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Urbanise India to Eliminate Poverty [Mains Article]

Development and urbanisation are two sides of the same coin. Sustainable urbanisation can mobilise India’s potential. The world is at 55.3% urbanisation on average, whereas India lags at 34%. Keeping a majority of India’s population in villages has resulted in high inequity.
By IT's Mains Articles Team
August 27, 2019


  • What is Urbanization?
  • Urbanization in India
  • Indian Rural Scenario
  • Why India’s urbanization is globally relevant?
  • State-wise Urbanization
  • National Urban Livelihoods Mission
  • Problems and Suggestions for Sustainable Urbanization
  • Conclusion

Urbanise India to Eliminate Poverty

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What is Urbanization?

  • Urbanization refers to the population shift from rural areas to urban areas and the gradual increase in the proportion of people living in urban areas.


Urbanization in India

Urbanization in India

  • India, China and Nigeria are together expected to account for 35% of the projected growth in the world’s urban population until 2050; of these three, the absolute growth in urban population is projected to be the highest in India.
  • The world, on average, is at 55.3% urbanisation, whereas India lags at 34%.
  • India’s urban population is likely to reach 600 million by 2030.
  • However, India has been slow to urbanise because of the fixation on being a village-based society. Keeping India’s population in villages while being unable to meet their economic needs has resulted in high inequity.
  • The municipal revenues of cities in India account for 0.75 percent of the country’s GDP, against cities of BRICS countries such as Brazil (8 percent) and South Africa (6.9 percent).
  • Now, the village-based concept will no longer work as complexity has increased and people’s economic needs have grown.

Indian Rural Scenario  

  • Rural employment is mostly in agriculture. 43% of India’s workforce in 2016-17 was engaged in the agriculture sector with mere 3.4% growth rate and contributing only 17 % to the GDP.
  • Meanwhile, 57% of the workforce was engaged in industry and services. The wage of industry worker is twice that of agriculture and the wage of workers in services is thrice of that agriculture.
  • Lack of opportunities is also accelerating large-scale internal migration towards India’s few urban growth cities such as Mumbai, Bengaluru etc.
  • As per 2011 Census indicates more than 43,000 villages were abounded, presumably due to migration.

Why India’s urbanization is globally relevant?

A global growth engine propelled by cities

A global growth engine propelled by cities

  • According to World Bank estimates, India will continue to be the fastest growing major economy in the world, with 7.5% GDP growth predicted in the next two years.
  • India is expected to become the third largest consumer economy by 2025.
  • India’s cities contribute about two-thirds of its economic output and are the main recipients of FDI.
  • However, many of India’s metropolises and cities contend with unsustainable levels of stress on infrastructure, resources and public services.
  • To achieve sustainable growth, these cities will have to become more liveable and safe with clean air, adequate infrastructure, reliable utilities and opportunities for employment.

A global growth engine propelled by cities 1

Urban laboratory for the world

  • 90% of the world’s urban population growth by 2050 is expected to occur in Asia and Africa, in countries with socio-economic profiles comparable to India.
  • The study and findings from India’s rapidly advancing urban agglomerations can help emerging Asian and African countries design policies and strategy to better prepare for their local influx and growth.

India’s contribution to the UN SGDs

  • Making Indian cities inclusive, sustainable and safe is critical to achieving the global 2030 Sustainable Development Goals (SDG) Agenda.
  • Renewable energy: India registered a growth of approximately 67% in wind power production in the last four years and also recorded its biggest ever solar power capacity addition of in 2017-18.
  • Policy-driven urban rejuvenation: India has launched programmes such as Atal Mission for Rejuvenation and Urban Transformation (AMRUT), 100 Smart Cities Mission, Housing for All (PMAY) and Swachh Bharat Mission.
  • A green built environment: Of the 60 major opportunities related to delivering the UN SDGs, six of them fall in the net-zero energy buildings (NZEB) sector: affordable housing, energy-efficient buildings and water and sanitation infrastructure. India’s green buildings market is estimated to double by 2022.

