The answer to the problems of our rural economy paradoxically lies in urban
development We have a choice between 600,000 small villages and 600
well-planned, new, vibrant urban centres
B Y A TANU D EY AND R EUBEN A BRAHAM
T here has been a general tendency to romanticize village life as a return
to our roots. What is noticeable, though, is that most people who
romanticize village life in India tend to live in cities-in India, or
elsewhere.
They also seem incapable of noticing the irony implicit in this
romanticization, since their forefathers, too, were once villagers -who
migrated to cities for good reason.
There was no greater proponent of villages than Mohandas Gandhi, who had
been educated in London, and had a law career in urban South Africa. Gandhi’s
most vehement critic at the time was Ambedkar, who knew about village life
as an untouchable. Attacking Gandhi’s view on the republic of villages as
overly sentimental, Ambedkar urged his followers to leave their rural
persecution behind, get educated and move to urban centres.
Clearly, anyone who lives in the average Indian village and has access to
information and money would like to leave for towns and cities.
The conflating of the development of rural people with the development of
villages perhaps explains the misplaced emphasis on the latter. The fact
that despite decades of attempts at developing rural areas, nothing much has
been achieved in the development of rural people suggests that the answers
may lie elsewhere.
Every developed economy has followed a path which begins with agriculture
being the main source of income for the majority of the population, and ends
with agricultural employment being a very small fraction of the total labour
force. The shift has always been from a village-centric, agriculture-based
economy to a citycentric, non-agricultural economy-as agriculture becomes
more productive, labour is released into manufacturing and services, which
have higher productivity and incomes.
At the low levels of economic prosperity seen in rural India, economic
growth is a precondition for development. Economic growth, in turn, is a
cause and consequence of urbanization. The reason is not hard to see. In
urban areas, people aggregate in numbers sufficient for markets to deliver
goods and services efficiently and cheaply. Consider the supply of an
essential infrastructural service such as electricity.
The economics of power generation and distribution do not allow
decentralization to the level of villages that are home to a few hundred
people. The average cost of per unit of power makes it prohibitive. The only
way for a small 1-2MW decentralized plant to provide power for a village of
1,000 people is for the villagers to pay substantial premiums-which is
highly improbable. No wonder then that essential services such as
uninterrupted electricity are not available at the village level.
By comparison, supplying decentralized power for the needs of a few tens of
thousands of people is economically feasible.
Villages are not the proper object of analysis when it comes to economic
growth, and hence economic development. By insisting on the development of
villages, scarce resources, which could have been more efficiently used
elsewhere, are wasted. The same resources can be used in the development of
cities. It seems to us that the answer to the development of rural people
paradoxically lies in urban development.
About 700 million Indians live in villages. Clearly, there is little scope
for urbanization in their case by having them migrate to existing
cities-those are already bursting at the seams. Practically all Indian towns
and cities are unplanned and inefficiently use land and other resources.
They are inadequate even for current residents, leave alone the idea of
adding hundreds of millions of more people to them. The country requires new
urban centres to accommodate the hundreds of millions of people who need to
be in such centres.
In fact, the answer to Mumbai’s or Delhi’s problems is, interestingly
enough, that these cities lose their centrality to the Indian economy as
other regional centres come up and mass migration to large cities ceases.
People tend to forget that New York (or London) was once considered an
unlivable, hopelessly polluted city.
At least part of the solution to the city’s problem lay in the creation of
other centres such as Chicago, St. Louis and the cities of the west which
relieved the pressure on New York itself.
India has a choice of futures, say, in 2030. Will the majority of Indians
continue to live in 600,000 small villages engaged in near-subsistence
agriculture or will they be in living in 600 wellplanned vibrant cities (or
6,000 towns of 100,000 population, for that matter) working in
non-agricultural sectors and enjoying a rich social and cultural life?
Depending on how we use our resources, the latter future can be a reality.
Achieving that reality would be the greatest challenge for India and
arguably, the most rewarding as well. Rather than trying to trap people in
villages and agriculture, the focus should be on the creation of new urban
centres which will lead to economic growth and development of people.
Atanu Dey is chief economist at Netcore Solutions in Mumbai and author of
the Rural Infrastructure Services Commons (RISC) model.
Reuben Abraham is director of the Cornell/ISB Base of the Pyramid Learning
Lab at the Indian School of Business.
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