The McKinsey report on India's urban challenge is welcome for highlighting a relatively neglected part of the growth agenda but is probably off the mark on prescriptions .
In calling for proactive policy to shore up revenues , institutional structures and dedicated funds for cities , the study is spot-on . But then to recommend a massive, China-style increase in investment in cities, so as to reap 'productivity dividend of urban living,' seems misplaced .
What's suggested is that India's per capita annual spending in urban infrastructure rise from $17 today — the figure for China is $116 — to a steep $134. Such a strategy , with the ballpark requirement estimated at $1.2 trillion , would be needlessly costly, capital intensive and plain unwarranted.
What India needs is more sensible urban planning, policies to release land for urbanisation in a manner that does not cause social or political disruption, and city design that eschews urban sprawl and associated energy consumption on commutes.
We certainly need better allocation of resources for housing, reliable public transport and proper urban design, for instance to be able to walk across the road for work and recreation. But growth need not and should not be at high cost.
The McKinsey study projects demand for residential and commercial space pan-India at between 700 million and 900 million square meters a year, 350 to 400 km of metros and subways annually, and between 19,000 and 25,000 km of road lanes as well.
It adds that the targets are up to 20 times higher than actual investments in the past decade. The projections certainly seem a tall order in many respects. However, with forward-looking town planning, it should be possible to better manage urban demand and optimise infrastructure investment.
As India picks up economic speed, we need to be in a position to scale up and boost urban infrastructure. We clearly need to have a proper policy on new towns that go beyond SEZs and manufacturing zones. We also need supply side reforms to better coagulate funds in urban spaces. The way ahead is to have a thriving market for long-term funds.
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