Abstract
It is a generally accepted view that the twenty-first century will witness rapid urban expansion in the developing world. A section of urban scholars believe that India will be at the forefront of such a phenomenon. This book builds its hypothesis on the fact that India will be largely urban in the future decades and acknowledges the role of agglomeration externalities as the cornerstone of urban public policy in India.
Arguing that hypotheses of over-urbanization and urban bias theory—which articulated a negative view of urbanization, this book calls for proactive public policy to harness planned urbanization as a resource. The author argues that India requires agglomeration-augmenting, congestion-mitigating and resource-generating cities as engines of economic growth which will in turn promote rural development.
The book provides a large number of practical examples from India and abroad to enable policymakers undertake reforms in urban and regional planning, financing, and governance to meet the challenges of urbanization in India. It combines theory and practice to draw lessons for an urban agenda for India and recognizes the central role of cities in catalyzing growth and generating public finance for economic development.
This book is organized in several chapters. Following the introduction, Chapter 1 deals with the nature and causes, of and empirical evidence on agglomeration economies. It identifies the key issues of planning, financing and governance to enable cities function as engines of economic growth and structural transformation. It focuses on the economic theory of cities, which suggests that cities form and grow to exploit the external economies of agglomeration. The author argues that empirical evidence points to the overwhelming presence of these externalities in cities and that an inverse-U relationship is observed between agglomeration and economic growth. Agglomeration economies also magnify productivity gains at the lower and middle stages of economic development.
Chapter 2 argues why the ‘over-urbanization’ and ‘urban bias’ theories, which perpetuated a negative view on urbanization in developing countries, including India are fallacious. It argues that the ‘over-urbanization hypothesis’ and ‘urban bias theory’ rest on weak foundations leading to a paradigm of ‘rural versus urban’ rather than ‘rural and urban’ in policymaking and planning. It presents a model of economic development, incorporating agglomeration externalities. The author argues that the protagonists of this school of thought ignored the role of geography, agglomeration externalities and regional specialization in economic growth. Presenting a reformulation of the Harris-Todaro model in development economics, this chapter shows that when vibrant agglomeration externalities are present in cities, rural–urban migration under free market conditions is likely to be smaller than what is optimal socially.
Chapter 3 analyses the role of spatial planning and transportation-land use integration in planned development of city regions; with spatial planning and transportation-land use integration which have significant implications for agglomeration externalities through ‘wider area’ benefits. It argues that many observed urban problems, such as haphazard growth, sprawl, inadequate housing and workplaces, especially for the poor, insufficient land for public amenities, traffic congestion and lack of resources to finance urban infrastructure are rooted in the master planning model, which has not kept pace with the demands of structural transformation. It calls for restructuring the present master planning model to address these issues.
Chapter 4 addresses the key issues of urban inclusion and outlines the elements of an inclusive city development strategy. It discusses the issues of urban poverty, slums and exclusion: residential, occupational and social in detail and highlights the need for inclusionary urban planning and development. It advocates a two-pronged approach: addressing the concerns of income, employment and social security of the urban poor on one hand and integrating slums, and the informal sector with the city system on the other. The chapter calls for investment in labour-intensive growth in cities, vocational education and skill development for wage and self-employment acknowledging the fact that the informal sector is the largest provider of employment in cities.
Chapter 5 is devoted to financing city development and services; it emphasizes the rooting of financing strategy in the model of spatial planning. It refers the literature in public economics and urban economics to present an urban financing framework. This framework covers expenditure assignment, revenue assignment and expenditure–revenue matching. A major problem with master planning in India is that it seeks to address the financing of urban development outsides the model of urban planning. By not linking to the economics of cities the paradigm has not presented a robust model of financing city development. Thus, it does not harness spatial planning and infrastructure development as resource.
Chapter 6 focuses on urban land as a resource for financing planned urban investments through land taxation, development financing and land value capture tools. It recognizes that urban land is an input, an output and a resource for city development. The case for land use zoning arises from the needs to address co-location externalities. Zoning leads to windfall gains to owners of land slated for higher value use in the master plan. Infrastructure installation also increases land values through enhanced accessibility and serviceability of locations. Spatial planning and infrastructure development lead to ‘agglomeration rents’. The immobility of land makes it an ideal tax base for financing urban development, the author argues.
Chapter 7 deals with the institutional framework for good urban governance and effective management of urban growth. It highlights the importance of good governance in tapping urbanization as a resource for development. The good governance paradigm is focused on institutions, organization, service delivery processes and outcomes. Institutions define the rules of the game and incentive structure in society. The author posits that organizations operationalize the institutions and act as players of the game. The clear positions of organizations in the ‘big picture’ of institutions is critical for attaining the objectives of good governance which calls for establishing an institutional framework and enabling the institutions discharge their mandates effectively.
Chapter 8 summarizes the broad directions of urban public policy for India referring to the geography of economic growth and agglomeration externalities and drawing from discussions in the earlier chapters. It reiterates that urbanization is inevitable and not exploiting it as a resource means foregoing huge opportunities for economic growth and poverty reduction that structural transformation offers. It advocates the view that agglomeration-augmenting, congestion-mitigating and resource-generating cities provide a practical and cost-effective way of addressing the concerns of India’s economic development, including rural development in the future decades.
Although the author has substantiated the arguments with required empirical underpinning, it would have been important to address the chapter on governance with a detailed reference to the JNNURM reform agenda. A section on the performance of states and cities on the compliance with reforms would help in understanding the existing gaps and weaknesses in governance structure at the macro, state and city levels. Also, a brief description on the urbanization pattern of the country in the introductory chapter would have helped the reader in understanding and contextualizing the dynamics of urbanization in greater detail. However, the book is well structured with powerful insights for effective policymaking with lessons for an urban agenda for India. It recognizes the central role of cities in catalyzing growth and generating public finance for economic development. It is a unique combination of theory and practice. It proposes policy measures and reforms to meet the challenges of urbanization in India.