Civil Society News
The rural economy has been in decline, but people coming off the land in search of jobs haven’t been turning up in established Indian cities like they used to. Statistics show that the rate of growth of rural to urban migration has been falling as cities tend to shut out the poor and the jobs that came from manufacturing are no longer available.
Are older Indian cities therefore ceasing to play their traditional role as centres of opportunity and prosperity? And will the newer and smaller cities, with their focus on being smart and attracting global investment, be able to absorb unskilled people?
To have a better understanding of these changing urban equations and the implications of leaving rising aspirations unfulfilled, Civil Society spoke to Amitabh Kundu, who retired as professor of economics from the Jawaharlal Nehru University (JNU) and is currently at the Institute of Human Development in New Delhi.
Is it true that the rate of rural to urban migration is increasing and resulting in an adverse impact on our cities?
There is a systematic effort to create some sort of anxiety about the rate of urbanisation and migration into Indian cities. It isn’t just the media, administrators and policymakers who talk about this. It is also part of the global perspective of urbanisation in developing countries. The Asian Development Bank (ADB) talks about the epicentre of urbanisation shifting from Latin America to Asia to India.
Is this statistically correct? The rate of growth of our urban population has declined significantly in the last two decades from 3.8 per cent in the 1970s to 3.1 per cent in the 1980s to 2.7 per cent in the 1990s. It continues to be 2.7 per cent for the period 2001-11.
So there has been no increase in the growth rate of the urban population.
One of the reasons for this decline is decline in the fertility rate, which has taken place in the entire country. Therefore, if the urban population’s natural fertility rate is declining the urban growth rate will also come down.
But if you make adjustments for that, the decline in the growth rate of the urban population is much sharper than the decline in fertility. So there is a decline in migration also.
If you calculate from the National Sample Survey (NSS) data – Census 2011 has not yet reported migration – you do find that the percentage of adult male migration to urban areas has declined. This is something that should worry us because the urban-rural differential in productivity is very high. The rural economy has been going up but at a very slow pace. In the last decade if our overall growth rate has been 7-8 per cent, the rural economy has not grown over 2-3 per cent. The gaps have widened. So how come rural to urban migration has not picked up?
Yes, why has rural to urban migration declined?
I think the answer lies in the nature of urbanisation taking place, in the character of our cities. Cities have become more exclusionary. We would like our cities to be engines of growth, which means they should attract foreign and domestic investment. So we are ‘sanitising’ our cities.
We are making our urban spaces cleaner. The percentage of the slum population to the total urban population has gone down from 23 per cent in 1999-2000 to 17 per cent in the latest NSS data. We had around 61 million slum dwellers in 2001. The Pranab Sen Committee predicted that the slum population would increase to 93 million by 2011. The 2011 Census shows that it has gone up only to 65 million.
Secondly, this increase from 61 million to 65 million is also because in the 2001 Census they did not cover towns below 50,000. This time they did. But they were restricted to statutory towns.
Slums are not being encouraged. Slum eviction from the city’s inner areas, where land values have gone up, has taken place. Middle class civil society is trying to capture the urban space. Resident Welfare Associations (RWAs) in Delhi, Advance Locality Management in Mumbai or Janaagraha in Bengaluru who are, in a way, doing a good job trying to improve service delivery to the middle class who don’t want to live in congested, crime-prone unhygienic areas, have been able to exert pressure and slow down migration of poorer sections of the population.
In metropolitan cities, manufacturing has gone down since it causes pollution. The percentage of services – hotels, restaurants, shopping malls – has gone up. Basically we are providing comfortable living conditions to the middle class and the upper middle class so that they do not look for locations outside, and we are trying to attract global capital. Global capital’s interest is law and order, and health and hygiene. Both are being guaranteed by the exclusionary nature of urbanisation taking place.
Does a slower rate of migration affect the economy of the city?
What do we expect the cities to be achieving? By 2050 the population of this country will go up from 1,280 million to 1,600 million. The workforce is 500 million and will go up to 930 million. So an additional workforce of 430 million will be asking for jobs. Is the country prepared for this? Is exclusionary urbanisation going to address this issue?
The composition of migration has changed. There are jobs for business executives, management executives, software professionals. The better-off, more skilled people are migrating. Earlier, uneducated and poor people would migrate to the city and start selling things on the pavement. Now it is no longer possible. There is better policing. There is better management of urban spaces. It is no longer possible for a dispossessed agricultural labourer to migrate to urban areas.
