If the Indian economy is to sustain a growth rate of 9% for a couple of decades, the bulk of India would have to live in towns, fundamentally altering the dynamics of Indian society and culture. T K Arun examines the critical issues involved and the way forward
INDIA lives in its villages, according to Mohandas Gandhi. More's the pity. It's time India changed its habitat. If the Indian economy is to sustain a growth rate of 9% for a couple of decades, the bulk of India would have to live in towns, fundamentally altering the dynamics of Indian society and culture. The way inevitable urbanisation takes shape will determine what kind of a society India will become. We need coordinated policy and planning, involving governments at the Centre, the states and municipalities. Instead, we have a big, gaping hole that sucks in city dreams and converts them into living nightmares.
In 2001, 72% of Indians lived in rural areas and only 28% in towns, according to the Census conducted that year. By the next census in 2011, the share of urban India would probably be 35% (it's already 35% in a state like Punjab). Fast-paced growth of the kind India has been experiencing in the last four years would accelerate the trend towards urbanisation. India would cross the half-way mark in urbanisation probably in the early 2020s. If we assume a population growth rate of 1.3% per year, India's population would reach 136 crore in 15 years' time. (Well known demographer PN Mari Bhat has estimated India's population to be 133 crore in 2020). If we assume that urbanisation already is 32%, the additional number of people who would have to shift to towns for half of India to become urban in oneand-a-half decades is about 32 crore. If we assume a population density of 12,000 people per sq km, that would mean creating additional urban space of close to 27,000 sq km. That means 18 new towns, each the area of Delhi (Delhi's area is 1,483 sq km). Do we have any policy in place to build new urban spaces of this combined magnitude?
We have no such policy. We do have millions of migrants crowding into everexpanding slums in existing towns. Clearly, this is not the way to urbanise. By way of policy, what we do have is building Special Economic Zones, which are nothing but small urban spaces where industry and services can grow. The size of the largest SEZ cannot, by policy, exceed 50 sq km (yes, that is what 5,000 hectares means). The other relevant policy we have is for urban renewal, named after Jawaharlal Nehru, under which the Centre would give funds for urban development, provided the recipient towns agree to a modicum of policy reform. A high point of the present focus on urban reform is scrapping the antiquated Urban Land Ceiling and Regulation Act, which prevents decrepit mills, for example, from using their land for alternative use. Scrapping ULCRA would, admittedly, release a few hundred sq km of additional land within existing towns. But the area so released would be tiny, given the economy's requirement of urban land.
Scarcity of urban land hits economic development in a variety of ways. It jacks up the cost of urban real estate. This, in turn, inflates office rentals, hotel tariffs, cost of residential accommodation, the cost of doing business, in general. But that's not all. New hospitals and schools find that land accounts for as much as 60% of their capital cost. Bye-bye to affordable education and healthcare for the masses. In other words, skyrocketing real estate prices become a constraint on expansion of education and healthcare, leading to a manpower shortage as well.
Why is there a shortage of urban land? After all, there is plenty of rural land available, which can be converted, to increase the supply of urban land. There are two kinds of obstacles to conversion of rural land into towns. One is the Singur-Nandigram type — owners and other occupants of rural land have no incentive to give up their land for urbanisation; rather they'd lose their livelihood and face an uncertain future if they give up their land. Involuntary conversion of rural land can take place with compensation, as in Singur, or by means of terror unleashed by the henchmen of politically wellconnected agents who undertake to procure land for a new enterprise, as reportedly has been happening in the case of Posco in Orissa. The other kind of obstacle comes up where a farmer voluntarily wants to convert his land into urban land. The administration just would not permit it. Only when a builder acquires the same piece of land at a pittance does the administration grant the permission. The price of the land goes up dramatically after conversion, the politician and the babu get a share of that gain from the builder and everyone lives happily ever after — everyone other than the farmer who sold his land at a pittance and the rest of us, would-be users of scarce, expensive real estate.
We clearly need a policy to release rural land for building towns that makes the farmer who loses his land into a stakeholder of the process, rather than its victim. One model is from Magarpatta, a township near Pune built by a company floated by farmers who pooled their land and now sell a variety of services to the town dwellers, apart from earning handsome dividends from their company that earns enormous rental incomes from the IT parks and other ventures that have located there. Another possible model is for all those who stand to lose their livelihood from conversion of land use (not just owners who lose their land) to own at least half the stake in a special purpose vehicle that would lease out its land for building a town, factory or SEZ. The lease income would offer minimum sustenance and their stake in the SPV would grow in value as the land appreciates on account of the new economic activity spawned by conversion of the land-use from farming to towns. Fair market value at the time of acquiring a farmer's land for urbanisation is no guarantee of a fair deal. An institutional mechanism must be found to give traditional users of the converted land a stake in the prosperous future being built on what once was their land. States must identify large tracts of land where conversion of land-use is allowed automatically. Farm productivity must go up, simultaneously, to compensate for the tiny share of arable land that would be lost to urbanisation.
This, of course, is not the only challenge in building new towns. It is imperative to plan new towns to minimise their carbon footprints, going vertical, adopting mixed land use to organise work in close proximity to residences. Today's towns are built on the assumption that only a tiny elite would be prosperous enough to own cars. India's new towns must provide for both efficient public transport and the general populace's requirement of space for uses that were considered the privilege of the elite: parking, sports and games, other recreation.
When towns grew around cotton mills in colonial south India, streets were earmarked for exclusive use by particular castes. Modern towns carry the promise of breaking the correlation between caste and occupation, through structural diversification of the economy. Their physical organisation must help this process, rather than hinder it. Ghettos breed crime and cultural backwardness and insularity. Towns must be designed to have no room for ghettos.
Can we at least start thinking about urban affairs in a new light?
35%
Would probably be the share of urban India by the next census in 2011
136 cr
Is likely to be India's population in 15 years, if we assume a population growth rate of 1.3% per year
32 cr
Would be the additional number of people who would have to shift to towns for half of India to become urban in 15 years, if we assume urbanisation already is 32%
27,000 sq km
Would be the additional urban space requirement if we assume a population density of 12,000 people per sq km after 15 years
18 towns
Would be needed to be built anew, each the area of Delhi, in 15 years
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