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BW Businessworld

One Brick At A Time

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Urbanisation, its causes and effects  are much-debated and written-about topics; And this book offers observations on a diverse number of issues related to the subject and it does so in an insightful manner.

All the authors whose articles comprise this book focus on exploring remedies rather than merely dissecting the problems. India still struggles with information asymmetry and inadequate empirical research in investment and service delivery of urban infrastructure. For a long time now, urbanisation has been viewed as a by-product of failed regional planning. It is only now that we have started accepting two facts — that this is inevitable (and will only change when its benefits overtake the costs involved), and that it is an opportunity for achieving faster growth. This book will help in firming up of this new understanding. For urbanisation to happen inclusively and sustainably, good governance plays an integral role.

The authors prove several points: the disconnect between spatial and socio-economic planning is arguably the primary reason for the deplorable state of India’s urban infrastructure. Almost equally responsible is the failure to bring private incentives in line with the social cost-benefit calculus. Perhaps the most difficult task is to encourage urbanisation for attaining optimum threshold size for best socio-economic results, while also discouraging it from causing further urban decay. We struggle with the tricky task of closing the gap between private and social cost-benefits of urban expansion.

The book throws light on some aspects that we must start addressing immediately. For instance, it stresses the need to defuse — if not eliminate — policies that are not financially viable and depend on subsidy to sustain them. It also emphasises the need to strengthen Indian municipalities, which are among the weakest in the world when it comes to access to resources, financial autonomy and revenue-raising capacity. As the book highlights, they earn less than one-fourth of the capital needs of infrastructure and affordable housing alone!

We are made painfully aware that urban local bodies in India do not have satisfactory ‘market-worthiness’ principally because of unpredictable, unsustainable revenues, inconsistent conversion of investments into acceptable regular returns, and information opacity.

The essays perform the unpleasant yet required task of awakening its readers to reality. It is hard to contest that while availing subsidised lending from the centre or state, our municipalities have succumbed to the culture of dependency instead of roping in more private credit. Some bold measures are suggested in the book. Land, the crucial ingredient of urbanisation, must be freed to a reasonable extent from the current system of reservation, and all the implied corruption and inefficiencies. Transparent and substantial release of land for development is as important as reserving it for public and environmental purposes.

The principal takeaway from the 10 essays in this book that the challenges of urbanisation in India can only be overcome with timely and substantial reformation of institutions and governance. 

Limaye is head of research & real estate intelligence service, JLL India

(This story was published in BW | Businessworld Issue Dated 16-06-2014)