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Reproduced for scientific reasons, not-for-profit
November 7, 2011 8:31 pm
A case of rise and sprawl
By Amy Kazmin back
Urban growth is threatening Delhi’s global ambitions
When Duraisamy Balasundaram was a teenager, his south Indian home town of Coimbatore had just 120,000 people, with factories set along wide roads amid big open spaces. In the 1980s, his 8km commute to his automotive components factory took just 12 minutes and he regularly went home for lunch. Today, the 65-year-old industrialist’s once pleasant town is a congested, chaotic mess, with snarled traffic, housing shortages and a frenzied edge.
Lured by factory jobs, rural migrants have poured in, swelling the population from 816,000 in 1991 to an estimated 1.7m and saturating the city core. But the urban sprawl around the municipality is expanding rapidly, as high housing prices push families to the periphery, from where they endure long commutes.
Water runs short each summer, sewers are overwhelmed and poor drainage creates breeding grounds for disease-carrying mosquitoes. Many families live in illegal slums. As for Mr Balasundaram, his commute now takes at least 30 minutes; going home for lunch is off the menu.
“I feel like it’s another Bangkok, overwhelmed by traffic,” says the businessman, who exports to Europe and the US. “There is no orderly planning for infrastructure in the city. It’s just haphazard growth. There is a factory next to residential quarters and in front of it, there’s a school. Zoning is totally unknown.”
India’s urban agglomerations – from megacities such as New Delhi, Mumbai and Bangalore to smaller industrial cities including Coimbatore – are the engines of its dynamic growth, the heart of its aspirations to become an economic superpower. Yet the metropolises are also turning into dystopias undone by population pressure and neglect of infrastructure.
These conditions are already a serious drag on economic growth, deterring new investment and hindering the retention of talented professionals, many of whom jump at opportunities to work abroad. Even poorer Indians migrate to cities only when survival requires it, fuelling labour scarcity and upward pressure on wages. Urban dysfunction is also a threat to its prospects in the contest with neighbour and rival, China.
According to the 2011 census, the number of Indians living in urban areas has surged to 400m – about 31 per cent of the population. That is up from just about 285m, or 28 per cent, in 2001. The country now has 50 cities with more than 1m people, up from 35 a decade ago. That urban population is expected to surge to well over 600m in the next two decades, as increasingly mobile youth pour out of the countryside. Yet most cities are already struggling to cope.
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Across urban India, power and water supplies, public transport and social services are unable to keep pace with demand. High land prices put decent housing out of reach even of many middle-class families, forcing up to 25 per cent of city-dwellers – and about 50 per cent in Mumbai – into slums. Long-term development plans for orderly growth barely exist.
Aromar Revi is the director of the Indian Institute for Human Settlements (IIHS), a new, business-backed entity seeking to build a university focused on urban planning issues. He estimates the poor state of the cities – which together produce two-thirds of economic output – is shaving 1.5-3 per cent from potential annual growth in gross domestic product. Businesses are forced to shoulder the cost of providing basic services – power, clean water and employee transport – normally offered by municipalities.
“These cities are going to start collapsing under their own weight,” Jahangir Aziz of JPMorgan, says of India’s 10 biggest conurbations. “Local governments are in a state of denial – they don’t accept that these cities are in such a state that within a short period of time it will become almost impossible for them to do any business. Business is there now only because there is a very huge cost of moving out.”
A government panel on urban infrastructure recently estimated India needs to spend about $950bn in the next 20 years on services including power, water and sewers. That suggests huge business opportunities – though profiting from them will take time. “Everyone is salivating at that trillion dollars but where is the money going to come from?” asks Mr Aziz. “A significant number of these projects have to be pure public goods – for which you cannot charge user fees ... The Indian government, states and cities haven’t been able to come up with feasible financing plans.”
The problem is not just an Indian one. “This is one of the biggest challenges faced by many emerging economies in Asia,” says Haruhiko Kuroda, president of the Asian Development Bank. “To make urban life more liveable requires huge investment and good governance ... Most emerging economies in the region are not well managing this strong trend towards urbanisation.”
. . .
In India, however, the process has been particularly fraught. During the anti-colonial struggle, cities were considered enclaves of foreign influence, while villages were pronounced “the authentic India” by independence leader Mahatma Gandhi. Today, policymakers still tend to view cities as distasteful entities to be controlled or exploited, while largesse is showered on rural areas.
“India’s imagination – certainly of the political and administrative elite – still situates India as a country that lives in its villages,” says Mr Revi. “Investment in urban areas has been minuscule compared to what is happening in rural development.”
Cities have traditionally had little political or financial autonomy. India’s original constitution of 1950 gave local administrations few powers, leaving city management largely to state governments dominated by rural politicians preoccupied with other issues. Though a 1993 amendment ostensibly enabled cities to manage their own affairs, in reality crucial powers, especially in revenue raising, are barely devolved.
