05/07/2017 Editorial Simplified 0 comment

Cities – Our Policy Orphans | Editorial Simplified

RESOLVING INDIA’S URBAN GOVERNANCE CONUNDRUM 

  1. the only way to help farmers is to have less of them,
  2. our farm to non-farm transition is being murdered by the lack of good urbanisation,
  3. bad urbanisation is a child of city leadership that is either impotent or unelected.

Having Fewer Farmers : 

India has too many farmers (250 million) and too many poor farmers (they are about 50 percent of the labour force but only produce 12 percent of gross domestic product). Farmers have a productivity problem just like India does not have a jobs problem but a wages problem. India’s wages will only rise sustainably when we cross the “Lewisian” turning point which states that wages rise only after critical mass is reached in the farm to non-farm transition. Hence, the only sustainable way to help farmers is to have less of them.

Lack of Good Urbanisation

The unstoppable migration of people to our 50 cities, with more than a million people, is being retarded by bad urbanisation that has created a divergence between real wages (what employees care about) and nominal wages (what employers care about). Urbanisation is inevitable but the mispricing of land, patchy public transport, and poor suburb connectivity mean that India is not realising the true upside of cities by making them magnets for evacuating farmers seeking decent wages.

City Leadership

Cities are complicated organisations all over the world but Indian cities suffer the friendly fire of being policy orphans for three reasons

  • Firstly, state chief ministers are unwilling to cut the tree they are sitting on (Bengaluru contributes may be 60 per cent to Karnataka’s GDP).
  • Secondly, cities don’t have the plumbing or mandate to generate their own resources e.g. reasonable property taxes.
  • Finally, and probably most importantly, city leadership is either unelected (bureaucrats serving as development authority or municipality heads) or impotent (city politicians who win elections but don’t wield power).

WAY FORWARD

Getting power from State Governments would need state politicians to sacrifice self-interest. Politicians in states and the Centre face two important human capital decisions over the next decade – Civil service reform and the creation of elected and empowered city leadership.

Raj Malhotra IAS Study Group.