Posted in Urban India

Prospects for Prosperity of Indian Cities

As we saw in the last post, the UN-Habitat’s Wheel of Prosperity has the 5 dimensions of prosperity interacting with each other; and prosperity depends directly on whether these interactions reinforce or undermine each other.

wheel of prosperity 2

We also saw that according to the UN-Habitat’s survey, both Delhi and Mumbai made it only to the category of moderate prosperity factors (0.600–0.699), characterised by:

  • Wider discrepancies among the 5 dimensions of prosperity
  • Institutional and structural failings
  • Less balanced development
  • Neat divide between rich and poor

The main problem in integrating the 5 dimensions of prosperity in Indian cities is the growing informalisation of the city’s economy, with Mumbai having the dubious distinction of 68% of its economy being informal, while Delhi and Chennai have over 61% of informalisation. As mentioned in my earlier post, by operating in the 3 sectors of industry, enterprise, and housing, the informal economy weakens the national economy in the long run:

  • By pushing more and more of its practitioners deeper into poverty
  • By dissipating India’s age advantage, as deprivation leaches away at the human potential of generation after generation, denied access to education and skill building
  • By operating below the tax radar and denying taxes to the local, State and Central Governments
  • By untold damage to the urban environment, as a consequence of little or no monitoring or regulation

Large scale informalisation weakens all the 5 dimensions of prosperity, because informal production seldom gets reflected in the productivity figures of the city – especially as India lacks a proper representational system (guaranteed by a local/state authority) of documenting land deals, goods produced, inventories maintained, or transactions completed.

By acting below the tax radar, the informal economy deprives the local government of taxes, and a resource-strapped local body is hardly likely to provide adequate services like health, education, water and sanitation, which directly impacts quality of life.

The informal sector thrives in any economy, only because it is profitable for the formal sector to have all, or part of its supply chain in the informal sector. This segment can provide cheap goods and services as it pays abysmally low wages and offers no social security to its workers, as it falls outside the ambit of the country’s labour laws, meant to safeguard worker rights. This means that millions of informal sector workers are perpetually caught up in a poverty trap, generation after generation – a situation exacerbated by the unavailability of affordable or rental housing. In fact I have a simple thumb rule, if according to the decadal Census, x% of a city’s population lives in slums, then x*1.3% of its economy must be in the informal sector! Such high prevalence of urban poverty and the policies which perpetuate it in Indian cities make a mockery of the equity and social inclusion dimension of prosperity.

The informal industrial sector is also guilty of the worst pollution in a city, and being unmonitored and unregulated, there is no incentive for these enterprises to clean up their act, so there goes environmental sustainability!

I have left infrastructure for the last, because every government in recent times looks upon urban infrastructure as its most tangible ‘mark’ on the horizon, and given a limited span of 5 years to ‘prove themselves’ they opt for quick fixes like roads, bridges and flyovers which only encourage more private vehicles, add to the pollution, and are hardly ‘inclusive’ in their exclusive use by the wealthy. Spending the same money on improving the quality of health and education, lowering the city’s carbon footprint, or upgrading the city’s water supply system makes more sense for Indian cities, but by the time their impact is seen, the election has come and gone…

So instead, we are happy with news-bites, putting up huge statues of the icons of the day, and providing photo-ops for VIPs sweeping the streets to dump the garbage god knows where!

In India it is called ‘good governance’…

How then, can we go about making Indian cities more prosperous? Primarily by addressing the issues at the hub of the Wheel of Prosperity – Government institutions; and Laws and Urban Planning.

Despite almost 70 years of independence, India does not have a national urban policy nor a National Urban Plan. When China opened up, the first thing it did was to invest billions in developing its National Central Cities and business hubs like Pu Dong in Shanghai and Shenzhen near Guangzhou. The Government investment earned magnificent returns, as China went on to become the world’s factory in the following decade. Indian Governments must realise that national investment in urban infrastructure is key to economic growth, and cannot be left at the mercy of the private sector, as happened under JNNURM and is going to happen again under the new regime..

Plus (unlike Brazil) there has been no attempt in India to involve the community in urban management and planning, nor to subsume public housing in urban planning, as in Singapore.

Further, taking a lesson from cities which rank much higher than us, we notice one common thread: they all have very strong, enabled and empowered local governments. India needs to follow suit. Although it is over 20 years since the 74th Constitutional Amendment, decentralisation has not really taken off, because only the functions have been delegated to the local level, not the resources, powers or personnel.

As I had pointed out in my earlier post, the Mayor of Shanghai is such a powerful personage, that visiting Heads of States come calling whenever they visit China. He is assisted by a plethora of urban planners, administrators and engineers whose only concern is their home city of Shanghai. Contrast that with Mumbai, whose highest local official is the City Engineer, who is subject to a Municipal Commissioner and numerous Additional Municipal Commissioners, all officers of the Central Indian Administrative Service or IAS (who are generalist career civil servants and not  qualified urban professionals), posted by the State government for a short duration, to run local government! How amusing…

The New York Police Department (consisting of officers who spend their entire careers serving the city) reports to its Mayor, an elected public official, while Delhi’s Police Commissioner is from the Central Indian Police Service (IPS), posted by the State Government for a couple of years to police the city, and report to some IAS Officer at the State Home Department!

The same system prevails when it comes to urban planners, who are responsible not to the local body, but to the State Government’s Urban Development Department, headed (you guessed it!) by yet another IAS Officer. For instance in Maharashtra, if a city finds that its industries are moving further out from the city centre and the large swathes of land under factories will remain unutilised, it cannot authorise change of use to commercial or residential development, without the say-so of the State Government. So much for autonomy in local planning!

This absence of qualified urban professionals (who are lifetime employees of a local government in charge of their city’s planning and development) is at the heart of misgovernance in Indian towns and cities. Without a strong local administration, it becomes impossible to elect and empower Mayors who can act as true CEOs of their cities, as in other parts of the world.

However, given the clout of the Central permanent bureaucracy (which considers urban local bodies as plum postings), things are unlikely to change soon, and Indian cities will have to postpone their dreams of prosperity a little longer yet… no matter which political party is in power.


I am a trainer of Government Officials and Elected Representatives, specializing in the urban and municipal sector. I have also written extensively on Urban Governance, Poverty, Development, Social Accountability and Municipal Management in the Indian context, and wish to share these writings with you through this blog.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s