“If you ask anybody, anywhere in India, ‘who is in charge of the city?’ you won’t get an answer,” K.C. Sivaramakrishnan, formerly the most senior bureaucrat in the ministry of urban development, says. “It depends on the day of the week and the issue. Everybody wants to have a hand in. The possibility of a political agenda for the city is almost non-existent. It’s subsumed by the agenda of the state.”
That agenda is not much changed. Mr Revi notes: “The theory is cities now have a tremendous amount of autonomy – they can raise taxes and legislate on a whole range of questions that relate to urbanisation. In actual practice, very few of the capacities were transferred from state governments. The money has not been transferred; cities are still seen as places you extract resources from.”
Indian cities have only one clear revenue source: property taxes. But poor record-keeping and outdated valuations mean their revenue collection hardly reflects the property boom.
“No city in India actually has a map of the entire city, plot by plot, with each land parcel mapped out,” says Partha Mukhopadhyay at New Delhi’s Centre for Policy Research, a think-tank. “By the time the survey has been done, somebody has built an extra room, somebody has built an extra floor, and all of that is outside the official records. A lot of what is actually there is not supposed to legally be there, so you end up having a lot of property not being actually in the tax net.”
. . .
The Congress party-led administration has tacitly recognised the urban crisis. It has sought to stem farmers’ migration to cities with its flagship rural employment guarantee scheme, which offers 100 days of paid labour to villagers in their communities. In 2005, New Delhi also launched an “urban renewal mission”, which has provided about $10bn to cities for improvements such as new bus fleets, storm drains and roadworks. Yet Kamal Nath, urban development minister, concedes this is barely scraping the surface: “We are catching up with the past, not building for the future.”
Cities are also short of officials to develop and implement urban improvement plans. India currently produces just 300 qualified city planners a year, most of whom join the private sector. Mumbai, India’s business capital, for example has not a single qualified urban planner in its municipal government, according to Mr Revi of the IIHS. As a result, cities have struggled to use even the limited funds available. “We don’t have projects chasing money,” says Mr Nath. “We have money chasing projects.”
But the urban landscape is not without hopeful signs. Ten years ago, New Delhi inaugurated a metro system now spanning 189km, one of the world’s biggest. The network is profitable and a 108km expansion is under way. Last month, Bangalore, India’s information technology hub, inaugurated a 6km stretch of its own long-awaited metro system. Several state governments are considering metros for their busy capitals. Under pressure from business, Bangalore has also blazed a trail in property tax reform, increasing revenues and putting it on a firmer financial footing. Other cities are trying to follow suit.
Mr Mukhopadhyay at the CPR says central government and state politicians are starting to see the importance of cities and the opportunities offered by large infrastructural projects, “both in an overall economic sense but also in a narrow rent-seeking sense. This convergence of incentives – private incentives and public importance – is going to move a lot more investment into our cities.”
That cannot happen soon enough for Mr Balasundaram, who fears Coimbatore deterioration poses a threat to his company: “If I have a foreign customer who takes one whole day to have one meeting, he is not likely to come next time. If our employees have to live very far away and take two hours to come to work, their efficiency will be very poor.”
Every year, he adds, local business groups point out the city’s needs to politicians but little is done. “The political will to implement seems to be lacking.”
For most Chinese officials and business people, a visit to India may be inconvenient and uncomfortable but it confirms their faith in China’s economic and political superiority. The urban shambles and deficiencies in infrastructure are all the proof they need that single-party rule by ageing engineers is preferable to the chaos of Indian democracy, writes Jamil Anderlini.
But behind China’s gleaming roads, vast ports and forests of apartment blocks, many officials worry their country has become too successful at infrastructure at the expense of the other things needed to sustain a healthy economy.
“If you travel anywhere in China there are so many construction sites still. This is not good for China’s long-term growth, because we have used too many resources,” says Yu Yongding, an adviser to the ruling Communist party. “You can see magnificent, vulgar and costly government buildings at all levels of government and even in the smallest county you will find five-star hotels that look better than in Washington or New York: it’s terrible.”
Local governments are technically forbidden to run deficits or borrow directly from banks or debt markets. But for years they have evaded these restrictions by setting up “financing platforms” that borrow from banks and issue bonds, then use the money to fund local infrastructure projects.
Schemes such as toll roads should provide returns. But policymakers fear others will end up as bad loans on banks’ books. “Building a house and dismantling it again creates huge GDP but no wealth,” says Prof Yu. “Who is going to stay in all those extravagant countryside hotels?”
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ErichW | November 10 2:38pm
Why does nobody see the obvious, that we must stop growth? If poorer areas need better lifestyles, redistribution is the answer. General growth is a suicidal policy for normal people, not living on a flat and endless planet. No argument for growth (jobs, the system, etc.) is valid against the fact that all growth is material and increases resource depletion rates. cf. ecoglobe.ch for more details on flat-earthers' HOT ideology.