You ask whether that meets the objectives of this country. Yes, perhaps. If you want the economy to grow at 6-7 per cent you need the skilled worker.
But ADB has predicted that India’s per capita income which is currently less than half of the global per capita income is going to be 20 per cent more than the global per capita income by 2050. We have structural advantages: our large youthful population of 430 million with a higher level of productivity and less medical expenditure. So the Indian economy has a very low dependency rate.
Our population that is 65-70 years plus is not increasing, unlike in Europe. But our workforce is. It is only now that our fertility rate has gone down, so the percentage of children is less but our youth population is more. This is a structural advantage that India has. China’s percentage of young people who are 18-35 will be less than India’s in another 10 years. India also has a high savings rate and a high investment rate. So India’s growth rate is going to be much higher.
But a critical assumption in the ADB model is that the urban growth rate will be very high. We will have a shift of population from low productive agriculture to high productive industry and services. Rural, dispossessed, unskilled people will come to urban areas and be absorbed.
But if that does not happen, if migration slows down, if people are not able to come to the city and be absorbed, the whole projection made by ADB will go absolutely haywire.
The UN had predicted that the urban growth rate would be 3.2 per cent per annum between 2020-2025. But our urban growth rate has already gone down to 2.7 per cent. The UN recognises that urban growth is not taking place. They have now revised their projections downwards. The slower growth rate is due to the exclusionary character of our urbanisation. This will have an adverse impact on our economic growth rate and that’s why I am worried.
So you are saying that urbanisation is critical to achieving high economic growth in India?
The model that predicts that India is going to achieve all this critically depends on the assumption that the rate of urbanisation is picking up. But I am confident that the low urban growth rate that has been registered cannot continue for very long. It has to go up otherwise there will be chaos. The rural population is increasing and if the rural economy grows by only 2 per cent….
How can a fraternal role for the city be defined so that you bring a large rural population into the city?
You are asking me a question on which I can only speculate. I believe the capture of urban space by the urban elite is so strong that you will never be able to make cities expand this way. So I have been very sceptical of this idea of allowing large cities to grow.
Won’t new cities attract migration?
Isher Ahluwalia in her India Infrastructure Report has predicted that 53 million plus cities will become 87 million plus cities. This is more than what McKinsey Global Institute predicts – that by 2030 there will be 65 million plus cities. That means top-heavy urbanisation. Exclusionary cities that are a million plus and attract global capital will not encourage an informal sector to come up.
I personally feel that if you really want to promote urbanisation you have to create a network of small and medium towns. These should have some agro-processing character, they should not require people to have a high level of management skills and should be able to absorb people. You need appropriate training that can allow small-scale industries to produce things efficiently and get linked with the larger formal sector. Lower-level informal sector activities can be upgraded.
The 2011 Census – unlike the other censuses that identified only 400-500 new towns – identified 2,800 new towns. Something is happening: rural areas are getting urbanised and they are creating these towns. These towns need to be captured and strengthened.
We need to provide them with the right technology and plan urban spaces so that informal activities can get absorbed. People from rural areas can shift to small and medium towns and maintain their links with the village, going back to cultivate and in the process take urbanism to rural areas. I have a feeling that this kind of dispersed urbanisation that does not take India into the cottage industry age but creates modernised new towns is a process that has to be strengthened.
You are suggesting strengthening the organic urbanisation that is already taking place?
Absolutely. We need to disperse into second-order centres which are connected with efficient transport systems. There is effective demand in rural areas and small towns which is not being tapped properly. If you are focusing on demand from the big cities you are restricting your market.
The size of the middle class is not that large now. But in another 20 years it will be significant. Only 35 per cent of the total middle class demand comes from metropolitan cities. The remaining 65 per cent comes from rural areas and small towns. So there is demand potential that needs to be tapped. Once you provide some infrastructure it should be possible to encourage this process of industrialisation.
I looked at the NSS data and defined middle class as those who are getting per capita consumption expenditure of $10 per day. That’s the global definition which right now is high by Indian standards. In purchasing power parity it works out to Rs 300 per person per day. Multiplied by five (household size), it comes to an expenditure of Rs 1,500 per day. That is going to rise to 35 per cent of the total global consumption. This is huge. The government needs to facilitate dispersed urbanisation.