Mains Paper 1: Indian Society | Developmental issues, urbanization, their problems and their remedies.
From UPSC perspective, the following things are important:
Prelims level: MoHUA Schemes
Mains level: The newscard discusses issues, related to Lopsided spatial development in India, in a brief manner.
- India’s unprecedented economic growth during the last two decades has been spearheaded by lopsided spatial development, with clusters of economic activity concentrated in a few highly dense megacities.
- Engines of growth have failed to spread to less dense secondary cities.
- A majority of the population in India still lives outside megacities, this has created huge spatial disparities. Uneven spatial development is common in many countries, but it is much more pronounced in India.
- Unlike in China, Europe and the US, where the engines of growth and job creation have spread to the secondary cities, in India medium-sized cities remain mired in joblessness and poverty.
- Policymakers frown upon unequal spatial disparities and this has increased the importance of inclusive spatial development in our development discourse.
Why is India’s spatial development so lopsided?
- India’s manufacturing sector is spatially spreading at a much faster pace than the services sector. However, the manufacturing sector has not spread to all districts. Only those districts that have improved their physical and human infrastructure have attracted manufacturing enterprises.
- India’s services sector, a bigger engine of growth and job creation, has experienced different spatial evolution trends. High-density service clusters have continued to grow at a much faster pace than less dense areas and more dense locations have become more concentrated over time.
- This stands in contrast with the US, where in the last decades services have tended to grow fastest in medium density locations, such as Silicon Valley. India’s experience is not common to all fast-growing developing economies.
Why is India’s spatial evolution so different?
- One explanation is that while India’s megacities suffer from severe congestion costs, they also benefit from huge agglomeration economies and knowledge spillovers.
- The Fourth Industrial Revolution and new technology have favoured the trade-offs toward a concentration in services and a spread of maturing manufacturing.
- Modern services are benefitting more from knowledge spillovers compared to the manufacturing sector. This explains why agglomeration economies in services is likely to dominate congestion costs even in megacities, thus allowing high-density locations in India to grow at a much faster pace.
- It is more likely that the megacities in India are more successful not because they are less congested, but because spatial development policies and frictions are preventing the secondary cities from growing.
Future spatial trends
- Like spatial evolution experience of China and the US, India’s engines of growth and job creation will be in its secondary cities and not megacities.
- The relatively slow-growing Indian districts will grow much faster in the future.
- Of the well-known IT clusters in India, the medium-density places, such as Ahmedabad, Pune and especially Bengaluru, will have high growth rates in the future, while the high-density places, such as Chennai and Mumbai, will slow down.
- Engines of growth and job creation are not tied to big cities. Services can spread spatially at a much faster pace than the manufacturing sector and contribute to more inclusive growth.
- For this to happen, policymakers will need to improve access to telecommunication and post-secondary education in secondary cities.
- It is unfortunate that the services sector, which has contributed more to growth and job creation than manufacturing during the last two decades, has not got a seat at the table in our development discourse.