This year’s budget was presented during highly unprecedented and difficult times, with high expectations from experts and citizens to lift the economy out of the woods. Undoubtedly, this budget has been overshadowed by Covid-19 which struck at a time when India was fighting a recession, so it became a double whammy.
Covid-19 is an urban phenomenon as it proliferates with greater density and population, common in cities. The pandemic, if anything, showed the revenge of the cities and begged for attention to their sanitation and health infrastructure. I note with much relief that Rs 35,000 crore has been allocated in the budget for Covid vaccines.
In addition, the Finance Minister has devoted significant resources and signalled efforts to improve urban public services, most notably solid waste management, especially those resulting from construction waste, sanitation, and clean air in Tier-1 cities. Further, there are important initiatives targeted to urban public mass transport in the form of investment in Metro and buses in the largest cities of the country such as Chennai, Bengaluru and Nagpur.
There is not much research on the channels through which cities affect the national economy, macro-economic growth and their GDP, even though we know them to be ‘engines of growth’. As per McKinsey, urban consumers are expected to trigger roughly $20 trillion a year in additional expenditure into the global economy, leading economic growth.
Why are urban services important for the city and national economy? The World Bank estimates that inadequate sanitation costs India about 6% of its GDP. Public services such as water supply (the Jal Jeevan Mission initiative), sanitation (faecal sludge management and waste water treatment), and solid waste management (segregation at source), which have been the focus in this budget, directly target the urban population, and their health and productivity, which have effect on the GDP, as per the above estimates.
Due to investment in the urban Swachh Mission 2.0, and related initiatives, basic services have become more accessible to the public, which earlier was just theory, even with investment in public-private partnerships.
The government is now seized with the problem of poor air quality in the large cities, with the result it has proposed to manage waste from construction in a better way in this year’s budget. This is quite contradictory to the approach where traditionally only judicial activism has played a major role in cleaning up India’s urban environment. This is indeed to be lauded as a major step in preventing the emission of pollutants such as PM2.5 in our large cities, improving urban environment and public health.
Transport contributes about 5% to India’s GDP. What are the advantages of investment in urban transport, as this year’s budget has proposed? Shorter travel time to work is a major determinant of a city’s effective labour market, implying that the shorter the travel, the more productive a city’s jobs are, given shorter commute implies accessibility of a large number of jobs within the distance. Given that the Metro is a fast mode of accessibility compared with traditional ones, Bengaluru, Kochi, Chennai and Nagpur Metros have been provided Central counterpart funding.
India’s Census thus far has not published data on travel time to work, like other countries, on journey to work. In the absence of official data on travel time, private firms in India have gathered this data, and report it for major cities, although not for the smaller ones. The emphasis on the National Research Foundation with an outlay of Rs 50,000 crore is much needed, if India is to become a knowledge power, and promote world class universities and research, along with such data.
Public transport
In addition to the Rs 18,000 crore worth of public bus transport measures, it is welcome that the budget extends the transport outlay to peripheral areas of Tier-1 cities. This is appreciated because in the case of large cities, peripheral areas are ignored, they are usually left out of the master planning process, with the result that land use, and transport planning in such areas take a backseat when they are developing.
In large cities, public transport such as buses and Metro are also ignored beyond the outer ring road, usually considered the city’s boundary. A World Bank report found that while metropolitan cores were deindustrialising, the suburbs and peripheries of metropolitan cities (Mumbai, Delhi, Bengaluru, Kolkata, Chennai, Hyderabad and Ahmedabad) were gaining industry.
Most Indian cities have also suburbanised. As instance, the jobs within the identified employment sub-centres of Ahmedabad constituted 83% in 1980, while this reduced to 69% in 2010, with jobs locating in peripheral areas.
However, peripheral areas, notwithstanding their inclusion in various plans, continue to suffer from severe traffic congestion. No doubt we found that travel time in the peripheral areas is quite long in Bengaluru, compared with that in the central locations.
Further, the cost of developing new residential units and public services such as water, roads, energy, sewerage and recreation in the city centre against that in the periphery is quite high.
Obviously, such high costs are a strain on the already cash strapped urban local bodies and can be avoided with appropriate policies.
Based on this evidence, the thrust on urban services and infrastructure in this year’s budget is to be applauded, as is the emphasis on their intra-city distribution. Despite the fact that urban development is a state subject, it is appropriate that the national government emphasises the focus on locally provided urban services, to encourage the state governments to follow suit. Only if our cities are strong, they can absorb farmers and migrants from rural areas and support their livelihoods.
(The writer is Professor, Institute for Social and Economic Change)