Finance

Redefining cities: A brand new city consensus

redefining-cities-a-brand-new-city-consensus

A small tweak—such as defining what is urban in India—can have a far-reaching impact on the ease of living and economic development.

By Devashish Dhar

In policymaking and the consequent activities of legislative and executive responses and budgetary allocations, the fundamental step that decides the course of action is the definition of the issue at hand. After Covid, we have been forced to redefine issues so that we can make the most of what lies ahead. The way a policy issue is defined determines the next step. The battle is mostly won and lost at the policy definition stage. No other issue has carried the cross of the subjectivity of definition like urbanisation in India.

There are two main ways to define urban areas. One is a statutory town, which includes all places with a municipality, corporation, cantonment board or notified town area committee. These towns are defined by state governments and place India’s urbanisation rate at 26.7%. Census, however, adopts three criteria to define what is urban. The three criteria are: i) a minimum population of 5,000; ii) at least 75% of the male main working population engaged in non-agricultural pursuits, and iii) a density of population of at least 400 persons per sq km This, coupled with statutory towns, pegs India’s urbanisation rate at 31%. Total number of towns (state and census) stand at 7,933, together constituting a 377-mn population.

This definition skews the policy maker’s attention and budgetary allocation, which is not in tandem with the ground realities. There is growing evidence—mostly from satellite imagery—that India is way more urban than the 2011 Census estimate. This is quite plausible because there is a large sum of money allocated for rural development, and it is in the interest of state governments to under-represent urbanisation. Besides, the Census’s stringent definition was first carved out in 1961 by census commissioner Asok Mitra. They clearly do not reflect the realities of the 21st century. India won’t be alone in changing these definitions for Census 2021. Many countries, such as China, Iran, the UK, among others, have changed the definition of ‘urban’ from one census to another.

India, thus, is also not alone in facing the challenge of defining what constitutes urban. Worldwide, there are a fairly large set of thresholds being used (sometimes in combination, as in India) to define an urban area. However, India is one of the only four countries to use a combination of administrative, economic and density for urban definition.

Taking a more liberal and realistic approach in the upcoming census to define urban areas will prove critical as it will present the actual picture of urbanisation. Many think-tanks have highlighted this issue. For instance, if we just use the population density criteria like 37 other countries, with the 400 people per sq km threshold, we will add around 500 mn people to the urban share of the population. This pegs the urbanisation rate at over 70%! Surely, we are harming ourselves by maintaining the status quo. We have a rare opportunity in Census 2021 to redefine what constitutes as urban. This becomes more important in the wake of Covid-19, a considerable share of the migrant population has moved back to either smaller cities or their villages. If they do not move back to cities soon enough, this will reflect in the 2021 census, and the urban areas will get even lower funding, limiting their ability to invest in developing urban areas.

There is no doubt that the actual numbers will mobilise a sense of urgency and resources in India to set right the injustice meted out to Indian cities. There are some clear benefits. First, the budgetary allocation will reflect the reality and scales will balance between rural and urban areas. Second, the urban areas will not be governed through rural governance structures of Panchayati Raj Institutions. Third, we can avoid the trap existing cities face, devoid of basic urban infrastructure. The sewerage networks, fire services, building regulations, high-density housing, transit-oriented development, piped drinking water supply, among others can be provided in areas which otherwise would continue to operate as rural areas. Post-Covid, there is an urgent need to expand our investments in the urban areas—housing, transport, medical facilities, among others. Else, only a decade later, we will recognise that we are repeating the same mistakes all over again.

Fourth, these newly defined urban areas could act as a new source of revenue for funding local infrastructure development through municipal finance sources such as property tax and development rights. This would ease pressure on state finances. Lastly, the rethink of urban definition would have an impact on the regional and national economy. These newly defined urban areas will open them to new infrastructure such as railway lines, discom services, highway connectivity, creation of higher education institutes which will together increase the connectivity and resource capability at the local level. This will not only boost the local economy but also ease pressure on bigger cities and help in cluster level development.

A small tweak—such as defining what is urban in India—can have a far-reaching impact on the ease of living and economic development. As more people continue to depend on non-farm incomes, this change in definition will usher in new economic opportunities. A rethink of urban definition in Census 2021, particularly with some degrowth in urban areas due to Covid, will bode well for India for coming decades in more ways than one. We showed such agility while undertaking reforms in the agriculture sector. There is no reason why we cannot do it for urbanisation.

The author is Public Policy Specialist, NITI Aayog.
Tweets: @dhardevashish. Views are personal

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Steven Gregory