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Budget 2023- 24: The Case to Build New Cities – IMPRI Impact and Policy Research Institute

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Budget 2023- 24: The Case to Build New Cities - IMPRI Impact and Policy Research Institute

T K Arun

By 2051, India may have an additional 335 million urban population. Several new cities will be needed to settle them.

ndia needs more than a pat on the back from fiscal-deficit-focused rating agencies and analysts, in order to regain economic vigour in a slowing world. A whole lot more. India needs a new New Deal, and, in the present national and global context, that would mean investing in a large project that creates demand for material and machines produced in India and for lots of labour, both skilled and unskilled, while adding to India’s future productive capacity. Building a new city is a good choice.

Building a city is more a challenge of planning, project development and coordination, rather than of putting up the money needed to finance it. Rarely is a city owned by a single entity, whether individual or corporate. Rather, individual chunks of it will be owned by those who see the opportunity that a new city will create for themselves and for the country.

China’s population is about two-thirds urban, whereas India’s is about half that proportion. Countries prosper because non-traditional sectors, industry and assorted services, grow, and these grow mostly in towns. New jobs are created in the sectors that grow faster than in the traditional sector of agriculture. People move from village to town to take up the new occupations, and thus countries urbanise.

Existing Cities Choked 

World Bank data finds that 56 percent of the world’s population live in towns, and produce 80 percent of its GDP. The 2011 status found the level of urbanisation in India to be just under 33 percent. Assume it is about 35 percent now. With India’s population now at 1.42 billion, the urban population would be almost 500 million. In 2051, India’s population would be 1.67 billion (both population figures from UN Population projections. If India’s population becomes 50 percent urban by then, that would mean the urban population would increase to 835 million. That would mean that the incremental urban population would be 335 million.

There is no way this additional population can be squeezed into India’s existing towns and cities, whatever redevelopment of extant towns is carried out. India would need several thousand additional sq km of urban space. If we assume a reasonably high population density of 25,000 per sq km (Chennai and Kolkata exceed that level) that would call for 13,400 sq km of additional urban space.

If we allow for more breathing space and plan for a density of 15,000 people per sq km, the need for new urban space would be in excess of 22,300 sq km. The state of Delhi is 1,483 sq km in area, including some semi-urban areas. That means India will need 15 new cities, each the size of Delhi state. Or a larger number of smaller cities.

Go For Land Pooling

The biggest challenge in building brand new towns is freeing up land. The states, rather than the Centre, is best placed to find the land. Announce that the Centre would start the new city project in whichever state undertakes to mobilise land parcels of 100 sq km with reasonable water availability, to begin with.

New cities need not come up in the proximity of existing towns. They just need to be near a highway. Pooling land, on the lines of Amaravati — the capital that Chandrababu Naidu was building for Andhra Pradesh before he lost his re-election bid, leading to politically motivated stalling of the project by his successor — is the best way to persuade incumbent land owners to offer up their land for new development. They exchange their land in return for getting a fraction of it back as developed, urban land.

The new towns India builds now would have to be conceptualized differently, thoroughly planned for energy efficiency, minimal commutes, easy mobility of people and vehicles, inclusive habitats that avert ghettoisation, ease of policing, have mixed land use rather than segregated commercial and residential use, and optimal connectivity with other towns and cities.

Detailed project development could identify clusters of office, commercial and residential spaces, zones for utilities, entertainment, education. Real Estate Investment Trusts and property developers could build the real estate assets suited for each purpose.

How Governments Can Help

The government’s job is to do very detailed planning, put in place a framework of democratically accountable urban governance, complete with a fiscal base the local body can tap. A viable market for municipal bonds is necessary for city development, and that is an integral part of developing a vibrant market for debt in the country. The money would flow in, once the city project looks convincingly detailed and viable.

The Centre’s role is essentially that of a catalyst and enabler, not that of a financier. States could initiate such projects on their own, as well, once the framework of governance, taxation and debt is put in place. Creating the numbers of urban planners needed would also fall to state and central governments, who need to ensure that the urban planning models they champion are not the legacy models abandoned in the West from where these have been imported.

As the economy prospers, the need will arise for many new towns. If their development is staggered too much, the ones that come up earlier would tend to get crowded, and the natural tendency would be for populist accommodation of immigrant pressure. That would put paid to urban planning.

Intelligent, efficient urbanisation calls for mass awareness of the challenges involved and broad political buy-in.

This article was first published in MoneyControl as Budget 2023: Build new cities, it is what our future demands of the present on 28 January 2023.

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