26 June 2019

Urbania

India’s Urbane Surge

 

A rapidly expanding manufacturing sector, fuelled further off late by the ‘Make in India’ charge, is spawning new industrial and commercial hubs in Tier II & Tier III cities across India. This has prompted mass migration of labor to urban areas from rural India. The urban population in India currently totals around 410 million people (32 per cent of the total population) and is projected at 814 million (50 per cent) by 2050. This urban surge in population is throwing up its own challenges, which range from economic land-use, to affordable housing, to Green construction.

 

India’s urban population is projected to reach 590 million in 2030, according to CNN, up from 340 million in 2008. It cited a 2010 McKinsey comment that India will “have to build the equivalent of one Mumbai of commercial and residential space every year to keep up.”

 

The latest Economic Survey by the government finds that about 377 million people from India’s total population of 1.21 billion are urban dwellers. With over 10 million people migrating to cities and towns every year, the total urban population is projected at about 600 million by 2031. This has accelerated the rate of urbanisation rapidly — between 2015 and 2031, the pace of urbanisation is projected to increase at a compounded annual growth rate (CAGR) of 2.1 per cent, which is estimated to be almost double of China’s growth rate.

 

"Urbanisation is an irreversible trend. Rather than viewing it as an evil, we have to make it an integral part of our policy for development. Urbanisation has to be viewed as an opportunity to use modern technology to create a wholesome and secure habitat while reaping the economic benefits that it offers."
Cabinet Resolution on creation of NITI Aayog

 

The Urban Pie

While the funding required for building and managing the urban infrastructure required to manage this surging urban population is enormous, it can be seen as a huge business opportunity for major EPC contractors and real estate developers. According to the latest research from the New Climate Economy, “Better, smarter urban growth could be an economic opportunity for India worth up to 6 per cent of GDP by 2050. Continuing the current poorly planned, sprawling, unconnected pattern of urbanisation could impose an estimated cost of between $330 billion and $1.8 trillion by mid-century. At the household level, this equates to more than 20 per cent of average household incomes.” The research is being launched in New Delhi by Lord Nicholas Stern and Naina Lal Kidwai (recently ex- Chairman-HSBC Holdings Plc.’s India, & Executive Director —Board of HSBC Asia Pacific), as members of the Global Commission on the Economy and Climate.

The new paper pioneers a first-of-its-kind analysis drawing on satellite data of night-time lights to compare cities’ urban form with their economic growth. It finds that Indian cities that were more compact in 2002 experienced faster economic growth from 2002-2012. On average across a sample of 479 Indian cities, a 10 per cent increase in a city’s dispersion index in 2002 was associated with a 0.4-0.9 per cent point decrease in economic growth over the subsequent period. The report also underlines a number of negative impacts or costs associated with India’s current urbanisation model, ranging from increased costs of providing public infrastructure and services, transportation costs, traffic casualties, traffic congestion, air pollution, and health risks, among other considerations. The costs of providing public infrastructure and services are likely to be as much as 30 per cent higher in more sprawled, automobile-dependent neighborhoods compared with more compact, connected locations. The ‘High Power Expert Committee for Estimating the Investment Requirements for Urban Infrastructure Services’ report views urban infrastructure opportunity in India to amount to $640 billion, and the funding gap for infrastructure in India to amount to $100 billion up to 2030. The programmes will enable the private sector to help support the Government in infrastructure development – which is a priority considering the inadequate and crippling infrastructure that is rampant across Indian cities.

 

Major Challenges

14 of the world’s 30 most polluted cities are in India, and outdoor air pollution in Indian cities is estimated to cause around 1.1 million premature deaths per year. India also has the largest number of total traffic deaths of any country: 137,572 were officially reported in 2013.

In India, urban sprawl is different than in other countries; it is best understood as a low density of built-up floor space per unit of land area, combined with severe overcrowding per unit of built-up area. For example, Mumbai homes have only about 30 square feet per person, less than a quarter of the comparable availability in urban China. Countering urban sprawl in India will require a greater emphasis on “appropriate” or “good” density combined with adequate provision of accessible and well-connected infrastructure and services.

