Among the cities selected for Modi government’s smart cities project, Uttar Pradesh accounts for the most. The move seems justified, given the fact that it is India’s most populous state. However, if urbanization performance were to be a benchmark, there is reason to be sceptical about the prospects of these smart cities.

Between the 2001 and 2011 census, share of population living in urban areas in Uttar Pradesh increased from 20.7% to 22.3%, a rise of merely 1.5 percentage points. Kerala, which was the best performer, increased its share from 25.9% to 47.6% during this period. Other states with commendable track records were Goa, Nagaland, Tripura and Andhra Pradesh, whereas Bihar, Meghalaya and Himachal Pradesh showed the least growth in their urban population share.

What explains such divergence in urbanization performance of states across India?

The intuitive explanation of weight of non-farm economy in a state’s GSDP does not seem to answer all questions. While some of the better performing states such as Maharashtra, Tamil Nadu and Kerala have a higher weight on non-farm sector in their GSDP, there does not seem to be a one-to-one relation between the two variables. For example, Odisha has a higher share of non-farm economy, but it fares poorly in terms of urbanization. For Andhra Pradesh the reverse seems to be true.

A recently released paper by Chinmay Tumbe, an assistant professor of economics at IIM-Ahmedabad, has shown that state-wise divergence in rural-urban population growth might be the key factor behind difference in pace of urbanization in India.

Tumbe underlines the fact that cities in northern India have been experiencing a faster growth in population than those in the southern parts of the country. Despite this, it is the south which has progressed faster in terms of share of population living in urban areas. The solution to the puzzle lies in the rural-urban differential in natural rate of growth of population in northern and southern India, Tumbe argues. What this means is despite urban population rising faster in the north than the south, the share of urban population in the north has fallen behind that of the south because a much-faster rise in rural population has brought down the share of urban population.

The increasing divergence between rural-urban natural rates of growth of population is because birth rates have come down at a much faster pace in cities than in villages, whereas decline in death rates have become more or less equal.

While the increasing gap has been a pan-Indian phenomenon, its magnitude is much larger in the northern parts of the country, statistics given in the paper show.

What is the reason for higher population growth in villages of northern states? It has to do with the backwardness of north-Indian villages in terms of education and income. A growing body of research shows that fertility among women declines with improvement in education levels as it increases awareness about contraception methods and also increases the opportunity cost of child birth for women. Opportunity cost means that educated women have to forego higher incomes in the time lost due to childbirth commitments. Richer families are also known to have fewer children, as they can compensate the loss in future family incomes due to lesser children (working hands) by increasing the earning per child by a higher investment in education.

Tumbe tests this causation by checking whether or not there is a relation between natural rate of growth and rural literacy and agricultural productivity levels; the two being proxies for education and income. Using an econometric exercise to separate the effect of other factors on natural growth of population, he finds that difference in rural literacy and agricultural productivity account for as much as 26% of the difference in fertility among northern and southern states. This explains the slower pace of urbanisation in northern India in comparison to southern India.

The first part of this data-journalism series had highlighted the role of circular migration behind India’s slow pace of urbanization and argued for providing better infrastructure for women in cities to facilitate urbanization growth in India. The arguments presented here underline the need for bringing down fertility rates by improving income and education levels in villages. The short point is, if India is really interested in having smart cities in the near future, it must make its villages smarter as well.

This is the final part of a two-part data journalism series looking at India’s urbanisation challenge. The first part had looked at the role of circular migration in holding back India’s urbanisation speed.