Lessons in mobility

  • India’s transportation demand has grown by more than eightfold since 1980. In rural India, the Pradhan Mantri Gram Sadak Yojana (PMGSY) has focused on building all-weather roads.
  • At the national level, policies such as the National Urban Transport Policy & the National Electric Mobility Mission Plan 2020 seek to provide safe and sustainable access and achieve fuel security and leadership in electric mobility.

State-wise Urbanisation

State-wise Urbanisation

  • Gross Enrolment Ratio (GER) is an indicator of human capital development and is crucial for high-growth sectors like services.
  • Total Fertility Rate (TFR) indicates whether a population is shrinking or expanding and is vital to policy planning.
  • States in the South-West zones are more urbanised, all above the 31% all-India average. These states also have low TFR, below the national average of 2.18.
  • Low fertility and high GER has resulted in better educated, smaller populations that are earning more than their northern counterparts.


  • Tamil Nadu (TN) has India’s highest GER, at 48.6, and one of the lowest TFRs. In 2011 itself, one can see TN is most urbanised at 48.4%, with an already-high GER of 40. No other big Indian state attained a GER of 40 even in 2017-18.
  • Rapid urbanisation has boosted TN’s enrolment in higher education. Though TN had the second-highest per-capita GSDP in 2011-12, growth is lower compared to states like Karnataka and Telangana, which are driven by services.


  • Karnataka has one of the highest per-capita GDPs in 2017-18 and a reasonably high urban percentage, however it has lower GER.
  • 60% of Karnataka’s GDP comes from Bengaluru and the services sector—driven by IT and other technological drivers. Like most southern states, TFR is low, but it sees significant immigration.
  • Despite its large services sector, by defocusing on human capital, Karnataka’s government is placing natives in stressful situation of being unable to compete for the best jobs in their state.
  • Hence, Karnataka must focus on urbanisation and development of human capital to remedy this.


  • Gujarat has high urbanisation but lower than average GER of 20.1.
  • Gujarat’s steady growth and high per-capita GSDP are driven by its industry sector, which accounts for more than half of Gross value added (GVA).
  • High dependency on industry, and not services, which contribute only 35% of GVA, means Gujarat’s growth will start slowing down when automation and other factors come.
  • Without the development of human capital, Gujarat is in danger of lagging in the future. Hence, it should invest in higher education and building a strong services sector to complement its industry.


  • It has high urban percentage and high GER in 2017-18 and one of the lowest TFRs.
  • Despite this, Punjab still relies heavily on agriculture and industrial output is lower than that of southern states.
  • With indicators of high urbanisation, high GER and low population growth, Punjab can easily make the transition to a high-growth economy focused on services, with the right policies.

North-Central-East zones

  • Other states in the North-Central-East zones mostly have low urbanisation and low GER. The lack of urbanisation has resulted in a shortage of industry and services sectors and low per-capita GDP.
  • The populations in these states will keep growing in the foreseeable future, indicated by higher TFRs.
  • Without employment options in high-growth sectors, these large populations cannot rely on agriculture or industry alone for growth.


  • Bihar is a troubling case study on the effects of low urbanisation and human capital. Only 11.3% of the population is urban.
  • It has the lowest GER and lowest Per-capita GSDP in India. It has highest TFR.
  • Despite having fertile land, Bihar’s agriculture sector cannot grow because it is disorganised with a large number of dependents.
  • Bihar needs special attention from the Centre, with focused schemes to organise the agricultural industry, urbanise and educate the masses, and provide mass employment through LIIs.

National Urban Livelihoods Mission

NULM was launched by the Ministry of Housing and Urban Poverty Alleviation (MHUPA), in 2013 by replacing the Swarna Jayanti Shahari Rozgar Yojana (SJSRY).


