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Remove bottlenecks on the path of urbanisation

Even though the size of India’s urban population is significant and larger than the population of the United States of America, for its level of income, urbanization appears to be low in India.

As per the first Census (in 1951) after Independence the proportion of India’s urban population was 17.29 percent. This rose to 31.16 percent in 2011, giving an average decadal growth rate of 2.3 percent. Though some economists, especially those in World Bank believe that India has ‘hidden urbanisation,’ inferring that all of urbanisation is not captured in data on account of what administratively gets labelled as ‘urban,’ it still remains a fact that India’s urbanisation has been stalling.

According to the United Nations Development Programme’s (UNDP) Human Development Report 2011, only about 25 countries out of 178 that had urbanisation levels lower than India. Not much has changed since then. USA took two centuries to reach the current level of urbanisation while China did it in just one century. At the current rate of urbanisation, India would have taken two and a half centuries to urbanise to the current US levels. The rate would have gone down further due to stagnation in urbanisation process (and reverse migration) in 2020 and 2021. It may take another 1-2 years for the normalcy in urbanisation process to return. This should nationally be a cause of worry, since this has had adverse implications for India’s economic progress.

The lack of affordable rental housing, the anti-city Indian mindset, inefficiently-held large tracts of urban land by public agencies, and the disastrous consequences of the recently enacted Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFTLARR) on the ability of urban local bodies (ULBs) to acquire urban land, are the main culprits creating bottlenecks on the path of urbanisation and growth.

In this regard, there is a lot to learn from China that has seen rapid urbanisation in recent years which is also one of the reasons for its economic miracle. China’s rapid urbanisation in recent years surprising as the country till 1970s had anti-urban mindset. Its only when the top think tank in China realised the close relationship between urbanisation and economic growth, policy initiatives started leaning towards rapid urbanisation. Impact at the ground level due to this change in this mindset is mind boggling. As late as 1950, only 13 percent of the population lived in cities in China. India’s own urbanisation stood at 17.3 percent in 1951. Today, the World Bank estimates that China has exceeded 60 percent urbanisation while India’s urbanisation stands at around 35 percent.

So, urbanisation is the much needed stimulant for economic growth and therefore there is urgent need to remove the hurdles on the path of urbanisation. If needed, we can mimic some of the successful models followed elsewhere in the world.

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