For most urban Indians, the past few years have been unsettling—we have seen neighbourhoods locked down for months during a pandemic, increasing the daily challenges of earning a living as well as of access to good healthcare and education. Inflation has ravaged the land with spiralling prices of food, rent, and transport. Our cities are hard to live in; lacking basic amenities, while being unaesthetic and discordant with our civilisation.
As economic growth takes priority, questions about liveability and meaningful employment arise, along with concerns about the deteriorating law and order. Feroze Varun Gandhi’s The Indian Metropolis: Deconstructing India’s Urban Spaces attempts to show how economic vitality can go hand-in-hand with creating vibrant cities, offering a haven for cultural and intellectual expression.
We have a cost-of-living crisis in urban India. Consider a metric—savings have declined—with gross financial savings at 10.8 per cent of India’s GDP in FY22 compared to 15.9 per cent in FY21. It must be noted that a segment of the population is investing in mutual funds and the stock market, but it remains small (as of July 2022, just 8 per cent of total PAN card holders actually invest in mutual funds.
Appetite for further investments in MF schemes is also noticeably waning (MF investments fell by ~31 per cent in August 2021 vs August 2020). Post pandemic, the average Indian has watched their savings eroded by inflation. Consumer confidence, over time, will be hit by such trends, leading to consumers reducing purchases to balance their household budget. With economic forecasts globally highlighting a global recession, is the economy resilient enough?
Consequently, the average urban Indian may not remain upbeat for long. In July 2022, a survey of ~11,000 Indians by the Global Issues Barometer (by Kantar) highlighted that 35 per cent of Indians surveyed felt that their finances were deteriorating, while ~46 per cent believed the economic outlook was negative. Approximately 32 per cent of Indian households surveyed mentioned that they were struggling to meet monthly expenses (e.g. rent, mortgage). 74 per cent of Indians highlighted that living expense inflation is impacting their long-term plans.
Other surveys highlighted that 92 per cent of surveyed Indians felt that their average monthly expenses had gone up between February 2022 and May 2022, with 70 per cent of them mentioning a 10 per cent hike and 15 per cent of those surveyed facing a rise in expenses of 30 per cent. Others have highlighted that they have to work longer hours and hold odd jobs to fund their expenses. For a country targeting to become one of the top three economies (by GDP) in the next decade, its citizens are finding it increasingly hard to eke out a living. If not corrected, aspirations will diminish along with ambition. One hopes policymakers are taking heed, with empathetic initiatives underway.
Urbanization should ideally have led to urban Indians becoming richer. Yet, the number of Indians who are poor (i.e., with a daily income less than or equal to $ 2 per day in purchasing power) rose to 134 million in 2021 from 59 million in 2020. The middle class is shrinking, from ~99 million in 2020 to ~66 million in 2021. All this has happened in an era of extreme inequality—with India’s top 1 per cent holding 73 per cent of the national wealth in 2017.
Going forward, we should chart out a new urban journey for India or else, we will stay in urban poverty. Over the past decade, India’s policymakers have grandly announced hundreds of ineffectual policies to promote manufacturing in India, create jobs and raise farmer income; while, Bangladesh simply made clothes. They are richer than us now. If we don’t course correct, we may become the ‘sick man’ of South Asia. Is there something wrong with our current urbanization model?
We need a new model of urbanization, away from squalor, with policies that seek to rebuild Indian cities around clusters of human capital and empower them via land policy reforms and autonomy in financing and enforcing local land usage norms. For India to shine, the transformation of its cities is necessary.
There are a few elements that can help make our cities more affordable in a transformative manner. Firstly, we need to pursue more economic integration within our cities. In a volatile economic age, where globalization is retreating, the ability of the formalized sector to generate enough jobs for employment in our urban cities is shrinking.
“We must embrace our informal sector and make it easier for them to expand. ”
We must embrace our informal sector and make it easier for them to expand. While aesthetically off-putting to our mandarins, at times, the informal sector has many advantages for rural migrants coming to cities. They can enter the segment easily, given its low skill-based barriers to entry. There is significant flexibility in the number of hours they can work and participate in. In a world where AI is increasingly eviscerating middle-class jobs in the organized segment, the informal segment offers opportunities for greater customization of products and services at a low-cost base.
The oft-quoted example of Dharavi must be mentioned here—it is home to most of Mumbai’s leather industry; the rising income has led to two-storey structures being built across the slum. We have to embrace such entrepreneurship and help make it more productive by providing better infrastructure and social security. In addition, we have to start embracing street hawkers as well—only in 2014, under the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, was hawking made legal. Cities need to start providing proper hawking spaces, with an average of ~5 sq. km allocated for it, along with accompanying public facilities (e.g., electricity, hygienic toilets, etc.). Just providing this would enable ~40 million hawkers to trade their wares in an organized manner. Such initiatives need to be written into the urban character of our cities and supported by operational statutes governing the city.
The provision of utilities, whether power, water, gas or internet, needs to be universal, at a price point that urban poor can afford, while retaining private participation in supply. Utility markets need to be more transparent while pushing for resource efficiency.
Making our cities more affordable to the urban poor will require work across these dimensions in a holistic fashion. We must move away from prioritizing large cities—breaking them up into separate units, if required—to improve governance, while disincentivizing the growth of mega-cities.
Excerpted with permission courtesy Rupa Publications India.