The Major Main Components of NULM are:


  • Employment through Skill Training and placement
  • Self-Employment Programme
  • Social Mobilization and Institutional Development
  • Shelter for Urban Homeless
  • Support to urban Street vendor
  • Capacity Building and Training Programmes

Problems and suggestion

Age Criteria for NULM

  • The National Policy on Skill Development and Entrepreneurship specifies the working age group in India as between 15-59.
  • However, in states like Maharashtra, Vocational Training Providers (VTPs) can only obtain funding for beneficiaries in the age group of 15 years to 45 years.
  • The age cut-off for all state-run skill development bodies should coincide with national standards. The upper age limit of 45 years should be extended. Capping the age at 45 will prevent older candidates, who need new skills in order to re-enter the job market.

Funding Structure for NULM

  • There is a difference in the disbursement of funding for multiple schemes that target employment of the urban poor, which creates unnecessary confusion and disparity.
  • For example, VTPs empanelled by state skill development bodies can use both NULM and the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for the skilling of the urban poor.
  • The VTP is paid different base costs per hour of conducting the course, for different categories of courses.
  • The ministries that grant funds for the schemes are also different, as the NULM is under MoHUA while the PMKVY is under the Ministry of Skill Development and Entrepreneurship.
  • This discrepancy in fund disbursement may skew the VTPs’ incentive of skilling towards the NULM programme, as more grants are given under the NULM than under the PMKVY.
  • Hence, a better approach would be to have one programme for skilling and employment in urban areas, which is funded by one ministry.

Transparency in numbers of skilled and employed

  • There needs to be a detailed Skill Gap Analysis (SGA) conducted by each state, which provides statistics on human resource requirements across various employment sectors in urban areas.
  • The NULM has set aside grants for the state governing body to conduct their own local SGA, and all states must participate.
  • State institutions also need to create a matrix of how many VTPs in urban areas are currently providing courses for the sectors that require a skilled workforce.
  • There should be a cap on how many VTPs can conduct a certain course, so that relevant courses can be conducted.

Problems and Suggestions for Sustainable Urbanization

  • Large cities face the overpopulation, with problems like inadequate infrastructure and high living costs.
  • Due to high costs, it is uncompetitive to set up industries in cities. Without industries to absorb the incoming rural population, they are mostly making low wages as contract labour.

Infrastructure and connectivity

  • From the planning stage, it is essential to prioritise providing infrastructure like roads and airport access, internet connectivity, and other amenities.
  • Not only is state-of-the-art infrastructure crucial for quality of life, it also provides the logistical backbone for a productive industrial environment.
  • Also, there should be strategic investments from both the central and state governments in these towns for infrastructure development.

Labour-intensive industry (LII) clusters

  • Creating many LIIs in and around the towns is the best way to provide gainful employment. By focusing on the right type of industries, it can also boost India’s export capabilities.
  • With focused skilling programs, LIIs can offer excellent income opportunities to the incoming population.
  • Governments, apart from focusing investment, must also provide incentives for the private sector to create LIIs.

New sustainable technologies

  • While urbanisation improves delivery of services, it poses several challenges like congestion, restricted mobility, high waste production, and pollution.
  • Hence, India must invest in understanding state-of-the-art technologies and implement them.
  • The newly developed towns will have the advantage of getting sustainable infrastructure such as renewables like solar panels and wind turbines, planned tree cover etc. integrated from the planning stage itself.

Planning for capacity

  • In India, most of the projects are not based on the latest available data. Moreover, by the time projects are completed 5-10 years later, projects are overloaded with new data.
  • Instead, it is necessary to plan projects for sewage treatment, airports, roads, water supply, and so on with at least a 20-30-year forecast with provisions for future expansion.
  • For example, in China, many major airports have received the approval to build a third runway and increase seating capacity by forecasting the demand to 2030.
  • The provision of the Twelfth Schedule of the Indian Constitution states allow city plans to be crafted by urban local bodies (ULBs). This will require planning capacity to be created in ULBs.

