Urban population growth way below official estimates

Parul Malhotra

India’s urban population grew at an annual exponential rate of 2.7 per cent in the 90s, according to data recently released by the Office of the Registrar General. As it turns out, this growth rate falls way short of previous official estimates. The policy planning group for the urban sector, set up by the Planning Commission in 1995-1996, had predicted a much higher annual urban growth rate. The ministry of urban affairs and employment had, merely a month ago, predicted an annual growth rate of 3.4 per cent, and many official documents had implicitly relied upon a 4 per cent growth rate in their projections.

Certainly, an annual urban growth rate of 4 per cent is ahistorical, considering that the highest-ever growth rate recorded was 3.8 per cent, that too in the 70s. So, what was the rationale behind such high estimates? According to Amitabh Kundu, Professor at the Centre for the Study of Regional Development, Jawaharlal Nehru University, New Delhi: “Some felt that with globalisation, a massive inflow of capital—both from within and without the country—would result in rapid development of infrastructure and industrial growth. This would accelerate rural-urban migration and consequently the process of urbanisation”.

Critics of globalisation, on the other hand, are worried that an open trade policy and low rates of investment in the social and economic infrastructure would destabilise the agrarian economy, thereby resulting in greater rural-urban migration. Consequently, two ideologically opposing viewpoints converged upon one conclusion: that an annual urban growth of 4 per cent was indeed possible in the 90s.

Obviously, this didn’t happen. So, what went wrong? Could it be that the rate of growth of population slowed down in excess of expectations? Prof. Kundu disagrees. “The projection of urban growth was based on a 1.8 per cent population rate of growth. In actuality, the growth rate was 1.93 per cent.” Instead, he believes that declining employment and rising unemployment borne out by both, National Sample Survey (NSS) data and the Economic Census, put a spanner in the works. “A 2-3 per cent fall in workforce participation is quite significant. And this decline—which has occurred across all age-groups, in both urban and rural areas and for men as well as women—is unprecedented in terms of its uniformity”.
The Economic Census shows that the growth rate of urban employment fell from 2.8 per cent per annum in the 80s to 1.8 per cent per annum during the 1990-1998 period. “In fact, the public organised sector (which commands a significant weightage) showed a negative growth rate in employment”, says Prof. Kundu. Clearly then, declining (or almost stagnant) employment opportunities in urban centres impacted rural-urban migration unfavourably.

Not only that, real wages of the rural working community increased at a faster rate than urban workers’ wages, reducing a crucial economic imperative for rural-urban migration. According to NSS data (55th Round), the real wage of the rural male casual worker increased at 2.93 per cent per annum between 1993 and 2000, as opposed to his urban counterpart’s wage which grew at 1.6 per cent. The rural female casual worker’s real wage increased at 2.49 per cent, very close to her urban counterpart’s 2.8 per cent per annum increase. Compared to the 1987-1993 period, the wage gap between rural and urban workers in the 90s declined significantly, with rural growth rates witnessing a significant increase, while urban growth rates remained more or less stagnant.

Prof. Kundu also believes that relaxation of town planning restrictions in the previous decade impacted upon urban growth. In order to attract foreign and Indian business houses to urban centres, legal and administrative procedures for changing land use were simplified and low-income, high-density slum colonies were ‘pushed out’ to the city periphery. “Lack of alternative employment opportunities as a result of such displacement adversely affected the immigration of the rural poor into urban areas”, Prof. Kundu argues. He adds: “It is important to note that left to the market, it were the major metropolises—which had cornered a large part of investment in infrastructure—that experienced rapid urban growth but smaller urban centres were left out”.

Yet another institutional innovation for promoting urban infrastructural development was the the 74th Amendment to the Constitution (1992). This aimed at empowering towns and cities to tap their own resources or mobilise them from the capital market via bonds and other credit instruments, instead of relying upon budgetary support from state governments. Prof. Kundu suggests that this also accentuated disparities among urban centres and between rural and urban centres. “The revenue generating capacity of local bodies in smaller towns is one-fifth of that of Class I cities. They neither enjoy good credit ratings nor are they in a position to tap the capital market. As a result, only a handful of large cities, mostly in developed states, were able to raise funds from the market”, he explains. So, spatially concentrated industrialisation and infrastructure development in India’s urban centres resulted in a low national urban growth average.

To be sure, Prof. Kundu’s arguments pan out. During the past decade, the average annual exponential population growth rate for urban centres in developed states, such as Punjab, Haryana, Tamil Nadu, Maharashtra, Karnataka and Gujarat was either greater than the national average of 2.7 per cent or roughly equal (see table)—the only exception being West Bengal.

On the other hand, the urban population of backward states such as Rajasthan, Uttar Pradesh, Himachal Pradesh, Madhya Pradesh, Bihar and Orissa etc., grew at either the national average or at a lower rate. According to Prof. Kundu this is a sharp reversal of previous trends—during the 50s, 60s and 70s, backward states actually showed very high urban growth rates. Clearly, land and capital market reforms as well as an altered labour market scenario ended up giving an unequal boost to the urbanisation process. Consequently, backward states and their small and medium towns did not experience the expected growth in their urban population, whereas the metropolises/cities did. The result? A low national average of 2.7 per cent annual rate of urban growth.