Why is urbanization important ?
Week 14-21 Feb,2016
● Urbanisation occurs when people move out of rural areas into cities in search of employment and opportunity. This has been the development experience of almost all countries. This is because cities play an important role in developing industries and services. By generating economies of agglomeration and by acting as centres of knowledge and innovation, they make investments in industry and services more productive.
● Rapid growth of GDP will have to be driven by non-agricultural sectors.
Faster growth of industry and services leads to a decline in the share of agriculture in both GDP and employment. This is called structural transformation and should be welcomed.
● India has been among the fastest growing economies of the world for quite some time now.
● However, the rapid growth has not been associated with employment growth in non-agricultural sectors.
● With far too many people dependent on agriculture for their livelihoods, productivity of labour is low in Indian agriculture as farmers engage in labour-intensive farming. This limits their potential to earn a higher income. Since it is not possible for the existing rural population to earn a decent living in rural areas, they have to, and do, move to the cities. To absorb the exodus of people from rural to urban areas, we need to fix our cities. We need to provide employment, skills and opportunity for people to engage in industry and services sectors.
Problems associated with urbanization and way forward:
● Indian cities are in a state of disrepair and are visibly deficient in the public services they provide, with alarming consequences for public health.
● Whether it is the severe air pollution in Delhi, traffic congestion in Bangalore, the floods in Chennai or the garbage menace in a number of cities, technology provides only a small part of the solution.
● The larger challenge is that of reorienting the federal framework to strengthen governance.
● The government of India can provide strategic leadership and the new missions are very welcome from this perspective. But the funds needed for the missions are much larger than what the government of India has offered, or can possibly offer, given the competing demands on the financial resources of the Centre.
● The private sector can generate funds for urban infrastructure projects but will do so only if a reasonable return is assured, and for this, reforms in urban planning, finance and management are crucial, and state governments will have to be the principal players.
● Public-private partnership works best when it is based on an open and transparent arrangement, with a clear assignment of risks, backed by an effective dispute-resolution mechanism. The Centre can help with a model framework. But state governments will have to come on board in a partnership mode with the urban local bodies, the community and the private sector to make public-private partnerships work.