Quick statutory processes

  • A further problem is the long process prescribed by state planning statutes. It is possible to create a plan much more quickly if statutory processes are reduced and a tighter time frame is prescribed.
  • It is self-evident that if plans are not executed swiftly, they are rendered largely redundant by the interim growth that takes place in the city.

Need to address urban poor

  • Another problem is the reluctance to recognise the issue of urban poverty or of finding adequate space for the urban poor to live.
  • India’s cities have not planned for affordable housing, leaving the matter of shelter largely to the market. The informal economy has thus been an activity outside the Plan.
  • However, the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 has obligated the ULBs to look at this part of the informal economy and make it a planned activity.

Decentralised and integrated system for vital city infrastructure

  • Other planning deficits result from the loose treatment given to vital city infrastructure such as solid waste management, public transportation systems etc.
  • A detailed and decentralised system of solid waste collection, treatment, and disposal is a challenge for urban planning.
  • This has resulted in cities struggling to find space for waste and increasing eviction from spaces in outside settlements.
  • Urban Plans also have huge deficits in terms of provisions relating to gender, children, the elderly, and people with disabilities.

Use of town planning schemes

  • The Right to Fair Compensation & Transparency in Land Acquisition Rehabilitation & Resettlement Act has made urban plan implementation impossible through ULB budgets, because of the steep rise in land costs.
  • It is now beyond municipal budgets to acquire all reserved amenity land.
  • Given the scarcity of resources, town planning schemes could prove to be a healthy mechanism for implementation of parts of the Development Plan (DP).
  • Additionally, ULBs could make innovative use of land instruments.

Revisiting the 12th schedule of the 74th Amendment

  • The 74th amendment of the Constitution, under its 12th schedule defined 18 functions of Municipalities.
  • However, only 12 of the 18 functions have a corresponding finance source while the municipal corporation is expected to take care of rest of the functions.
  • The revenue instruments assigned to urban local bodies by State Governments are inadequate.
  • Hence, Funds allocated towards the core services need to improve and finances need to match functions. For this, a financial list should be inserted in the schedule.

A system that will assist corporations in assessment and collection of property tax

  • In 2013, the average collection of property tax in 36 of the largest municipal corporations in India was 37 percent.
  • Considering the dependence of municipalities on this sole internal tax, there needs to be a central or state agency to monitor and help set up a system that is linked to citizens’ credit performance to make it stringent.

Creating a strong bond market

  • The bond market in India has not taken off despite several attempts made by governments
  • This is due to: i) the inability of a municipal corporation to get credit ratings due to lack of awareness ii) lackadaisical attitude of the staff towards maintaining account books, balance sheets and management of finances and iii) Unrealistic planning and Heavy tax on bonds.

Better Housing Policies

  • Housing schemes in India have focused on time-bound targets to construct a fixed number of units. India requires a housing policy that synchronises and evolves with its urbanisation agenda.
  • A housing policy must provide for low-cost rental accommodation for seasonal migrants who, in the absence of such accommodation are forced to live in dehumanised conditions. The PMAY scheme has failed to provide such accommodation.
  • There are some private entities operating in the affordable rental housing market. These entities operate under a lot of pressure finding the balance of costs and profits tricky. The government can ease this pressure by 1) leasing unutilised government-owned land to low-cost rental homes at affordable rates; 2) infrastructure status to such homes allowing them to leverage low cost of borrowing, tax breaks, seamless access to capital; and 3) extending grants under affordable Housing in Partnership (AHP) of the PMAY scheme to low-cost rental homes.


  • Urbanisation aggregates human activity, aggregation leads to specialisation, specialisation to increased productivity; enabling greater availability of goods, increased wages and job opportunities. Urban areas are engines of growth in any modern economy.
  • India must systematically urbanise and provide mass-employment to its large population in high-growth sectors like industry and services.


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