The report recommends reforms and progress in three key areas to help deliver social and economic benefits for urban India.

Reform of land regulations to manage urban expansion to improve the efficiency and effectiveness of land use. Expansion of sustainable urban infrastructure to encourage appropriately compact, connected, and coordinated cities. And above all “Reform to strengthen urban local government, accountability, and financing.”

 

Conclusion

While the scale of problems across a wide spectrum spawned by India’s unprecedented explosive growth of urban population is daunting, two major government policy initiatives currently being implemented will help build the critical capacity required to grapple with these problems. One is the Smart City Mission, and the other is Affordable housing. These initiatives, along with others like Atal Mission for Rejuvenation and UrbanTransformation (AMRUT), Swachh Bharat Mission, etc. bode well to manage the rapid urbanisation problem.

The concept of a planned urban administration is yet to be addressed in India’s cities and severe supply and demand gaps are driving cities towards a planned approach to tackle urbanisation. Piecemeal efforts have been made but they lack the thrust to address mega issues. Urban India faces challenges across sectors, with some requiring immediate attention and others requiring long-term action. Thse challenges range from fundamental supply and demand gaps across such utility sectors as power, water, waste & sanitation, urban mobility, to quality and affordability issues across sectors such as health and education.

 

 

India’s maiden Land Summit 2017

 

A global conference on Land Economics, Infrastructure Development, and Finance

 

The Economic Times in partnership with AUM LAI, recently hosted a three day conference-- the Land Summit 2017, for the first time in India. The conference, powered by Gazenia Shelters, was a global conference on land economics, infrastructure development and finance, it was organised to contribute to the ecosystem for holistic land-use development. The summit also highlighted ‘the land question’ and discussed in depth about the contemporary social concerns such as problems of housing affordability and environmental quality.

Land being the most basic of all economic resources, its use is crucial in shaping effective functioning of cities, determining degree of economic inequality and possibility of ecological sustainability.The global conference featured a list of prominent international and Indian speakers who deliberated on affordable housing for all, challenges for rapid development of India, FDI structuring and intellectual property, maximizing returns from rural lands, and other such interesting topics which would help India make optimum use of its land.

Devendra Fadnavis, Hon’ble Chief Minister of Maharashtra, was present at the event to felicitate prominent industrial players with the Dr. Homer Hoyt Awards. The other impressive lineup of speakers and prominent personalities present at the event were Deepak Kesarkar, Minister of State, Minister for Planning & Finance, Subhash Desai,Minister of Industries, Government of Maharashtra, Leslie Pollock, Principal Urban Planner, LAI Global Chapter Chair, Ramesh Nair, CEO & Country Head, JLL India and Niranjan Hiranandani, Co-founder & Managing Director of Hiranandani Groups.

 

The Dr. Homer Hoyt Award held on 11th March, 2017 acknowledged the contribution of industry players like Renaissance Indus Infra, Manavlok Social Work College, Indian Coast Guard, Hiranandani Communities & Gazenia Shelters for their contribution for sustainable land development in urban and rural India.

 

“Maharashtra has achieved up to 50 per cent urbanisation and the biggest challenge before any government is to manage urbanisation. While this urbanisation was happening, we didn't manage it, which resulted in unsustainable urbanisation. 65 per cent of our GDP comes from our cities, which makes them engines of growth. If we can leverage this capacity of cities in a sustainable way, we can accelerate its development in a way that benefits all. We need to manage urbanisation through initiatives like the Smart Cities mission, planned in a sustainable manner,” commented Devendra Fadnavis, Hon’ble Chief Minister of Maharashtra.

“The Land Summit 2017 was a great concept brought to life by the Times Group in partnership with the Land Economics Society, USA. The event witnessed some of the thought leaders and key decision makers of the infrastructure and finance industry who deliberated on important and pressing issues of the sectors. We at the Times Group have tracked, followed and evangelized the positive growth across sectors that will help India realise the dream of a country which has place for all. We have received an encouraging response that reassures us that we are together in optimizing the use of land as a resource in urban as well as rural India,” adds Deepak Lamba, President, Times Strategic Solutions Ltd.




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