlement to welfare schemes.
That a part of the rural-urban migration is seasonal in nature and concentrated in sectors such as construction is well known. An earlier Plainfacts column had shown construction to be the single largest source of employment for migrant workers in India.
The lacklustre environment in India’s construction sector might already have had an adverse effect on employment opportunities for India’s migrant workforce, as was pointed out in another Plainfacts column published last month.
Tumbe’s paper goes beyond the issue of seasonal employment in urban areas limiting India’s rural transformation. He argues that migration from India’s rural areas has always had a gender bias and male workers leave their families in rural areas to look for employment opportunities in urban areas.
As time passes, older cohorts go back to the villages to live with their families only to be replaced by younger ones. The process is facilitated by the important role of kinship ties in getting such jobs. Given the fact that there is neither any restriction on rural-urban movement of labour, nor is there adequate infrastructure for women migrant workers in cities, the net effect is a slowing down of India’s urbanization pace, the paper says.
This is the first part of a two part data-journalism series looking at India’s urbanization challenge. The final part would look at the causes of state-wise differences in urbanization.