Taking a dig at India and other countries that believe economic activities must be spread geographically to benefit the poor, a new World Bank report has called for concentration of production, mobility of people and economic integration to lift rural people out of poverty. Population shift from villages to cities is natural and should be encouraged, it said.
This contradicts India’s policy of countering migration by setting up industries in backward areas and offering temporary employment through schemes like the National Rural Employment Guarantee Programme.
“The world’s most geographically disadvantaged people know all too well that growth does not come to every place at once,” said Indermit S Gill, director of the World Development Report (WDR) and chief economist, Europe and Central Asia. “Markets favour some places over others. To fight this concentration is tantamount to fighting prosperity,” Gill added.
Giving India’s example, where more than 60 per cent of the nation’s poor live in the economically backward states, the report calls for policies that promote mobility of people, products and ideas. Instead of worrying about the size of metropolises, the report calls for policymakers to focus on improving the basic infrastructure to make sure these places work well like Tokyo or New York.
Giving example of Mumbai, the report says despite its attempts to discourage inflows of people, who were attracted to economic opportunities, Mumbai has twice as many people as in 1980s. Half of the city’s population lives in slums as the government has not created the requisite infrastructure.
The standard practice in cities with limited land is to raise the permitted Floor Space Index (FSI) over time to accommodate urban growth, as in Manhattan, Singapore, Hong Kong and Shanghai. However, the Municipal Corporation of Greater Mumbai went the other way by lowering the permitted FSI, which has resulted in a vicious circle of supply shortages and high land prices.
The report lays special importance on 3Ds – density (of population closer to economic activity), distance (reducing transport cost) and divisions (less divisions or barriers to trade) — to make economic hubs.
In India, new economic activity in the industry and services is now concentrated along India’s metropolises and coastal cities, increasing the central region’s economic distance from density. While people want to move closer to opportunities, mobility has not been helped by ethnic and linguistic divisions, coupled with policies that seek to revive growth in lagging areas through subsidised finance and preferential industrial licensing.
Instead, the government should provide improved education, health and other social services across the country to prepare quality human resource which can migrate to economic hubs for better opportunities, Gill said.
The report criticised India’s special economic zones (SEZs), which are not as well located as in China. China has located its SEZs in coastal areas and has promoted migration of its people to these areas as well as foreign investment, and leading to greater connectivity to foreign markets.
In India we tend to be haphazard and half hearted in anything we do . We also keep very short term perspective . This report is pointing out the failure of our planning in the first place .We have used one policy perspective for last 20 years . As per that the urban population should have decreased . It has not . This is attributed as the failure of the policy .
The policy advocated by World Bank is that of cluster development. Small cities are easier to administer than far flung villages . If we keep taking proper care of cities and the people therein the remittances they send home will spur growth at their far flung villages . At the same time giving water , electricity , and other amenities in concentrated urban areas will be economically easier . Today we are doing neither . We are allowing immigration unchecked , and pouring money in rural areas where there are no return . So our cities keep getting worse and rural areas get no better . That is the crux of the report .
It appears that the report has been written with a capitalist mind set to meet vested interests. It's a very narrow point of view. The report assumes that human being are machines and they live to make products for their lords and earn bread. Even if you earn 20 lakhs rupees annually in Mumbai the quality of life is so poor. There is so much of rush and stress. People are not satisfied.
The quality of life and satisfaction level can improve through proper decentralization. People need swaraj/self governance and not central rulers. The eastern states of India will show the way.
In big crowded city like Mumbai, the distance of residence from place of work is totally neglected forcing people to travel even 2 hours each way. There should be a rule by which the employer must employ say 80% of his staff from an area from where time to reach office is not more than say 30 minutes. Also he must provide a minimum work space per employee to avoid packing employees like sardines in their offices/workshops. This way full advantage of a place can be taken without exploiting the employees.
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