Good cities need less government

Good cities need less government
The Financial Express, July 28, 2009, Page 7

Jeffrey S Hammer

As India grows, it is going to become urban. Municipal governments are simply not ready for the influx of rural migrants and Indian cities are facing the prospect of environments so unhealthy that they would have shocked Charles Dickens. Unless more forward thinking is applied to basic infrastructure investments, development in the country will choke itself off with the stench of sewage and disease-spreading water.

Urban infrastructure via the new Rajiv Awas Yojana (RAY) as well as the much larger Jawaharlal Nehru National Urban Renewal Mission was highlighted as a priority in FM Pranab Mukherjee’s Budget speech. This is as it should be. However, infrastructure should lead and not lag development and an appropriate balance of public real investment needs to be struck.

Urban investment is directly related to rural livelihoods. Urban employment does not come at the expense of rural residents—it is already a major off-season employment option and, more importantly, is the future of the children of rural India. But the government’s role in supporting urban growth should be quite clearly focused on public goods such as sanitation and the guarantee of safety of drinking water and less on the construction of private goods such as housing that, so far, seems to take the lion’s share of budget resources. We can only hope that the RAY, the “parameters of which are being worked out”, in Minister Mukherjee’s words, takes this concept to heart and facilitates continuous and natural urban growth.

It is a fact of life that with income growth, countries’ populations become city dwellers. Some think the causal factor is that proximity to complementary business services and the easy flow of ideas that cities provide accelerate growth. Others think that higher incomes lead people to want the services that only cities have: top quality schools, healthcare, entertainment and myriad other amenities. Frankly, figuring out which way it goes is not really relevant to policy—cities and income are going to grow together no matter what.

India is a bit unusual in that its degree of urbanisation is lower than that of other countries of the same income level and its rate of urbanisation is somewhat slower as well. This is clear from a comparison of different countries’ levels of income against the proportion of their population that live in cities. This data has been compiled at a fascinating website www. gapminder. org, where each countries’ ‘dot’ is proportional to the size of its population. The proportionality of the size of the points is a great tonic against comparing India with smaller countries at the same general level of income. Especially when their populations barely make them the size of the statistical error of the estimated number of people in some of our cities. .

It may be a good thing that India’s urbanisation has been slower than average since it gives government a little more breathing space (so to speak). However, this state of affairs cannot continue. Sooner or later, possibly happening already, the lack of water, sanitation, uncongested roads and reliable electricity, among other things, will retard growth. That is, the rate of growth of urbanisation may be slow precisely because of inadequate planning of infrastructure investments that have made cities unattractive to workers and employers alike.

While lack of sanitation may not have put a brake on economic growth yet, it is likely that it has retarded the growth of peoples’ well-being. For example, recent measures of infant mortality in Delhi appear to show an increase. The lag of indicators such as mortality decline behind per capita income in cities is almost certainly due to poor sanitation, unsafe water and the occasional outbreak of mosquito-borne diseases from stagnant water, rather than lack of medical care.

Two problems stand in the way of quick action on this matter. First, while we sometimes talk as though we are still ‘planners’, the fact of the matter is that forward-looking infrastructure development is sorely lacking. The problem of inadequate infrastructure is not new. Indeed, it is almost perennial and does, in fact, require planning. If the government can ‘stick to its knitting’ and guarantee the provision of real public goods and high externality-correcting activities, it can make good progress on accommodating urban growth. If its money and energy is frittered away on ‘planning’ private goods, it won’t.

Second, India’s history of handling urban slums should remind policymakers of the need for humane policies as it provides essential services. That the focus of the RAY is the establishment of property rights for the urban poor is heartening. Such rights and humane treatment as infrastructure is built are both moral and practical imperatives. China may be able to ignore peoples’ rights; India can’t and shouldn’t. The end is improving peoples’ quality of life. The means may require inconveniencing the very same people. Laying pipes, running electricity lines and inspecting, draining or treating stagnant water all take time and disruption of daily routine, but simple bulldozing is not an option. It’s been tried, it’s been proven unacceptable. On the other hand, Delhi, at least, is currently living with construction sites for Metro stations and flyovers. Many of these are in affluent areas and people are coping. These will help with congestion but not with safekeeping public health. No one should underestimate the difficulties of implementing urban renewal to make cities livable for an expanding workforce but neither can it wait much longer.

The author is Charles and Marie Robertson Visiting Professor of Economic Development, Woodrow Wilson School of Public and International Affairs, Princeton University.