Home / Opinion / Online-views /  Making small towns a priority for growth

Although India continues to be a largely rural country with 69% of its population in villages in 2011, there are signs of change which have important consequences for its economic geography. Between 2001 and 2011, growth in urban population at 32% was almost three times the growth in rural population at 12%. But more important was the fact that a significant part of this growth was contributed by small towns and census towns. The number of census towns increased by three times, with census 2011 recording 3,894 census towns as against 1,362 in 2001. It is important to note that census towns are defined as towns based on the census definition of urban areas but are administratively treated as villages.

One of the primary reasons these villages by administrative category have been classified as census towns is the changing nature of employment structure. National Sample Survey Office (NSSO) data on employment and unemployment have already highlighted the fact that the period after 2004-05 is the first since independence when the absolute number of workers in agriculture declined. The decline between 2004-05 and 2011-12 was around 35 million workers who moved out of agriculture into non-agricultural occupations. While rural areas accounted for the bulk of the increase in non-farm employment, a significant majority of them have also found jobs in these urban peripheries.

A recent study by Urmila Chatterjee, Rinku Murgai and Martin Rama from the World Bank suggests that small towns have contributed significantly more in generating non-farm employment as compared to large cities. Another study by John Gibson, Gaurav Datt, Rinku Murgai and Martin Ravallion also highlights the importance of small towns in rural poverty alleviation compared to large cities.

There is now a plethora of studies which have documented the emergence of these small and medium towns as drivers of growth. Our own study based on Palanpur village in Moradabad district also confirms the growing importance of these small towns as providers of employment but also as drivers of growth for new non-farm activities. Most of these new activities are at present casual and largely in construction, transportation and other service activities. Interestingly, data from census 2011 also shows that 48% of all workers engaged in activities other than agriculture and household industry are commuting to a distance of 2km and more for work. Almost 30% of these rural workers are commuting to a distance of more than 5km for work.

Advances in communication and transportation have made accessing jobs in these urban peripheries easy. But what has also helped these small and medium towns is the availability of cheap labour which is looking for employment outside agriculture. It is interesting to note that most of these urban peripheries are not only towns in the vicinity of large metropolitan cities but also rural villages which have grown to acquire characteristics of urban areas. The emergence of market towns is an important feature of these census towns and small towns. But closeness to rural areas has also allowed these small and medium towns to become centres for growth, for demand for new services and goods consumed by the rural population. The close links to the rural and agrarian economy has allowed them to insulate themselves from the uncertainties of large urban cities.

Unfortunately, despite the significant contribution of these small towns, they remain invisible in the policy discourse. The fact that they continue to be administered as rural villages also means that they are not on the priority of state and central governments as far as urban infrastructure is concerned. In any case, it is well known that an overwhelming amount of our total expenditure in urban infrastructure is cornered by large projects of urban transportation and infrastructure in metropolitan areas. But they also receive lower priority in provision of electricity, communication and financial services such as banking and credit.

The invisibility of small towns in the political discourse is partly a result of the size of these towns but also the approach of the government. Rural areas continue to remain important politically because of the sheer size of rural areas as vote banks but also the nature of vulnerability that rural populations face. As a result, rural areas have not only benefitted from new schemes such as Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) but also increased spending on rural infrastructure such as Pradhan Mantri Gram Sadak Yojana (PMGSY) and the rural housing scheme.

But it is the approach to urbanization which continues to remain fixated with large metropolitan cities that has rendered these small towns trishankus, a term used by Jairam Ramesh, cabinet minister in the previous government. The absence of an administrative structure suited to urban governance eludes them since they are counted as rural in the administrative scheme of the government. The ‘neither here, nor there’ status of these census towns and small towns raises important questions of sustainability of these as drivers of growth.

The solution is not just changing our understanding of urbanization based on statistical measures but an economic classification. But more important is to recognize the importance of changing economic geography which is centred on these small towns and census towns. This will require not just planning ahead in terms of public provisioning of essential services and infrastructure to these areas but also making sure they continue to remain important for future growth. At a time when the fastest growth of the economy between 2004-05 and 2011-12 could only yield a growth rate of employment of 0.6% per annum, small towns are not just important for employment creation for the new entrants to the labour force but also a majority of those who will move out of agriculture in the future.

Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.

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