Invest in the future

By the year 2025, one billion people in cities around the world will enter the global “consuming class” with incomes high enough to become significant consumers of goods and services. According to a 2012 McKinsey Global Institute report titled Urban World – Rise of the Consuming Class, the world’s top cities will generate 65% of global GDP growth during 2010 – 2025, and of these, 440 cities from emerging countries, with a population of 600 million or so will generate close to half of this growth.

Even more dramatic is the likely contribution of what McKinsey terms as ‘middle-weight cities’ – with a population between 200,000 to ten million. The report predicts that these 400 cities would contribute USD 17.7 trillion in GDP growth by 2025.

Cities have always been engines of economic growth, attracting skilled workers, generating capital and helping scale up productive businesses that benefit from economies of scale. A nation’s level of urbanisation and rise in its per capita income generally tend to be in sync. What is new about this mega-trend is the scale and speed by which cities are transforming the global economy leading McKinsey to point out that “…we are witnessing the most significant shift in the earth’s economic centre of gravity in history”.

The Indian government’s announcement to set up 100 new smart cities is, in a sense, recognition of this mega-trend. But to get it right, the government will have to – above all else – focus on one critical element – urban planning.  

In India, the path to urbanisation has been rocky, largely owing to unplanned growth.  A Planning Commission Approach Paper to the 12th Plan pointed out, “Very few Indian cities have 2030 master plans that take into account peak transportation loads, requirements for low-income affordable housing and climate change. In general, the capacity to execute the urban reforms and projects at the municipal and state level has been historically inadequate.”

By 2030, India’s largest cities will be bigger than many countries today and there is a need for meaningful reforms that enable true devolution of power and responsibilities from the states to the local and metropolitan bodies.

Among the measures suggested by the Planning Commission is an overhaul of India’s urban governance. India’s current urban governance is in sharp contrast to large cities elsewhere that have empowered mayors with long tenures and clear accountability for the city’s performance. India also needs to clearly define the relative roles of its metropolitan and municipal structures for its 20 largest metropolitan areas. With cities growing beyond municipal boundaries, having fully formed metropolitan authorities with clearly defined roles will be essential for the successful management of large cities in India.

The most critical reform the Planning Commission suggests is centered on Planning. “India needs to make urban planning a central, respected function, investing in skilled people, a rigorous fact base and innovative urban form. This can be done through a ‘cascaded’ planning structure in which large cities have 40-year and 20-year plans at the metropolitan level that are binding on municipal development plans. Central to planning in any city is the optimal allocation of space, especially land use and Floor Area Ratio (FAR) planning. Both should focus on linking public transportation with zoning for affordable houses for low-income groups. These plans need to be detailed, comprehensive, and enforceable,” it says.

The Commission noted that reforms will have to address the development of professional managers for urban management functions, who are presently in short supply and will be required in large numbers. New innovative approaches will have to be explored to tap into the expertise available in the private and social sectors. Another measure suggested by the Commission is to build a cadre with technical and managerial depth in its city administrations, perhaps on the lines of the Civil Services, as well as allow for lateral entry of private-sector executives. It points out that, “A real step-up in the capabilities and expertise of urban local bodies will be critical to devolution and improvement of service delivery.”

We can also learn from the success as well as challenges faced by cities like Navi Mumbai. It started off being developed in 1972 by the City and Industrial Development Corporation (CIDCO) by carving out 14 nodes, gradually transforming villages into carefully planned townships. Vashi was the first node to be developed; others like Nerul, CBD Belapur, New Panvel, Ulwe and Dronagiri followed.

But until the turn of the century, lack of a 24x7 economy meant that it was treated largely as an extended suburb of its older counterpart. It was only in the last decade and a half, as transport networks and other infrastructure developed, that businesses started moving into the city. It has hence taken Navi Mumbai close to four decades to come into its own, where its residents can work and stay within the city boundaries without commuting to Mumbai. Today, with six rail corridors being commissioned in the city, excellent road connectivity and Mumbai’s second international airport coming up close to the city, it will act as a catalyst for further growth in the region.

India, today, however does not have this luxury of time when it comes to future cities. We need to tackle issues like planning related to zoning, clusters, affordable housing, transport networks and ways to encourage businesses from the outset. Also to improve livability, India must rationalise the rules for delivering and expanding infrastructure services, such that providers can recover costs, yet reach out to poorer neighborhoods and peripheral areas. Third, for better mobility, investments are needed in improving connectivity between metropolitan cores and their peripheries, as these are the areas that will attract the bulk of people and businesses over the medium term. There are enough international experiences from cities as diverse as Singapore to Toronto that we can draw on to aid our planning and execution processes.

One advantage India has, as pointed out by Amitabh Kant, CEO and Managing Director, Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) at a recent conference on Smart Sustainable Cities, is that India can leverage technology to integrate utilities and bring real-time governance into urban planning. It can thereby leap-frog the evolutionary process in urban management.

India may have come late into the game, but this in itself provides the opportunity to learn from experience – both our own, and that of other countries. The future is already here; it is time to grasp it and make it a better one for the next generation.


(A Forbes India & Lavasa New Urbanisation BrandVoice Initiative - While there is increased awareness in India on the country’s urban challenges, some of the larger issues and global best practices still require discussion. Forbes India in association with Lavasa Corporation, turns the spotlight on the subject, with this series of BrandVoice articles. You can also log on to www.forbesindia.com, or check out the Forbes India iPad App)