Posted in Urban Issues

Why our cities cannot be run as businesses

Very simply, cities cannot be run as businesses because urban governance is more than just government. It is government + people. And while a business can clearly classify all its stakeholders (share-holders, management, workers, suppliers and distributors), how does a city draw the lines – between the property owners and the squatters? Between the tax-payers and the indigent? Between the empowered citizens and the illegal migrants? Between the rich and the poor? Between the natives and the newcomers? Between the producers and the consumers? Between the governed and the government? Between local demands and regional priorities? And so on…

Thus while a business can be satisfied with mere efficiency, a city needs to look at effectiveness. There is little merit in computerized property tax bills, if the tax base has not been updated for the last twenty years, is there? Ditto with completing a pumping station on time, if the water delivery continues to be erratic and unreliable. City dwellers are more interested in the water in their taps than the technology which gets it there.

Similarly, a business doesn’t really care about participation, equity or inclusion while an urban government must necessarily provide for it.

Accountability in business is often merely a matter of financial accounting and compliance with various government norms – if they were accountable to society at large, we wouldn’t need a law of torts, or liability clauses in every business contract. A city on the other hand, is held to account in every election by its citizens, and there are a large number of mechanisms available today, for citizens to monitor and pull up their local governments.

These thoughts have come to mind because the Indian media are rife with news of grand new urban initiatives being announced by the Central Government. The urban rejuvenation programme (AMRUT) is essentially a reworking of the erstwhile government’s Jawaharlal Nehru National Urban Renewal Mission (JNNURM) which this writer had an opportunity to closely observe from conception to execution to demise… and the summary judgment on JNNURM across the country has been – too many private sector consultants at every stage! Again the proclivity to run a city like a business…

Brazil seems to have had a similar experience as the mayor of Sao Paulo admitted in an interview in 2013: “The previous economic model was very private-sector orientated, so the reaction of the local community was very negative. We need to rebalance the equation so development is not seen as a threat,” he said. “People consider politicians as bad people so it is important to get them involved personally. If they feel a sense of ownership then they don’t complain.”

The fact that the JNNURM then, and AMRUT now, are deeply influenced by organizations like USAID and the Asian Development Bank explains this ‘cities as businesses’ approach, where a Business Development Plan got renamed as a City Development Plan, and almost all reforms made mandatory, had a financial angle – and somewhere along the line we forgot what a mish-mash the urban scene in India is, with thousands of small market towns, ancient pilgrim towns, bustling cities, and dysfunctional megacities with huge informal sectors, all getting the same treatment.

The present Indian government is already receiving a lot of flak for massive cuts in social welfare programmes, discontinuing the consent and Social Impact Analysis from the Land Bill, and replacing unconditional transfers in the social security net with contributory (and therefore conditional) insurance schemes. It appears to put infrastructure and industry before people and the environment – and this attitude is again coming to the fore as India launches a very ambitious Smart Cities project. The many IT consultants are of course looking enviously at Songdo in South Korea or Masdar in the UAE, and hoping to create something similar in India. But do Indians really want this kind of super-efficient but impersonal urban experience? And what minute percentage could eventually afford to live in such a place? Well nobody’s asking these awkward questions.

As the Prime Minister attends a BRICS meeting, he can perhaps pick up a few tips from Brazil about a more participatory and humane approach, seen in the Smart City Initiative to prepare Rio for the Olympics:

Rio Smart City

Only such a holistic approach; which balances the human development, infrastructure and environmental aspects; and formulated with the active participation of the residents of a city, can make it SMART in the long run.


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.

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