Urbanization is an integral part of the process of economic growth. As in most countries, India’s towns and cities make a major contribution to the country’s economy. With less than 1/3 of India’s people, its urban areas generate over 2/3 of the country’s GDP and account for 90% of government revenues.
Urbanization in India has expanded rapidly as increasing numbers of people migrate to towns and cities in search of economic opportunity. Slums now account for 1/4 of all urban housing. In Mumbai, for instance, more than half the population lives in slums, many of which are situated near employment centers in the heart of town, unlike in most other developing countries.
Meeting the needs of India’s soaring urban populations is and will therefore continue to be a strategic policy matter. Critical issues that need to be addressed are:
- Poor local governance
- Weak finances
- Inappropriate planning that leads to high costs of housing and office space; in some Indian cities these costs are among the highest in the world
- Critical infrastructure shortages and major service deficiencies that include erratic water and power supply, and woefully inadequate transportation systems
- Rapidly deteriorating environment
- Many urban governments lack a modern planning framework
- The multiplicity of local bodies obstructs efficient planning and land use
- Rigid master plans and restrictive zoning regulations limit the land available for building, constricting cities’ abilities to grow in accordance with changing needs.
- Building regulations that limit urban density - such as floor space indexes – reduce the number of houses available, thereby pushing up property prices
- Outdated rent control regulations reduce the number of houses available on rent – a critical option for the poor
- Poor access to micro finance and mortgage finance limit the ability of low income groups to buy or improve their homes
- Policy, planning, and regulation deficiencies lead to a proliferation of slums
- Weak finances of urban local bodies and service providers leave them unable to expand the trunk infrastructure that housing developers need to develop new sites.
- Most services are delivered by city governments with unclear lines of accountability
- There is a strong bias towards adding physical infrastructure rather than providing financially and environmentally sustainable services
- Service providers are unable to recover operations and maintenance costs and depend on the government for finance
- Independent regulatory authorities that set tariffs, decide on subsidies, and enforce service quality are generally absent.
- Most urban bodies do not generate the revenues needed to renew infrastructure, nor do they have the creditworthiness to access capital markets for funds
- Urban transport planning needs to be more holistic – there is a focus on moving vehicles rather than meeting the needs of the large numbers of people who walk or ride bicycles in India’s towns and cities.
- The deteriorating urban environment is taking a toll on people’s health and productivity and diminishing their quality of life.
WORLD BANK SUPPORT
The World Bank will look to support policy reform in critical areas such as land use planning and municipal finance, as well as institutional reform. It will work with all three tiers of government in desiging programs to address slums, housing and urban infrastructure requirements.
- Karnataka Municipal Reform Project: Karnataka is one of India’s most rapidly urbanizing states; its capital city of Bangalore is known as the Silicon Valley of India. Enormous growth in business opportunities, as well as rising urban populations and incomes has led to strong demand for better infrastructure and services.
- Third Tamil Nadu Urban Development Project (TNUDP III) aims to help to improve civic services in the state.
- Andhra Pradesh Urban Reform & Municipal Services Project
- Gujarat Urban Development Program
- West Bengal Urban Development Project
- JNNURM Institutional Development and Capacity Building Program
Fast Facts - Urbanization in India
- Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 42.4%; Gujarat 37.4%
- 3 out of world's 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)
- Large Cities: 23 in 1991; 40 in 2001
- Urban Pop.: 25% of 850 mill in 1992; 28% of 1,030 mill in 2002.
- Estimated Urban Pop. by 2017: 500 mill
- % of Urban Residents who are Poor: About 25%
- Slum Population: About 41 million in 2001
- Estimated Slum Pop. by 2017: 69 mill