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Business News/ Opinion / Online Views/  Why projections of a rosy urban future may not come true
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Why projections of a rosy urban future may not come true

India’s urbanization rate has historically been lower than the rest of Asia, and that may not change in the coming decades

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Urban Indians will constitute the majority in the country by 2050, according to a recently released update of the United Nations (UN) report, the World Urbanization Prospects. Between 2014 and then, India will have added 404 million people to the ranks of city-dwellers of the world, over 100 million more than what China is projected to add over the same period, the report said.

The World Urbanization Prospects is a widely-cited UN research publication, based on national census statistics collected from across the globe. While current and historical data reported in the publication are based on actual records, projections are based on certain assumptions implicit in the statistical model used by UN researchers. A look at the trends for India shows that the projections for India involve heroic assumptions. According to the latest projections, India will reverse its history of slow urbanization over the past half century to emerge as one of the fastest urbanizing country in Asia over the next few decades.

Between 1950 and 2000, India’s urban population had increased at an average annual pace of 3% while the Asian continent added urban residents at a faster pace of 3.5% per annum. The contrast with China is the starkest. Both India and China had roughly identical number of urban residents in 1950 at 64.1 million. But thanks to its investments in building efficient cities, China urbanized at a faster rate of 4% per annum. Thus, by the turn of the century, China had added nearly twice as many urban residents as compared with India, with its urban population rising to 459 million in 2000.

Between 2010 and 2014, the pace of urbanization has slowed down across countries. But India has still lagged China and the average Asian economy. Over this period, Asia’s urbanization rate slowed to 2.85% per annum, China’s urban population grew at an annual pace of 3.65% whereas India’s urban population grew at a slower rate of 2.55%, according to the UN estimates.

Over the next few decades, India is expected to reverse this trend. The UN expects Chinese urbanization rates to drop to less than 1% per annum between now and 2050 and Asian urbanization rates to drop to 1.3%. India’s urbanization rate is also expected to drop but at a much slower clip. India’s urban population is expected to grow at 1.9% per annum between 2014 and 2050, faster than China, and faster than the Asian average.

The actual evidence so far does not back such heroic assumptions. To be sure, a nation’s history does not always determine its future. But even recent trends over the past decade or so suggest that urbanization rates in India have remained far lower than the rest of Asia even as economic growth rates have converged. Besides, as the urban economist Amitabh Kundu argues in his writings, multilateral agencies such as the UN have been wrong time and again in their urban population projections because of flawed assumptions.

As the accompanying chart shows, India’s actual trajectory of urbanisation could look completely different if we use assumptions other than what the UN proposes. The chart illustrates what India’s urbanization path will be if India were to urbanize at the same rate as the rest of Asia between now and 2050. India will still add more than 240 urban residents between now and then in such a scenario, but it will be less than what China is expected to add.

India’s actual trajectory will, of course, largely be determined by its appetite for, and ability to, reform its archaic and flawed urban policies. India’s slow track record in urbanization so far is primarily because of flawed policies relating to land and rent control, which have allowed a small cartel of builders and politicians to reap huge rents at the expense of ordinary citizens. To change its urban trajectory, India will need to unshackle itself from the burdens of the past. Unless India does that, it is unlikely that India will rise ahead of its peers in creating a viable urban future for its growing population.

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Published: 22 Jul 2014, 12:36 PM IST
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